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Who does this affect?

All Australian businesses that have dealings with consumers.

What do you need to do?

Be aware of the key areas for reform and consider how additional laws in these areas would impact you. We can help.

Author
Mary Syrotynskyj  
Solicitor
Caroline Coops  
Partner
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Step towards the next phase of the Australian Consumer Law - 19 November 2009

On 16 November 2009, the Standing Committee of Officials of Consumer Affairs (SCOCA) released a consultation paper with draft Regulatory Impact Statements (RIS) for best practice and product safety reform proposals. This consultation paper formally kicks off the second phase of the Australian Consumer Law (ACL), with the first phase (consisting of the national unfair contract terms regime and new consumer protection enforcement powers) currently before the Senate.

SCOCA’s best practices reform proposals cover the areas canvassed by SCOCA in its February 2009 discussion paper on the ACL, which we reported on. Options for reform were not covered in detail in the discussion paper and it is clear that SCOCA has considered stakeholder feedback on the areas presented in that discussion paper in arriving at the options in the draft RIS.

SCOCA’s best practice reform proposals have not been agreed to by the Federal Government or the State and Territory governments and do not represent agreed policies of any of the Governments.

SCOCA has requested the views of stakeholders on the options for reform presented in the draft RIS, information about any other costs or benefits associated with the proposals, additional options for the proposals and any other relevant issues by Friday 27 November 2009. The intention is then to present these reform proposals and stakeholder views to the Ministerial Council on Consumer Affairs on 4 December 2009, from where the formal process will begin among the States and Territories to agree on these reforms.

A Bill to include the agreed best practice reform proposals is expected to be introduced into federal parliament in early 2010.

The draft RIS for best practice reform proposals

The consultation paper divides the best practice reform proposals into two categories: those which promote national consistency and those which promote the use of best practice in specific areas. Various options are put forward for dealing with the various areas of reform, with a cost and benefit analysis of each. The options presented are set out below.

In general, the options favoured by SCOCA (as providing the greatest net benefit) seek to enhance the protection of consumers by adding new provisions to Trade Practices Act 1974 (Cth) (TPA).

Highlights from the reform proposals are set out below.

National consistency reforms

  • Unsolicited selling (door-to-door and telephone sales), with the options put forward being:

 
  • prohibiting all forms of direct and telephone sales; or
  • not including any specific provisions regulating direct and telephone sales in the TPA and repealing the existing provisions of State and Territory legislation; or
  • including new provisions that deal with direct and telephone sales, based on best practice in state and territory legislation (with the Victorian and New South Wales regimes specifically mentioned).
  • Asserting a right to payment for unsolicited goods and services, unauthorised directory entries and advertisements, with the options put forward being:

 
  • retaining the existing TPA provisions prohibiting a person from asserting a right to payment for unsolicited goods or services and unauthorised directory entries; or
  • including a new provision in the TPA that also prohibits a person asserting a right to payment from another person for unauthorised advertisements; or
  • including a new provision in the TPA that also prohibits a person asserting a right to payment from another person for unauthorised advertisements and regulations detailing requirements for the making of a warning statement.

Best practice reforms

  • Liability of recipient of unsolicited services, with the options put forward being:

 
  • retaining the existing TPA provisions without change, which only deal with liability for unsolicited goods; or
  • including provisions dealing with liability for unsolicited services.
  • Standards of disclosure for information under the ACL, with the options put forward being:

 
  • not adopting any standard disclosure requirements in the ACL; or
  • adopting in principle the Victorian requirements (section 163 of the Fair Trading Act 1999 (Vic)), so that documents specifically required under the ACL must be clear and legible; or
  • adopting the same requirements under Victorian law for all consumer documents.
  • Lay-by sales, with the options put forward being:

 
  • not adopting specific lay-by sales regulation in the ACL; or
  • introducing provisions to deal with lay-by sales, based on existing state and territory provisions.
  • Dual pricing, with the options put forward being:

 
  • not specifically regulating dual pricing; or
  • amending the TPA to prohibit selling at higher than the lowest of the prices when more than one price is appended to goods.
  • False or misleading representations, with the options put forward being:

 
  • retaining the existing types of prohibited false or misleading representations listed in section 53 of the TPA;
  • adding a separate prohibition on representations that purport to be a testimonial or that are about a testimonial from being false or misleading; or
  • adding a separate prohibition on representations that purport to be a testimonial or that are about a testimonial from being false or misleading, but with an evidentiary burden on the respondent.

Please click here for our Alert on the product safety reform proposals in the consultation paper.

Evaluating the options proposed for best practice reform proposals in the draft RIS

The introduction of new laws will impose compliance costs on businesses. The exception to this may be in areas such as direct and telesales, where businesses are currently burdened by differing laws between jurisdictions: in this context, a harmonised approach may lower compliance costs and should be supported.

As mentioned earlier, the options generally supported by SCOCA involve adding additional provisions to the TPA, rather than relying on existing provisions or even contract law, to solve the issue they are seeking to address.

However, serious thought and assessment is needed as to whether or not the existing TPA provisions, such as sections 52 or 53 and unconscionable conduct, would already provide consumers (or regulators) with adequate protection and redress in the areas highlighted by SCOCA. An example of this is the proposal to introduce misleading or false testimonials to the list under section 53. Thought is also needed as to whether some of the issues raised warrant a national legislative response or are best tackled at the industry level. The proposal to introduce dual pricing laws is a good example, which is based on New South Wales provisions that were introduced in response to barcode scanning issues in the supermarket industry.

Next steps

If your business deals with consumers, then you may well be affected by the draft RIS. We can help with your submissions in response to this consultation paper and your participation in further consultations. We can also advise you on how the options proposed in the draft RIS would impinge on your business in particular. We have extensive experience in the area and have advised a range of clients on both existing and proposed consumer legislation in Australia.

This publication is only a general outline. It is not legal advice. You should seek professional advice before taking any action based on its contents.