Latest Legal Updates

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ACCC commences proceedings against Webjet for alleged misleading claims on airfare prices and bookings

Date: 29 November 2024
Source: Australian Competition and Consumer Commission

Abstract:

The Australian Competition and Consumer Commission (ACCC) has commenced proceedings against online travel agency Webjet Marketing Pty Ltd (Webjet), alleging that it made false and misleading representations to consumers about flight prices and bookings.

The ACCC alleges that Webjet breached ss 18 and 29(1)(i) of the Australian Consumer Law by making misleading statements in the 5-year period between November 2019 and November 2023 across various means including on its app, in marketing emails, on social media platforms, and on its website, that failed to include compulsory fees charged by the website.

The statements included “flights from $x” when the price quoted excluded Webjet’s compulsory ‘Webjet servicing fee’ and ‘booking price guarantee’ fee which ranged from $34.90 to $54.90 per booking, depending on the type of flight.

The ACCC is also alleging that Webjet breached consumer law by displaying virtual confirmations of bookings on their website and sending confirmation emails after payment has been completed when on 382 occasions, Webjet had not booked the flight with the airline. On these occasions Webjet would then seek additional…

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Revised draft rules to expand Consumer Data Right (CDR) to non -bank lenders and narrow the scope of CDR data for banking sector released

Date: 27 November 2024
Source: Treasury.gov.au

On 26 November 2024 Treasury released an exposure draft of the Competition and Consumer (Consumer Data Right) Amendment (2024 Measures No. 2) Rules 2024 (Amending Rules), explanatory materials (EM) and an information sheet for consultation. The release of the Amending Rules follows on from earlier consultations, the most recent in August 2023 which considered expanding the Consumer Data Right (CDR) rules to non-bank lenders (NBLs). If implemented, the Amending Rules will operate to extend the CDR to the NBL sector and narrow the scope of CDR data for the banking and NBL sectors.

The Amending Rules propose revised thresholds for mandatory data sharing by NBLs. A NBL will be categorised as a data holder and will be required to comply with the CDR Rules where the NBL:

• has a total value of resident loans and finance leases over $1 billion (compared to $500 million under previous proposal) for the preceding calendar month;
• averages over $1 billion for the previous 12 calendar months; and
• has more than 1,000 customers (compared to…

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OAIC finds Bunnings’ facial recognition tech breached privacy principles

Date: 20 November 2024
Source: Office of the Australian Information Commissioner

Abstract:

The Office of the Australian Information Commissioner (OAIC) has determined that Bunnings Group Limited has breached the privacy of its customers by collecting personal and sensitive information using facial recognition technology.

The facial recognition system, in effect in 63 stores across Victoria and New South Wales between November 2018 and November 2021, captured the face of every person who entered Bunnings stores.

The OAIC found that Bunnings breached the following Australian Privacy Principles (which are contained in the Privacy Act 1988 (Cth)):

• APP 3.3: an entity must not collect sensitive information unless the individual consents or an exception applies.
• APP 5.1: an entity must take reasonable steps to notify an individual, or make sure they are aware, of certain matters around the handling of their personal information.
• APP 1.2: an entity must take reasonable steps to implement practices, procedures and systems to ensure they comply with the APPs.
• APP 1.3: an entity must have a clearly expressed and up-to-date privacy policy.

Privacy Commissioner Carly Kind found the technology to be the most intrusive option available to Bunnings in its…

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Treasury seeks feedback on proposed ACL amendments to address unfair trading practices

Date: 19 November 2024
Source: The Treasury

The Treasury is conducting stakeholder consultation to seek feedback on the design of proposed amendments to the Australian Consumer Law (ACL) to introduce general and specific prohibitions to address unfair trading practices.

The consultation paper builds upon a policy option proposed in the Treasury’s previous Consultation Regulation Impact Statement on Protecting Consumers from Unfair Trading: see our previous Latest Legal Update here.

General prohibition

The proposed general prohibition would be principles-based in addressing unfair trading practices where a business’s conduct:

• unreasonably distorts or manipulates, or is likely to unreasonable distort or manipulate, the economic decision-making or behaviour of a consumer; and

• causes, or is likely to cause, material detriment (financial or otherwise) to the consumer.

The proposal includes legislating a non-exhaustive ‘grey list’ of examples of conduct that may meet the above test, such as:

• the omission of material information;

• the provision of material information to a consumer in an unclear, ambiguous or untimely way, including in a manner that is likely to overwhelm them;

• impeding the consumer’s ability to exercise their contractual or other legal rights; or

• using online consumer…

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ASIC announces 2025 enforcement priorities

Date: 19 November 2024
Source: Australian Securities and Investments Commission

Abstract:

The Australian Securities and Investments Commission (ASIC) has announced its enforcement priorities for 2025 placing particular emphasis on mitigating financial harm to consumers amidst growing cost-of-living pressures. These priorities aim to tackle misconduct that exploits financially vulnerable Australians and uphold market integrity.

Key Enforcement Focus Areas for 2025:

1. Consumer Protection:
   • Targeting unlawful debt management and collection practices.
   • Addressing business models that evade consumer credit protections.
   • Investigating misconduct in used car financing aimed at vulnerable consumers.
2. Superannuation, Insurance and Investment Schemes:
   • Focusing on misconduct exploiting superannuation savings.
   • Addressing member service failures within the superannuation sector.
   • Cracking down on fraudulent property investment schemes.
   • Ensuring insurers deal fairly and in good faith with customers.
3. Financial Market Integrity:
   • Establishing a dedicated internal team to combat insider trading.
   • Strengthening enforcement against market manipulation and breaches of continuous disclosure obligations.
4. Corporate Compliance Failures:
   • Addressing inadequate cyber-security protections by licensees.
   • Investigating auditor misconduct.
5. Sustainability and ESG Claims:
   • Targeting greenwashing and misleading conduct in environmental, social, and governance (ESG) claims.

Achievements and Enforcement Actions in 2024:

Last year, ASIC increased investigations by 25% and civil proceedings by…

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Tabcorp pays penalty of $262,200 for illegal in-play sports bets

Date: 18 November 2024
Source: Australian Communications and Media Authority

Tabcorp Holdings Limited (Tabcorp) has paid a $262,920 penalty for taking 854 online in-play sports bets.

Bets placed after a sporting event has commenced are prohibited under s 15(2A) of the Interactive Gambling Act 2001 (Cth). An investigation by the Australian Communications and Media Authority (ACMA) found that Tabcorp had accepted the 854 such in-play bets from 69 tennis matches between 27 April 2023 and 24 October 2023.

Tabcorp submitted that the issue arose from an automated system control not closing betting due to an error, which led to bets being accepted after the match started. Tabcorp had refunded and voided all bets such that neither the customer nor Tabcorp benefitted from the bets, however the technology fix was only properly implemented 6 months later in October 2023.

The ACMA had previously given Tabcorp a formal warning in November 2021 for accepting in-play bets during a United States college basketball game. Tabcorp has since advised the ACMA of steps taken to minimise the risk of online in-play bets being accepted in the future.

See the ACMA’s media release here and…

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Treasury flags phaseout of cheques and assurances for continued access to cash payment for essentials

Date: 18 November 2024
Source: Federal Treasury

Abstract:

The Treasurer and Assistant Treasurer and Minister for Financial Services, Jim Chalmers MP and Stephen Jones MP have released a joint statement on the future of physical cash payments and the phasing out of cheques as a form of payment.

The Federal Government intends to ensure that Australian consumers will continue to be able to pay wish cash for essential items, such as groceries and petrol, by introducing a legislative mandate requiring businesses to accept cash tender when selling essential items, subject to some exemptions made for small businesses.

Treasury will conduct industry consultation prior to the end of 2024 to consider the impact on affected businesses and consumers and determine details of the mandate framework. The consultation will also seek input on what further steps are required for cash to remain accessible in an economically sustainable manner.

Details of the legislative mandate will be announced in 2025 and (subject to the outcomes of consultation) it is planned to commence commence from 1 January 2026.

The Government has also released its Cheques Transition Plan, which aims to…

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Consumer Data Right Amendment Rules come into force

Date: 14 November 2024
Court: County Court of Victoria
Source: Federal Register of Legislation

The Competition and Consumer (Consumer Data Right) Amendment (2024 Measures No. 1) Rules 2024 have now come into force.

The amendments mainly centre around simplifying provisions relating to consumer consent and operational matters, with the aim of improving the adoption of the regime by business consumers.

Consent amendments

The amendments to data consent processes seek to enhance consumer experience by:

• extending the data minimisation principle to disclosure, ensuring privacy protection coverage for consumers;
• enabling consumers to provide multiple CDR consents with a single action;
• allowing data recipients to pre-select the specific consent elements that would be reasonably needed to provide a specific good or service;
• simplifying the information that data recipients are required to provide to the consumer at the time of seeking the consumer’s consent;
• requiring data recipients to provide consumers with information regarding all supporting parties who may access a consumer’s data at the time a consumer’s consent is sought; and
• requiring data recipients to delete redundant CDR data unless a consumer has given a de identification consent.

Operational amendments

Operational amendments seek to make it…

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Introduction of the Scams Prevention Framework Bill 2024

Date: 13 November 2024
Source: The Hon Stephen Jones MP

On 7 November 2024, following on from two formal rounds of consultation, the Scams Prevention Framework Bill 2024 was introduced into the Parliament. If passed, the Bill will introduce a new Part IVF into the Competition and Consumer Act 2010 (Cth) creating a legislative framework called the Scams Prevention Framework (SPF). The SPF is aimed at preventing and responding to scams impacting consumers and small business operators.

The SPF allows the relevant Minister to designate certain sectors of the economy as subject to the SPF, including banking, telecommunications, social media and others. The Australian Competition and Consumer Commission (ACCC) will be the SPF’s general regulator, and the telecommunications sector will be regulated in conjunction with the Australian Communications and Media Authority (ACMA). Fines of up to $50 million for non-compliance may be issued under the SPF.

The SPF includes the following features:

• six overarching principles (governance, prevent, detect, report, disrupt and respond) that apply to all regulated entities, enforced by the ACCC as the SPF general regulator;
• mandatory industry codes setting out sector specific requirements for clear, accessible and transparent internal dispute…

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ACMA reports on telco consumer protections and complaints-handling performance

Date: 12 November 2024
Source: Australian Communications and Media Authority

The Australian Communications and Media Authority (ACMA) has released its report on action on telco consumer protections for the quarter of July to September 2024.

The ACMA’s compliance and enforcement actions include:

• Formally warning a telco for failing to join the Telecommunications Industry Ombudsman (TIO) scheme;
• Directing one telco to pay its annual TIO membership fees;
• Directing a bulk messaging telco to comply with anti-scam rules after sending SMS messages using message headers without sufficient checks on their use;
• Completing 10 investigations into compliance with the Telecommunications Consumer Protections Code’s obligations to support customers affected by domestic and family violence and keep records of customers’ changes in circumstances, and Scam Code obligations to share information on scam activity;
• Starting 11 investigations into telco compliance with the TIO scheme, Emergency Call Service Determination rules, data storage and obligations under Reducing Scam Calls and the Scam SMs Industry Code;
• Commencing 55 compliance assessments and completing 17 assessments into telco compliance with legislative consumer safeguards; and
• Commencing an audit to assess telco compliance with complaints monitoring and analysis provisions in the Complaints Handling Standard.

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Treasury consultation on franchising sector licensing regime opens

Date: 12 November 2024
Source: Federal Treasury

The Treasury Licensing Taskforce is seeking stakeholder submissions regarding the prospect of creating a licensing regime for the franchising sector.

A new licensing regime may provide a more efficient and effective means of promoting positive business relationships, fair trade, competition and access to justice. The consultation is in line with the recommendations of the Independent Review of the Franchising Code of Conduct previously undertaken by the Federal Government. For further information on that review, see our previous Latest Legal Update here.

The consultation seeks views on the need for and potential framework for a licensing regime and welcomes submissions on the following issues:

• Nature of the current regulatory framework for licensing: issues with the current regulatory framework for franchising, whether issues need government intervention and the success of previous attempts at regulation.
• Regulator powers: whether the regulator (the ACCC) currently has sufficient power to respond under the Code, introducing early intervention powers and powers to incentivise better outcomes for franchisees and franchisors.
• Dispute resolution: whether the current framework is meaningful, timely and cost-effective and where it could be improved, current barriers and meaningful engagement between…

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Public consultation sought on PFAS for draft Australian Drinking Water Guidelines

Date: 12 November 2024
Source: National Health and Medical Research Council

The National Health and Medical Research Council (NHMRC) seeks public consultation on guidance on the per- and polyfluoroalkyl substances (PFAS) for the Australian Drinking Water Guidelines. The Guidelines, which are part of the National Water Quality Management Strategy, are designed to provide a framework for safe, good-quality drinking water, how it can be achieved and how it can be assured.

PFAS are manufactured chemicals that do not occur naturally in the environment. Humans can be exposed to PFAS present in sources such as food, consumer products, dust and drinking water. Certain PFAS are persistent in the environment, have the potential for bioaccumulation and biomagnification, and may cause adverse health effects (eg potential developmental, reproductive and systemic toxicity).

The NHMRC is proposing the following changes for PFAS concentrations in drinking water based on human health considerations:

• perfluorooctanoic acid (PFOA): not exceed 200ng/L (previously 560ng/L);
• perfluorooctane sulfonic acid (PFOS): not exceed 4ng/L (previously 70ng/L);
• perfluorohexane sulfonic acid (PFHxS): not exceed 30ng/L (previously 70ng/L);
• perfluorobutane sulfonic acid (PFBS): not exceed 1000ng/L (new guideline); and
• GenX chemicals: no guideline necessary at this…

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Food and Grocery (Mandatory) Code of Conduct Bill introduced into Parliament

Date: 11 November 2024
Source: Parliament of Australia

The Food and Grocery (Mandatory) Code of Conduct Bill 2024 (Cth) (Bill) has been introduced into Parliament.

The Bill aims to make the Food and Grocery Code of Conduct (Code) mandatory for large retailers and wholesalers in the supermarket industry with an annual adjusted turnover of $5 billion and introduces penalties for misconduct.

For breaches of the Code, clause 6 of the Bill proposes to apply a maximum penalty that is the greatest out of:

• $10 million;
• Three times the benefit obtained from the contravention; or
• 10% of the retailer’s or wholesaler’s adjusted turnover in the past 12 months (where the benefit cannot be determined).

Clause 7 of the Bill also provides that infringement notices will carry a penalty of $2 million rather than the normal 50 penalty units that would apply across industry codes. The proposed penalties follow the recommendations of the Final Report for the Independent Review of the Food and Grocery Code of Conduct (see our previous Latest Legal Update here).

Clause 9 also confers the Australian Competition and Consumer Commission with powers to conduct audits to determine…

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ACCC commences proceedings against mail order business Magnamail and parent company over allegedly misleading pre-draw promotions

Date: 8 November 2024
Source: Australian Competition and Consumer Commission (ACCC)

The ACCC has instituted proceedings in the Federal Court against mail order company Magnamail Pty Ltd (Magnamail) and its parent company Direct Group Pty Ltd (Direct Group) over allegedly misleading conduct and false or misleading representations made to hundreds of thousands of consumers in connection with Magnamail's "pre-draw" promotions.

Magnamail’s alleged conduct

Between 9 May 2022 and 7 July 2023, Magnamail ran 12 pre-draw promotions where it distributed promotional materials, including letters, envelopes, catalogues, and scratch cards, to hundreds of thousands of consumers.

The ACCC alleges that these materials represented that consumers had a right to claim, were eligible for, or had qualified for major cash prizes valued up to $10,000, $20,000 or $25,000, or other major prizes like Apple iPads or jewellery, if they purchased products from Magnamail's catalogues. However, before distributing the promotional materials, Magnamail had allegedly already conducted pre-draws to determine the winners of the major prizes, meaning that the only prizes available to non-pre-drawn consumers were minor prizes or, in one case, no prize at all.

Examples of the…

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ACCC commences proceedings against Optus for alleged unconscionable sales, misleading or deceptive representations and debt collection practices

Date: 1 November 2024
Source: Australian Competition and Consumer Commission (ACCC)

The ACCC has initiated proceedings against Optus Mobile Pty Ltd (Optus) in the Federal Court alleging that the telecommunications company engaged in unconscionable conduct and made false, misleading or deceptive representations to consumers in breach of the Australian Consumer Law (ACL).

Key allegations

The ACCC claims that Optus acted unconscionably in breach of s 21 of the ACL in the course of selling telecommunications products and services to approximately 429 consumers by engaging in inappropriate sales conduct, including manipulation of credit check results, and subsequently pursuing debt collection activities, even when Optus knew the consumer contracts were created fraudulently. The regulator also alleges that Optus made false, misleading or deceptive representations in breach of ss 18 and 29(1)(i) of the ACL by representing that particular goods were “free” when this was not the case. Many of the individuals involved were from disadvantaged backgrounds, including First Nations Australians from remote areas, people with disabilities or cognitive impairments, and those with limited financial literacy or employment.

According to the allegations, Optus' sales staff were…

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TM — Full Court confirms no infringement of BED BATH ‘N’ TABLE and overturns finding of a breach of the ACL

Date: 1 November 2024
Court: Federal Court of Australia (Full Court)
Judge(s): Nicholas, Katzmann and Downes JJ
Judgment date: 31 October 2024
Catchwords: MISLEADING OR DECEPTIVE CONDUCT — Where primary judge found that respondent’s reputation was “crucial” to conclusion of misleading and deceptive conduct contrary to ss 18(1) and 29(1)(g) and (h) of Australian Consumer Law, by its use of trade mark “HOUSE BED & BATH” (appellant’s mark) in relation to soft homewares in a market in which respondent’s trade mark “BED BATH ‘N’ TABLE” (respondent’s mark) has a significant reputation, appellant found to have contravened — Where primary judge found appellant’s mark not deceptively similar to “BED BATH ‘N’ TABLE” but found appellant’s use of its mark misleading and deceptive — Where primary judge found that respondent had no independent reputation in “BED BATH” or “BED & BATH”, that there had been substantial and common third party use of “bed” and “bath” and “bed & bath” as navigational or category descriptors

Abstract:

TRADE MARK INFRINGEMENT — Where primary judge found that appellant did not infringe respondents’ marks — Whether primary judge erred in holding…

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ASIC commences proceedings against Oak Capital for alleged avoidance of National Credit Code

Date: 31 October 2024
Source: Australian Securities and Investments Commission (ASIC)

ASIC has commenced proceedings in the Federal Court against Oak Capital Mortgage Fund Ltd and Oak Capital Wholesale Fund Ltd (Oak Capital) for allegedly engaging in unconscionable conduct in contravention of s 12 CB of the ASIC Act 2001 (Cth) by implementing and maintaining systems for the purpose of avoiding regulation by the National Credit Code (Schedule 1 of the National Consumer Credit Protection Act 2009 (Cth) (Credit Code).

ASIC alleges that between March 2019 and October 2023, Oak Capital made up to 47 loans totalling over $37 million under a lending model designed to circumvent the Credit Code. The lending model adopted by Oak Capital involved structuring loans which typically required a company borrower, a guarantee from the director(s) of the borrower company supported by security over real property held in the name of the guarantor(s). ASIC alleges that the requirement for a corporate borrower existed in circumstances even where the named company borrower had no discernible interest in the subject of the transaction, was not trading, had no assets or had only been established…

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Federal Court finds HCF Life liable for misleading consumers about coverage for pre-existing conditions (Australian Securities and Investments Commission v H C F Life Insurance Company Pty Ltd)

Date: 30 October 2024
Court: Federal Court of Australia
Judge(s): Jackman J
Judgment date: 28 October 2024
Catchwords: INSURANCE — where defendant a life insurer offering products excluding pre-existing conditions — whether contracts rendered partially unenforceable by s 47 of the Insurance Contracts Act 1984 (Cth) — whether terms unfair and conduct liable to mislead the public as to the nature, characteristics or suitability of financial services

Abstract:

The Federal Court has found that a term involving a ‘pre-existing condition’ found in three life insurance policies sold by of H C F Life Insurance Company Pty Ltd’s (HCF Life) was liable to mislead consumers about HCF Life’s ability to deny coverage, but was not an unfair contract term.

Background: 

HCF Life is a life insurer that offered three ‘Recover’ range life insurance products which contained terms that excluded cover for ‘pre-existing conditions’. From August 2019 to 9 November 2023, HCF Life defined ‘pre-existing condition’ such that cover would be excluded where a medical practitioner is of the opinion that signs or symptoms of the relevant…

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ACCC/AER annual report 2023–24 outlines enforcement outcomes

Date: 28 October 2024
Source: Australian Competition and Consumer Commission

The Australian Competition and Consumer Commission (ACCC) and Australian Energy Regulator have released their annual report for 2023–24 which details the work of both regulators in the promotion of competition and fair trading, consumer rights and the regulation of energy.

Competition law enforcement

In 2023–24, the ACCC’s efforts in competition law enforcement include:

• assessing 207 mergers and 26 non-merger authorisation applications;
• achieving a total of $109.49 million in penalties and fines awarded by the court for competition matters;
• completing 15 in-depth competition investigations;
• increasing work in Consumer Data Right, accrediting 41 data recipients and an increase to 143 active data recipient representative arrangements notified; and
• continuing its focus on anti-competitive and cartel conduct including in proceedings against:
  • Bingo Industries and Aussie Skips for arranging a skip bin and waste processing cartel;
  • BlueScope Steel for attempting to fix prices for flat steel products supplied in Australia; and
  • Mastercard for alleged misuse of market power.

 

Consumer law enforcement

In 2023–24, the ACCC’s enforcement of consumer laws include:

• achieving a total of $513.45 million in penalties and fines awarded…

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AASIC 2024 update

Date: 25 October 2024
Source: ASIC 2024 update

ASIC Commissioner Kate O’Rourke has presented a keynote address at the 34th Annual Credit Law Conference on 24 October 2024.

ASIC’s key focus is on:

• Improving Consumer Outcomes
  • ASIC's top priority is safeguarding consumers from harmful practices and products in credit and banking sectors.
  • Recent reports examined financial hardship assistance, fee harm in banking, credit card lending practices, and compliance with product design/distribution obligations.
  • Ongoing initiatives focus on reforms to small amount credit contracts, consumer leases, and implementing the enhanced Banking Code of Practice.
  • ASIC is closely monitoring regulatory settings like responsible lending obligations to assess their impact on credit accessibility.
• Advancing Digital and Data Safety
  • Efforts are underway to combat technology-facilitated misconduct such as scams and oversee the use of artificial intelligence (AI) in financial services.
  • Reviews of major banks highlighted deficiencies in scam prevention strategies, governance frameworks, liability determination approaches, and victim support.
  • ASIC supports the proposed Scams Prevention Framework that will impose anti-scam obligations on banks and other key sectors.
  • Governance frameworks guiding AI implementation by financial services providers are being reviewed, with findings to be released soon.

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Federal Government and RBA announce review of card payment costs

Date: 15 October 2024
Source: Reserve Bank of Australia and Office of the Prime Minister (PMO)

Abstract

Prime Minister Anthony Albanese has announced a review of merchant card payment costs and unfair or excessive card payment surcharges.

In aiming to reduce the costs to both consumers and small businesses the Government will:

• Provide $2.1 million of new funding for the Australian Competition and Consumer Commission (ACCC) to investigate excessive surcharges and work to reduce payment fees; and
• Move towards banning debit card surcharges from 1 January 2026, subject to assessment by the Reserve Bank of Australia (RBA) to ensure that both small businesses and consumers will benefit.

In tandem with this, the RBA has commence its Review into Retail Payments Regulation. The review will analyse the costs merchants face when accepting card payments and the framework for surcharging.

The first phase of the review will focus on:

• Merchant card payment costs, which the RBA views as a key indicator of efficiency and competition in the payment ecosystem. Whilst the average fee for merchants per card payment has decreased in recent years, the increasing use of cards by consumers has led…

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WA Government urges consumers to shop safely for Halloween

Date: 14 October 2024
Source: Government of Western Australia

The Government of Western Australia urges consumers to take care when shopping for Halloween-related merchandise involving button batteries, potentially flammable clothing and products that may cause skin allergies.

A preliminary assessment by Consumer Protection on Halloween-related merchandise bought from a large popular online retailer showed that several items were likely in breach of product safety laws. Further assessment on the following qualities of the potentially non-compliant items will be undertaken for a formal determination:

• no secure button battery compartments or internationally recognised safety symptoms on glow in the dark rights, LED lights and finger lights;
• no mandatory ingredient labelling on face stickers, make-up and fake blood; and
• no mandatory flammable safety warnings on children’s nightwear.

Last year, Consumer Protection’s seasonal inspections in physical stores across Western Australia found 28 Halloween-related products powered by button batteries that were incorrectly labelled or did not display the appropriate warnings to consumers. A cosmetic product was also in breach of the mandatory labelling laws in failing to list its ingredients on the packaging.

The Commerce Minister Sue Ellery has stated the following tips for consumers looking…

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Federal Court orders Qantas to pay penalties of $100M for misleading consumers by offering and selling cancelled flights

Date: 9 October 2024
Source: Federal Court of Australia

The Federal Court has ordered Qantas Airways Ltd (Qantas) to pay $100 million in penalties for misleading consumers by offering and selling tickets for flights that it had decided to cancel, and by failing to tell prior ticketholders of its decision to cancel.

As outlined in our previous Latest Legal Update, Qantas co-operated with the Australian Competition and Consumer Commission (ACCC) in the proceedings and made joint submissions with the regulator on an agreed penalty, arguing that $100 million in total penalties were appropriate for deterrence while recognising the early cooperation of Qantas. Qantas admitted that:

• its senior managers Qantas knew that the cancelled flights were not immediately removed from sale, that consumers bought tickets for cancelled flights and that existing ticketholders were not notified of the cancellations; and
• Qantas benefitted from its conduct by profiting from consumers who would otherwise have chosen a different flight and saved costs by delaying notification regarding the cancellations.

 

Qantas’ contravening conduct

The Court made declarations under s 21 of the Federal Court Federal Court of Australia…

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ACMA takes action against 3 telcos for failing to comply with Telecommunications Industry Ombudsman scheme

Date: 8 October 2024
Source: Australian Communications and Media Authority

The Australian Communications and Media Authority (ACMA), Australia’s telecommunications and media regulator, has issued formal warnings to two telcos for failing to join the Telecommunications Industry Ombudsman (TIO) scheme and has also directed another to pay its outstanding membership fees.

The TIO scheme is an industry-based dispute resolution scheme that assists residential and small business consumers with unresolved complaints about their internet or phone service. Carriers and eligible carriage service providers (CSPs) have obligations under the Telecommunications (Consumer Protection and Service Standards) Act 1999 (Cth) (TCPSS Act) and the Telecommunications Act 1997 (Cth) (Telecommunications Act) to join and comply with the TIO scheme, which includes the payment of membership fees.

The ACMA’s investigations into Eureka Telecommunications Western Victoria Pty Ltd (Eureka) and Fly On IT Pty Ltd (Fly on IT) found that both telcos had failed to join the TIO scheme despite being eligible CSPs, contravening s 128(1) of the TCPSS Act. The ACMA issued formal warnings under s 103(1) of the Telecommunications Act and both Eureka and Fly on IT are now members of…

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ACCC receives $30M additional funding for the supermarket and retail sector

Date: 1 October 2024
Source: Australian Competition and Consumer Commission

The Treasurer has announced that the Australian Competition and Consumer Commission (ACCC) will be receiving an additional $30 million in funding over three and a half years for investigations and enforcement in the supermarket and retail sector.

The ACCC Chair Ms Cass-Gottlieb has stated that the additional $8.5 million funding per year from 1 January 2025 will enable the ACCC to escalate its investigations on misleading pricing claims and practices, businesses misrepresenting consumer rights under the Australian Consumer Law, and issues regarding delivery costs and timeframes for regional and remote Australian consumers. The ACCC has also received increased concerns from consumers regarding representations about the features or qualities of goods and services, the non-delivery or delayed delivery of goods bought online, and the impact of the cost of living on purchasing decisions.

The ACCC is currently conducting a 12 month inquiry into the supermarket sector with the final report due on 28 February 2025. The interim report released on 27 September 2024 identified concerns relating to the exercise of market power and high barriers to entry in the…

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EnergyAustralia to pay $14 million in penalties for failing to provide accurate price change communications to consumers (Australian Competition and Consumer Commission v EnergyAustralia Pty Ltd)

Date: 30 September 2024
Court: Federal Court of Australia
Judge(s): O’Callaghan J
Judgment date: 26 September 2024
Catchwords: CONSUMER LAW — where respondent an electricity retailer with the meaning of s 5 of the Competition and Consumer (Industry Code—Electricity Retail) Regulations 2019 (Code) — where respondent admitted to contraventions of s 12(2) of the Code, s 51ACB of the Competition and Consumer Act 2010 (Cth) and ss 18 and 29(1)(i) of the Australian Consumer
Law — where parties jointly sought declarations as to contraventions and other relief

Abstract:

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ACCC releases interim report of its year-long Supermarkets Inquiry

Date: 30 September 2024
Source: Australian Competition and Consumer Commission

The Australian Competition and Consumer Commission (ACCC) has released the interim report for its Supermarkets Inquiry. The report identifies key issues and outlines information gathered by the ACCC at the halfway point of its year-long inquiry into competition and prices in the supermarket sector (see our previous Latest Legal Updates here and here).

The findings of the interim report include that:

• Australia’s supermarket retailing sector is highly concentrated and exhibits oligopolistic characteristics, with Woolworths and Coles accounting for 67 per cent of supermarket retail sales nationally.
• Consumers have lost trust in supermarket pricing, with difficulties arising from frequent specials, short-term lowered prices, bulk-buy promotions, member-only prices and bundled prices.
• There are concerns about how supermarkets and/or other buyers through grocery supply chains may be exercising market power, and the extent to which such practices may be impeding the efficient operation of grocery supply chains. This contention will be scrutinised over the remaining five months of the inquiry.
• The supermarket sector has high barriers to expansion with significant investment, time and differentiated offering required to expand, demonstrated by ALDI having taken more…

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Federal Court imposes $12.9 million penalty for Vanguard’s misleading claims about ESG exclusionary screens (Australian Securities and Investments Commission v Vanguard Investments Australia Ltd (No 2))

Date: 26 September 2024
Court: Federal Court of Australia
Judge(s): O’Bryan J
Judgment date: 25 September 2024
Catchwords: CONSUMER LAW – pecuniary penalty for infringement of ss 12DF(1) and 12DB(1)(a) and (e) of the Australian Securities and Investments Commission Act 2001 (Cth) – application of s 12GBA to contravening conduct that commenced prior to 13 March 2019 – application of s 12GBB to contravening conduct that occurs wholly on or after 13 March 2019 – relevant considerations
EVIDENCE – statement of agreed facts tendered in evidence – where agreed facts contained footnote references to documents also tendered in evidence – observations concerning the practice of including documentary references to a statement of agreed facts and the extent to which the practice is permissible under s 191 of the Evidence Act 1995 (Cth)
COSTS – where one party wholly unsuccessful on single issue for which discrete hearing was required but otherwise successful in the proceeding

Abstract:

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ASIC revokes two credit licences after compensation payouts

Date: 25 September 2024
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

On 24 September 2024, ASIC announced the cancellation of the Australian credit licences of Ultimate Credit Management Pty Ltd (Ultimate Credit) and Worry Free Finance Pty Ltd (Worry Free). This action followed the Compensation Scheme of Last Resort (CSLR) paying compensation to consumers after both companies failed to meet determinations made by the Australian Financial Complaints Authority (AFCA). For context, The CSLR was established in June 2023 and began operations in April 2024, providing compensation of up to $150,000 for consumers who have unpaid AFCA determinations.

In Ultimate Credit’s case, AFCA issued a $500 determination against the company on 6 February 2024, which it did not pay. CSLR compensated the consumer on 14 August 2024, leading ASIC to cancel Ultimate Credit’s licence on 10 September 2024. Similarly, Worry Free Finance failed to pay a $22,001 AFCA determination from 13 February 2022, and CSLR compensated the consumer on 29 August 2024. ASIC cancelled Worry Free’s licence on 12 September 2024. ASIC’s cancellations mark the first-time credit licences have been revoked following CSLR payments.

For more, see ASIC media release here.

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Non-disclosure of potential contamination not misleading conduct or misrepresentation (191 Bells Pty Ltd v WJ & HL Crittle Pty Ltd)

Date: 25 September 2024
Court: Supreme Court of New South Wales — Court of Appeal
Judge(s): Ward P, Payne and Stern JJA
Judgment date: 16 September 2024
Catchwords: Misleading or deceptive conduct — Reasonable expectation of disclosure — Whether positive representations made on contamination status — Whether disclosures amounted to half-truths
Sale and purchase of land — Whether positive obligation to disclose actual or potential contamination — Construction of contractual obligations — Exclusivity agreement and contract of sale warranties

Abstract:

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ACCC commence proceedings against Woolworths and Coles for allegedly misleading consumers through discount pricing claims

Date: 24 September 2024
Source: Australian Competition and Consumer Commission

The Australian Competition and Consumer Commission (ACCC) has commenced separate Federal Court proceedings against Woolworths Group Ltd (Woolworths) and Coles Supermarkets Australia Pty Ltd (Coles) for allegedly misleading consumers through discount pricing claims on supermarket products in breach of the Australian Consumer Law (ACL).

The ACCC has alleged that false or misleading representations were made to consumers by Woolworths on 266 products between September 2021 and May 2023 and by Coles on 245 products between February 2022 and May 2023.

Woolworths and Coles are the first and second largest supermarket chains in Australia, respectively. Woolworths ran a “Prices Dropped” promotion that offered customers consistently low shelf prices on a particular product. Coles operated a similar “Down Down” program on frequently purchased products. Both promotions involved red and white price tickets both in-store and online that displayed the initial price, the date the initial price was last offered and the discounted price.

The ACCC has alleged that Woolworths and Coles offered products at a regular price for at least 180 days before increasing the prices by…

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Digital Platform Regulators Forum release third working paper on multimodal foundation models of generative AI

Date: 23 September 2024
Source: Australian Competition and Consumer Commission

The Digital Platform Regulators Forum (DP-REG) has released its third working paper on multimodal foundation models (MFMs) and its impacts on consumer protection, competition, privacy and online safety.

MFMs are a type of generative artificial intelligence (AI) that can work with different data types, such as images, text and audio. MFMs are a significant improvement from large language models (LLMs) which process text and have potential for future adoption by businesses and consumers.

The potential harms of MFMs include:

• the difficulty of determining whether content is genuine or AI-generated without clear disclosure and labelling;
• the use of personal information by MFMs to produce highly personalised content that is more persuasive and more likely to be distributed; and
• subsequent challenges for enforcement and regulation across the competition and consumer, privacy and online safety sectors.

The DP-REG’s regulatory members recognise the specific risks of MFMs for each of their sectors:

• Australian Competition and Consumer Commission (ACCC): Scams and misleading conduct may be exacerbated by MFMs which can be used to create deepfake videos and images that misrepresent…

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ASIC releases 2023-2024 report on greenwashing misconduct within the financial sector

Date: 23 September 2024
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

The Australian Securities & Investments Commission (ASIC) has released Report 791 which outlines the actions taken by the regulator between 1 April 2023, and 30 June 2024 to address greenwashing in the financial sector.

 

ASIC’s Greenwashing Interventions

ASIC's interventions during the reporting period targeted four main areas of concern:

1. Inconsistent Underlying Investments: ASIC identified several instances where underlying investments did not align with the ESG (Environmental, Social, and Governance) screens and policies disclosed to investors. This led to significant regulatory actions, including the initiation of two civil penalty proceedings and the finalisation of one, resulting in an $11.3 million penalty against Mercer Superannuation. Additionally, ASIC issued eight infringement notices and secured 37 corrective disclosure outcomes across various sectors, including listed companies, investment managers, and superannuation trustees.
2. Unsubstantiated Sustainability Claims: ASIC found that several entities made sustainability-related claims without reasonable grounds, leading to potential harm to investors. These claims included overstated environmental impacts and misleading statements about investment exclusions. For example, Future Super was fined for claiming that its entire $400 million fund had been moved…

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Greens to introduce Bill to make price gouging illegal

Date: 13 September 2024
Source: Parliament of Australia

The Greens will introduce a new Bill aimed to target corporations that abuse their market power and charge unreasonable prices. The proposed laws will mirror provisions in the European Union that protect consumers from price gouging.

Under the Bill, the Australian Competition and Consumer Commission (ACCC) will have the power to apply to the Court for an order where a corporation is believed to have engaged in price gouging.

If illegal price gouging is found, the Court can make orders under s 76 of the Competition and Consumer Act 2010 (Cth) (Competition and Consumer Act). The ACCC can also accept an enforceable undertaking under s 87(b) of the Competition and Consumer Act.

See the media release on the Parliament of Australia’s website here.

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Consultation on exposure draft legislation for the Scams Prevention Framework opens

Date: 13 September 2024
Source: The Treasury

The Australian Government has released the draft legislation for the implementation of the Scams Prevention Framework (Framework) and its explanatory materials.

The Framework is a multifaceted approach to protect Australian consumers from scams and aims to require service providers to comply with overarching principles regarding:

• governance arrangements relating to scams; and
• detecting, reporting, disrupting, preventing and responding to scams.

The Framework involves heavy penalties for non-compliance and pathways for consumers to resolve disputes and seek redress.

The Minister for Financial Services has stated that the Framework will first apply to the banking and telecommunication sectors, as well as digital platform service providers starting with providers of social media, direct messaging services and paid search engine advertising.

The Treasury is seeking submissions on the effectiveness of the draft legislation to implement the Framework and of the draft explanatory materials in explaining the policy context and operation of the proposed new law to stakeholders.

The consultation closes on 4 October 2024.

See the Treasury’s website for more information on the consultation here.

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ASIC enforcement and regulatory update: January to June 2024 (Report 794)

Date: 11 September 2024
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

ASIC has released its Enforcement and Regulatory Update (Report 794), detailing its key actions and policy developments from January to June 2024. The report outlines enforcement and regulatory actions taken by ASIC aimed at strengthening the safety and integrity of the financial system and protecting consumers and includes a regulatory developments timetable and case studies by sector.

 

Consumer Protection

ASIC reinforced its commitment to protecting consumers, especially those vulnerable to financial harm. ASIC noted that it took significant action against entities involved in predatory lending practices, misleading conduct, and greenwashing. For example, ASIC targeted crypto-asset businesses, emphasising the importance of ensuring that providers of financial products have the required Australian Financial Services (AFS) licenses.

The regulator also flagged issues in the superannuation sector, particularly in relation to persistently underperforming investment options that eroded members' savings. ASIC highlighted that that it will soon publish the results of its surveillance into how superannuation funds are handling death benefit claims, reflecting its ongoing focus on accountability in the sector. ASIC also noted that their actions have led to criminal convictions…

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Consultation on the proposed mandatory guardrails for the safe and responsible use of AI in Australia opens

Date: 10 September 2024
Source: Department of Industry, Science and Resources

The Department of Industry, Science and Resources (Department) is seeking feedback on the mandatory guardrails for the use of artificial intelligence (AI) following the release of the proposals paper on “Safe and responsible AI in Australia”.

 

Principles for defining high-risk AI

The consultation will seek feedback on the proposed approach to defining high-risk AI into two broad categories that relate to:

• uses of AI systems or general-purpose AI (GPAI) models that are known and foreseeable; and
• advanced and highly capable GPAI models where all possible applications and risks cannot be foreseen.

In designating AI as high-risk based on intended and foreseeable uses, the proposed considerations include the risks of adverse impacts to human rights, health and safety as well as the wider legal, systemic impacts to the broader Australian society, environment, economy and rule of law.

 

Mandatory guardrails for safe and responsible AI use

The 10 proposed mandatory guardrails aim to address harms and risks from AI, provide greater regulatory certainty for businesses and foster public trust. The proposed guardrails would require…

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ACCC release guidelines informing telcos on the exercise of its infringement notice powers

Date: 9 September 2024
Source: Australian Competition and Consumer Commission

The Australian Competition and Consumer Commission (ACCC) has issued the ACCC Telecommunications (Infringement Notices) Guidelines 2024 (Cth) (Guidelines) under s 572M(5) of the Telecommunications Act 1997 (Cth) (Telecommunications Act) to help telcos understand its infringement notice powers in the event of non-compliance with the carrier separation rules.

The carrier separation rules mean that a superfast broadband network operator cannot supply retail services over its network unless an exemption has been sought from the ACCC. The Guidelines support the ACCC to quickly respond to non-compliance within the telecommunications industry. Section 8.2 of the Guidelines list the discretionary matters that an authorised infringement notice officer would consider in exercising their power to give infringement notices, including the objects underlying the Telecommunications Act and:

• the nature, seriousness and circumstances of the conduct;
• the duration of the conduct and if it is ongoing;
• the impact of the conduct;
• the corporate culture of compliance of the person; and
• the need for specific and general education or deterrence.

The Guidelines follow the Telecommunications Legislation Amendment (Enhancing Consumer Safeguards and Other Measures) Act 2024…

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APCO release 2030 Strategic Plan to support national packaging targets

Date: 28 August 2024
Source: Australian Packaging Covenant Organisation

The Australian Packaging Covenant Organisation (APCO) has released its 2030 Strategic Plan (Plan) to establish mechanisms to support national packaging targets and provide increased incentives for brands using packaging to promote sustainability.

The APCO will establish a new fee model to incentivise brand owners towards the reuse, reduction and recovery of packaging and transitioning into using Australian recycled content and other materials that are easier to recycle.

The key strategies of the Plan include:

• Designing packaging for reduction, reuse and recovery by ensuring packaging design requirements are informed by industry trends, annually refreshing the sustainable packaging guidelines and adjusting APCO member fees to provide financial incentives to recycle.
• Increasing the use of reuse systems and recycling correctly by helping consumers understand how to correctly recycle packaging and avoid littering, and by assisting supply chain participants to understand the business case for reuse and recovery of packaging.
• Ensuring systems for reuse and recovery are established for all types of packaging with improved data and insights on recovery systems to support stakeholder decision-making.

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Government aims to uphold consumer protection and maintain a competitive aviation sector in Aviation White Paper

Date: 26 August 2024
Source: Department of Infrastructure, Transport, Regional Development, Communications and the Arts

The Australian Government has released the Aviation White Paper (Paper) stating its aims to ensure a safe, productive, competitive and sustainable aviation sector towards 2050.

The release of the Paper follows extensive consultations on issues raised in the Aviation Green Paper. The Paper lists 56 new policy initiatives that the Australian Government plan to implement across 10 key areas and will conduct a formal evaluation of in 2029.

 

Strengthening the passenger experience

The Australian Government is dedicated to ensuring fairness across the aviation industry with a focus on clearly stating and upholding consumer rights and providing efficient dispute resolution. Some initiatives include:

• Legislating an Aviation Industry Ombus Scheme to provide guidance on appropriate consumer conduct by airports and airlines, independently report on the aviation industry’s complaints handing, make recommendations for policy change and refer systemic misconduct that may fall under the Competition and Consumer Act 2010 (Cth) to the Australian Competition and Consumer Commission (ACCC).
• Establishing an Aviation Customer Rights Charter establishing guidelines for fair and appropriate customer treatment by airlines and airports in relation to customer service, certainty about flight cancellations and delays, disrupted journeys and fare issues.

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Consultation on further extension of small business exemption from responsible lending obligations

Date: 14 August 2024
Source: Treasury.gov.au

The Federal Government has released for consultation draft regulations to extend the small business exemption from responsible lending obligations (RLOs) under the National Consumer Credit Protection Act 2009 (NCCP Act) for another two years until 3 October 2026.

The RLOs set out in Chapter 3 of the NCCP Act and in the National Consumer Credit Protection Regulations 2010 require lenders to give certain documents and information to consumers to assist them in making decisions about dealing with their lender and understanding their rights and the credit services being provided to them. While these obligations generally do not apply to business and commercial lending, they apply to mixed-purpose loans (eg where a small business or sole trader applies for a single loan that may have both personal and commercial benefits) where the predominant purpose is not business-related.

In April 2020, a temporary exemption was introduced to exempt small business loans from RLOs if there is a genuine business purpose that is not minor or incidental. This exemption has been extended three times and is currently set to expire on 3 October 2024. For the purposes of the exemption, a small business is one that has less than 100 employees or revenue of $5 million or less in the previous financial year.

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Federal Court imposes $10.95 million penalty on Secure Parking for misleading representations about parking services (ACCC v Secure Parking Pty Ltd)

Date: 8 August 2024
Court: Federal Court of Australia
Judge: Perram J
Judgment date: 8 August 2024
Catchwords: CONSUMER LAW - misleading or deceptive conduct - false representations - parking reservation service - Australian Consumer Law contraventions - appropriate penalty

Abstract:

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ASIC greenwashing victory against Mercer Superannuation

Date: 8 August 2024
Court: Federal Court of Australia
Judge: Horan J
Judgment date: 2 August 2024
Catchwords: Corporations — False and misleading statements — Greenwashing — Pecuniary penalties

Background:

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ACCC confirms topics for final report of the Digital Platforms Services Inquiry

Date: 29 July 2024
Source: Australian Competition and Consumer Commission

The Australian Competition and Consumer Commission (ACCC) has released an issues paper for its Digital Platform Services Inquiry (DPSI) summarising the main topics that the report will focus on.

The main topics for the final report include:

• recent international regulatory and legislative developments and their impact on competition and consumers;
• major market developments and key trends for digital platform services; and
• potential and emerging competition and consumer issues.

The issues paper details recent international regulatory and legislative developments in the European Union, India, Germany, South Korea, Japan and the United Kingdom. The final report will likely provide more insight on other jurisdictions and include developments leading up to the report’s publication.

The ACCC also intends to provide updated information on topics of its earlier DPSI reports on online private messaging and app marketplaces and invites interested parties to share their views on existing and upcoming developments or key trends in these services and markets.

The scope of the ACCC’s considerations will also cover:

• potential competition and consumer issues in online gaming markets and cloud computing services; and
• concerns regarding generative AI’s impacts on impacting the ability of new entrants to compete with digital platform services that use it and how it can increase consumer interaction with particular platforms.

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American Express fined $8 million for breach of design and distribution obligations (Australian Securities and Investments Commission v American Express Australia Limited)

Date: 19 July 2024
Court: Federal Court of Australia
Judge: Jackman J
Judgment date: 19 July 2024
Catchwords: CORPORATIONS — Design and distribution obligations — Target market determinations — Knowledge requirements for review triggers — s 994C, Corporations Act 2001 (Cth) (Corporations Act)

Abstract:

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Telstra pays $1.5M penalty for failure to verify customer identity in high-risk transactions

Date: 18 July 2024
Source: Australian Communications and Media Authority

Telstra Ltd (Telstra) has paid a $1,551,000 penalty after failing to use the multi-factor ID authentication processes for high-risk customer interactions and placing customers at risk for SIM-swap scams, password resets and other mobile fraud.

Telstra is a carriage service provider with responsibilities under the Telecommunications Service Provider (Customer Identity Authentication) Determination 2022 (Cth) (Determination). Under s 11 of the Determination, Telstra was required to confirm the identity of the requesting person in a high-risk customer transaction.

An Australian Communications and Media Authority (ACMA) investigation found that between August 2022 and April 2023, Telstra failed to use identity verification in 168,000 high-risk customer interactions. The ACMA issued an infringement notice under s 572E of the Telecommunications Act 1997 (Cth) for these contraventions and Telstra has paid the penalty specified in the notice.

The ACMA has also accepted an enforceable undertaking from Telstra for a period of two years, pursuant to which the telco agreed to:

• appoint an independent reviewer to report on Telstra’s compliance controls and recommend any changes necessary;

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PayPal’s business account contracts found to contain unfair “fee error” term (Australian Securities and Investments Commission v PayPal Australia Pty Ltd)

Date: 17 July 2024
Court: Federal Court of Australia
Judge: Moshinsky J
Judgment date: 4 July 2024
Catchwords: CORPORATIONS – unfair contract terms – small business contracts – financial products – term permitting retention of erroneously charged fees unless notified within 60 days – significant imbalance – not reasonably necessary to protect legitimate interests – detriment

Abstract:

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Davie Clothing pays $101,280 in penalties for alleged failure to include high fire danger warning labels on Kids Beach Oodies

Date: 17 July 2024
Source: Australian Competition and Consumer Commission

Abstract:

Davie Clothing Pty Ltd (Davie Clothing), supplier of the ‘Oodie’ brand, has paid $101,280 in penalties for its alleged failure to comply with the Consumer Goods (Children’s Nightwear and Limited Daywear and Paper Patterns for Children’s Nightwear) Safety Standard 2017 (Cth) (Safety Standard).

Background

Davie Clothing is an online retailer that sold wearable blankets called Oodies. Between 29 September 2022 and 14 July 2023, Davie Clothing sold 2,460 garments directly to Australian consumers via the Oodie website.

Infringement notices

Following a consumer complaint, an investigation by the Australian Competition and Consumer Commission (ACCC) found that Davie Clothing had supplied six styles of the Kids Beach Oodie without high fire danger warning labels affixed to the product or displayed on the product website in contravention of the Safety Standard. The ACCC issued six infringement notices for the alleged contraventions of s 106 of the Australian Consumer Law (ACL) and Davie Clothing has paid the penalties specified in the notices.

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Banks to refund over $28 million following ASIC investigation

Date: 17 July 2024
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

ASIC has released Report 785 Better banking for indigenous consumers. The report provides findings from an investigation undertaken by ASIC which focussed on the availability and use of basic or low -fee bank accounts by low- income customers, including First Nations people. The investigation revealed that certain banks had been charging high fees to about two million low-income Australians who, under Chapter 15 of the Banking Code of Practice 2021 were entitled to access low- fee accounts. Low-fee accounts have features such as free direct debits and unlimited transactions within Australia with no account keeping fees, free statements and no overdraw or dishonour fees. As a result of the review several major banks have been prompted to refund over $28 million to low-income customers, including many First Nations individuals.

ASIC made the following recommendations to banks participating in their investigation and noted that other banks should take similar steps to identify customers who could benefit from low-fee accounts and implement processes to move customers on low incomes to accounts that better meet their needs.

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ACCC releases guidance on designated complaints

Date: 15 July 2024
Source: Australian Communications and Media Authority (ACMA)

The Australian Competition and Consumer Commission (ACCC) has released a guide to assist entities approved by the Minister as designated complainants in making designated complaints.

The designated complaints framework was established under amendments to the Competition and Consumer Act 2010 (Cth) (CCA) in March 2024. The ACCC’s guide provides information for entities seeking to apply to become a designated complainant and for designated complaints seeking to make a valid complaint. Designated complaints must be well-reasoned, supported by relevant information and must relate to both of the statutory requirements:

• A significant or systemic market issue that affects small businesses and consumers:
• Assessed on the extent of the impact on the involved groups of consumers, small businesses and market, and also considers the ACCC’s compliance and enforcement policy.
• A potential breach of the CCA or the ACCC’s powers or functions under the CCA.

The guide also provides insights into the process of making a designated complaint. Designated complainants are encouraged to discuss with the ACCC before submitting to allow the ACCC to provide further information or context regarding the issue and provide guidance on whether the issue is suitable for a designated complaint.

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Federal Court finds retail financial product issuer breached design and distribution obligations (Australian Securities and Investments Commission v Firstmac Limited)

Date: 10 July 2024
Court: Federal Court of Australia
Judge: Downes J
Judgment date: 10 July 2024
Catchwords: CORPORATIONS — s 994E, Corporations Act 2001 (Cth) (Corporations Act) — design and distribution obligations — obligation to take “reasonable steps” that are “reasonably likely” to result in conduct consistent with target market determination

Abstract:

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BCCC sanctions ANZ for breaching Banking Code of Practice

Date: 5 July 2024
Source: Banking Code Compliance Committee

Abstract:

The Banking Code Compliance Committee (BCCC) has sanctioned ANZ for systemic breaches of the Banking Code of Practice. From July 2019 to September 2023, ANZ failed to stop or refund fees for deceased estates and did not respond to representatives within the required 14 days. The BCCC highlighted the seriousness of these breaches, noting that ANZ took over a year to implement solutions after identifying the issues in early 2022, and nearly two years to start customer remediation, which is ongoing and expected to be completed by the end of July 2024.

ANZ's remediation efforts, involving payments to affected estates, were criticized for their lack of urgency and completeness. The BCCC's decision to publicly name ANZ was a decision chosen to reflect the severity of the non-compliance and aims to promote transparency and accountability within the banking sector.

For more, see the full BCCC investigation here and BCCC media release here.

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ACMA 2024–25 compliance priorities renews focus on telco consumer protections

Date: 1 July 2024
Source: Australian Communications and Media Authority (ACMA)

On 1 July 2024, the Australian Communications and Media Authority (ACMA) released its compliance priorities for 2024–25 with a renewed focus on protecting and supporting telco customers and ensuring industry compliance with the new Telecommunications (Financial Hardship) Industry Standard 2024 (Cth) (Telecommunications Standard).

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Federal Court orders Ferratum to pay $16m for contravention of NCCP Act

Date: 1 July 2024
Court: Federal Court of Australia
Judge: Kennet J
Judgment date: 28 June 2024
Catchwords: National Consumer Credit Protection Act 2009 (Cth)— small amount credit contracts — prohibited fees— assessment of pecuniary penalties.

Abstract:

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ACMA releases statement of expectations for businesses on the use of consumer consent in telemarketing and e-marketing

Date: 1 July 2024
Source: Australian Communications and Media Authority (ACMA)

On 1 July 2024, the Australian Communications and Media Authority (ACMA) released a statement of expectations for businesses to ensure they have obtained consumer consent prior to conducting telemarketing and e-marketing.

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Report of Senate Greenwashing inquiry delayed until November 2024

Date: 28 June 2024
Source: Federal Parliament

The reporting date for the Senate Standing Committee on Environment and Communications (Committee) inquiry into Greenwashing (Inquiry) has been extended until 20 November 2024.

The Senate referred the inquiry to the Committee in March 2023, with an initial reporting date in December 2023. That was subsequently extended until 28 June 2024 and has now been further extended until November.

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ACCC product safety priorities for 2024–25 with new focus on emerging technology and improving product safety data

Date: 27 June 2024
Source: Australian Competition and Consumer Commission (ACCC)

On 27 June 2024, Ms Gina Cass-Gottlieb, Chair of the Australian Competition and Consumer Commission (ACCC) announced the ACCC’s product safety priorities for 2024–25 at the National Consumer Congress 2024.

The ACCC’s five key priorities of product safety for 2024–25 are:

• Young children’s product safety: The ACCC will focus on developing safety standards for both toppling furniture and infant sleep products, as well as on increasing consumer awareness on infant sleep safety through a public campaign. Emerging risks will also be monitored, including the risk of choking from baby bottle self-feeding devices.
• Product safety online: The ACCC will encourage best practices from online platforms and raise awareness to reduce safety risks from goods sold online via targeted engagement with online marketplaces and collaboration with other domestic and international regulators.
• Sustainability and maintaining product safety: The ACCC will continue to support Australia’s transition to a net-zero economy by raising awareness about lithium-ion battery safety and harmonising the electrical safety regulatory framework for household electrical consumer products. Guidance on product safety issues in buying and selling second hand goods online will also be released to support safe sustainable consumption.

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Dodo Power & Gas pays penalties totalling $82,500 and provides enforceable undertaking for breaching the electricity code

Date: 27 June 2024
Source: Australian Competition and Consumer Commission (ACCC)

M2 Energy Pty Ltd, trading as Dodo Power & Gas (Dodo), has paid penalties totalling $82,500 following six infringement notices issued by the Australian Competition and Consumer Commission (ACCC) for alleged contraventions of ss 10(2), 12(2) and 13A(2) of the Competition and Consumer (Industry Code - Electricity Retail) Regulations 2019 (Cth) (Electricity Code). The ACCC has also accepted an enforceable undertaking from Dodo admitting to the alleged contraventions.

Background

Dodo is a small electricity retailer authorised under the National Energy Retail Law to sell electricity to residential and small business customers in New South Wales, South Australia and south-east Queensland. Dodo had previously paid penalties of $20,000 in 2020 for failing to promptly appoint a Metering Coordinator and of $37,800 in 2019 for alleged misleading claims about energy plan discounts.

In monitoring standard offer prices across the market, the ACCC identified the following conduct between 1 July 2022 and 22 June 2023:

• Dodo priced two standing offers for residential customers in South Australia above the relevant daily price caps, contravening s 10(2) of the Electricity Code;
• Dodo sent price change communications to 52,014 small business customers without including the necessary information, contravening s 12(2) of the Electricity Code; and
• Dodo did not record its calculations or estimates for its offered price changes, contravening s 13A(2) of the Electricity Code.

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ASIC validates improved Banking Code of Practice

Date: 27 June 2024
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

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Westpac sanctioned for breaching Banking Code in branch closure

Date: 27 June 2024
Source: Banking Code Compliance Committee (BCCC)

Abstract:

On 25 June 2024, the Banking Code Compliance Committee (BCCC) sanctioned Westpac Bank for serious and systemic breaches of the Banking Code of Practice. The investigation revealed that Westpac failed to adhere to the Australian Banking Association’s Branch Closure Protocol and its obligations under the Banking Code following the closure of its Tennant Creek branch in the Northern Territory in September 2022.

The BCCC's findings indicated that Westpac did not provide sufficient support to customers, particularly in assisting them with alternative banking services, engaging with the community, and addressing concerns promptly. This failure had a significant adverse impact on the Tennant Creek community, especially vulnerable customers such as the elderly and those with limited English proficiency.

BCCC Chair, Ian Govey AM, criticized Westpac's inadequate response and highlighted that the bank's actions were not only insufficient but also disproportionately affected vulnerable customers. The BCCC's decision to publicly sanction Westpac is the most severe measure it can impose and reflects the seriousness of the bank's failures.

This decision serves as a warning to the banking industry about the consequences of non-compliance with the Code and the critical need to consider customer needs during branch closures.

For more, see the BCCC media release here.

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Food and Grocery Code of Conduct to be made mandatory with increased penalties

Date: 24 June 2024
Source: Treasury

The Final Report for the Independent Review of the Food and Grocery Code of Conduct has recommended that the Food and Grocery Code of Conduct (Code) is made mandatory to address the market power imbalance between supermarkets and their suppliers. The proposed penalty regime would require amendments to the Competition and Consumer Act 2010 (Cth) and, if implemented, would carry the heaviest penalties for any industry code.

Following the findings of the earlier Interim Report (see our previous Latest Legal Update here), the Final Report proposes 11 recommendations in support of making the Code mandatory and applicable to all supermarkets, including online supermarkets, with annual revenues over $5 billion. All suppliers are proposed to be automatically covered by the Code.

The government’s response to the Final Report is available here and supports all 11 recommendations.

Penalties

The Final Report proposes that maximum penalties for more harmful breaches of the code should be the greatest of:

• $10 million;
• three times the benefit gained from the breach; or
• 10% of a supermarket’s annual turnover in the past 12 months (where the benefit cannot be determined).

The maximum penalty for other breaches is proposed at 3,200 penalty units (currently $1,001,600). For infringement notices for contraventions of the Code, the Final Report recommends an increase from the usual 50 penalty units applicable across industry codes to 600 penalty units (currently $187,000).

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Two novelty toy suppliers each pay $49,500 in penalties for alleged non-compliance with button battery safety standard

Date: 19 June 2024
Source: Australian Competition and Consumer Commission

Abstract:

Both MDI International Pty Ltd (MDI), a supplier of novelty toys, and TEEG Australia Pty Ltd (TEEG), the owner and operator of Kingpin, Timezone and Zone Bowling, have paid pecuniary penalties totalling $49,500 each to the Australian Competition and Consumer Commission (ACCC) for failing to comply with testing requirements of the button battery safety standard in breach of s 106(1) of the Australian Consumer Law (ACL).

Three novelty toy products containing button batteries, the World’s Smallest Alarm Clock, the Pocket Fart Gun and the Sonic Spinner were redeemable as prizes at TEEG venues in exchange for points gained through games played.

From July 2022 to June 2023, MDI had supplied TEEG with around 10,000 units of these three types of novelty toy products but had failed to complete adequate required product testing to ensure that the battery did not release. Approximately 5,000 toys were then on-supplied by TEEG to consumers.

The ACCC issued three infringement notices (one covering each product) to MDI and TEEG for the alleged non-compliance with the Consumer Goods (Products Containing Button/Coin Batteries) Safety Standard and both businesses have complied with the notices. MDI recalled the World’s Smallest Alarm Clock in February 2024 and TEEG stopped selling the toys in mid-2023 and recalled the other two products in April 2024.

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Court determines lender’s offer letter not a standard form contract and outside scope of UCT regime in DCZ Early Learning v Semper Mortgage Management

Date: 12 June 2024
Court: Supreme Court of Queensland
Judge(s): Freeburn J
Judgment date: 7 June 2024
Catchwords: Unfair contract terms-standard form contract-letter of offer

Abstract:

An indicative letter of offer (Offer letter) was determined to be outside the scope of the unfair contract terms (UCT) regime because the Offer letter was not a ‘standard form contract’ for the purposes of s 12BA of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).

Certain boilerplate contract terms which imposed liability on potential borrowers for various fees at the time of signing the Offer letter (regardless of whether a loan was made) were considered not to be unfair under s 12BG of the ASIC Act.

Background

DCZ Early Learning Pty Ltd (DCZ) as borrower signed an Offer letter issued by Semper Mortgage Management Pty Ltd (Semper) as lender for the purpose of obtaining funding to assist with the purchase of a childcare business. The loan did not proceed.

Under the terms of the Offer letter DCZ was liable to pay Semper various fees including establishment fees, administration fees and broker fees. The liability to pay the relevant fees arose at the time the Offer letter was signed.

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Bill to regulate BNPL industry under consumer credit regime introduced into Parliament

Date: 5 June 2024
Source: The Hon Stephen Jones MP

The Government has introduced into Parliament new legislation to protect consumers of Buy Now Pay Later (BNPL) services by extending the application of the National Consumer Credit Protection Act 2009 (Cth) (Credit Act) to provisions of credit under BNPL arrangements.

Unlike other forms of credit such as loans and credit cards, most BNPL services are not presently covered by the Credit Act are not subject to the same consumer protections nor offer the same access to effective hardship and dispute resolution processes.

The Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024 (Cth) (Bill) would:

• *amend the Credit Act to require BNPL providers to hold an Australian credit licence;
• *require BNPL operators to comply with existing credit laws regulated by ASIC; and
• *establish a new “low cost credit” category under the Credit Act that acknowledges the low risk and cost of BNPL in comparison to other regulated credit.

The reforms balance the recognised impact of the BNPL industry on boosting competition within credit markets with consumer protection and their ability to access to small amounts of credit and were subject to industry consultation by Treasury in March and April of this year.

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ASIC Commissioner indicates ASIC’s compliance priorities

Date: 29 May 2024
Source: Australian Securities and Investments Commission

Abstract:

Australian Securities and Investments Commission (ASIC) Commissioner Alan Kirkland has outlined ASIC’s compliance priorities for the financial services field in a speech delivered to the Australian Finance Industry Association Risk Summit 2024. The areas of focus are centred on key issues affecting consumers including the rising cost of living, climate change and technological advancement.

With these areas in mind, ASIC will target behaviours affecting consumers such as:

• home loan lenders’ compliance with financial hardship obligations (following the findings revealed in a review of practices of 10 large lenders);
• high-cost credit facilities and predatory lending practices;
• misconduct in used car financing; and
• misconduct impacting First Nation people and vulnerable consumers.

ASIC is also focused on how corporations deal with technological risk relating artificial intelligence, cyber security and financial scams.

See the full text of the speech here.

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ASIC succeeds in case against BSF Solutions and Cigno Australia

Date: 28 May 2024
Court: Federal Court of Australia
Judge(s): Jackman J
Judgement date: 24 May 2024
Catchwords: Consumer Law-National Consumer Credit Protection Act- credit activity without a licence-charges made for providing credit
Consumer Law- accessory liability-directors actual knowledge of essential facts

Abstract:

BSF Solutions Pty Ltd (BSF) and Cigno Australia Pty Ltd (Cigno) each contravened s 29(1) of the National Consumer Credit Protection Act 2009 (Cth) (Act) by engaging in credit activities without holding an Australian Credit Licence (ACL). The directors of BSF and Cigno were involved in the contraventions and accordingly by virtue of s 169(b) of the Act, they themselves also contravened s 29(1). The court ordered that so long as each of BSF, Cigno and their respective directors do not hold an ACL they be permanently restrained from demanding, receiving or accepting fees, charges or other amounts from consumers (including amounts of principal) in respect of certain loan and related service agreements entered into.

Background:

Cigno and BSF implemented a lending business model whereby Cigno marketed small loans to consumers (described as No Upfront Charge Loans), processed loan applications and managed repayments and BSF advanced those loans to consumers. Pursuant to the model BSF required consumers to enter into a loan agreement the terms of which did not include any fees or interest charges.

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Southern Phone pays $244,140 penalty for inadequate handling of customer complaints

Date: 22 May 2024
Source: Australian Communications and Media Authority

Southern Phone Co Ltd (Southern Phone) has paid a $244,140 penalty for its inadequate handling of customer complaints on 77 occasions between April and June 2023 in breach of the Telecommunications (Consumer Complaints Handling) Industry Standard 2018 (Cth) (Consumer Complaints Handling Standard). The Australian Communications and Media Authority (ACMA) has also accepted a two-year undertaking from Southern Phone to appoint an independent auditor to review systems for compliance with the Consumer Complaints Handling Standard and implement effective systems, processes and practices in line with recommendations.

Under s 521(2) of the Telecommunications Act 1997 (Cth), Southern Phone was sent a notice on 11 September after the ACMA had considered information provided for the June 2023 quarter that led to suspicions that Southern Phone may not have adequately resolved complaints. Southern Phone was unable to readily identify all the information required by the notice and stated that in some cases it did not exist.

Between 1 April 2023 and 30 June 2023, the ACMA’s investigation found that Southern Phone contravened the Consumer Complaints Handling Standard when it:

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Pizza Hut pays $2.5M penalty for sending over 10 million spam texts

Date: 20 May 2024
Source: Australian Communications and Media Authority

Pizza Pan Group Pty Ltd (Pizza Hut) has paid a $2,502,500 penalty for sending over 10 million marketing communications from 1 January 2023 to 4 May 2023 in breach of the Spam Act 2003 (Cth) (Spam Act). The Australian Communications and Media Authority (ACMA) has also accepted a three-year undertaking from Pizza Hut to appoint an independent consultant to report on Spam Act compliance and provide training to all relevant staff.

The ACMA had received complaints that Pizza Hut sent messages without a functional unsubscribe facility. From February 2021 to April 2023, the ACMA issued 15 compliance alerts to Pizza Hut regarding 39 customer complaints, notifying the potential of its non-compliance with the Spam Act. Under s 522 of the Telecommunications Act 1997 (Cth), Pizza Hut was sent a notice on 4 May 2023 requiring it to provide information and documents to investigate these complaints.

The ACMA’s investigation found that, from 1 January 2023 to 4 May 2023, Pizza Hut sent the following commercial electronic messages:

• 5,941,109 messages without the recipient’s consent or over 5 business days after their request to unsubscribe in contravention of s 16(1) of the Spam Act;
• 4,364,971 messages without a functional unsubscribe facility in contravention of s 18(1) of the Spam Act;

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ASIC report calls for better hardship support from lenders

Date: 20 May 2024
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

On 20 May 2024, ASIC released a report titled Hardship, hard to get help: lenders fall short in financial hardship support (REP 783), highlighting shortcomings among home loan lenders in supporting Australians facing financial difficulties. Overall, the report found that lenders need to do more to ensure that customers are consistently and appropriately supported.

The review of ten large home lenders revealed that 35% of Australians abandoned the financial assistance application process and 40% of customers who received assistance fell into arrears immediately after the assistance period ended. Poor practices highlighted in the report included:

• lenders not making it easy for customers to give a hardship notice;
• assessment processes being difficult for customers;
• lenders not communicating effectively with customers; and
• vulnerable customers often not being well supported.

The report found that lenders often adopted standardised approaches to hardship requests, had unduly burdensome assessment procedures, and provided inadequate support for vulnerable customers, including those experiencing family violence. Seven of the reviewed lenders had improvement programs in place, but ASIC stressed that material improvements are needed. Lenders are expected to prepare specific plans to address the issues raised in the report.

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New mandatory information standard to warn on dangers of toppling furniture

Date: 8 May 2024
Source: Australian Competition and Consumer Commission

Following recommendations made by the Australian Competition and Consumer Commission (ACCC), the Assistant Treasurer released the Consumer Goods (Toppling Furniture) Information Standard 2024 (Cth) (Standard), prescribed under s 134 of the Australian Consumer Law (ACL). The Standard requires furniture suppliers to provide consumers with safety warnings about the dangers of freestanding furniture toppling over from 4 May 2025.

The Standard applies to the following three categories of furniture:

• clothing storage units or bookcases with a height of 686 mm or more;
• entertainment units of any height; and
• hall tables, display cabinets, buffets and sideboards with a height of 686 mm or more.

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Government agrees to implement recommendations from Independent Review of Franchising Code of Conduct

Date: 7 May 2024
Source: Treasury

The Australian Government has released its response to the Independent Review of the Franchising Code of Conduct (Review) conducted by Dr Michael Schaper. The Review made 23 recommendations to improve the operation of the Franchising Code of Conduct (Code) and the broader franchising regulatory framework.

The Government has agreed to all the Review’s recommendations (with two recommendations agreed to “in principle”). In broad terms, the recommendations aim to enhance protections for franchisees, reduce compliance burden for franchisors and franchisees, and improve access to justice.

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Federal Court orders Macquarie Bank to pay $10M penalty for unauthorised customer account withdrawals (full judgment update)

Court: Federal Court of Australia
Judge(s): Wigney J
Judgement date: 19 April 2024
Catchwords: s 912A of the Corporations Act 2001 (Cth) contraventions — unauthorised customer account withdrawals — lack of adequate systems to prevent or detect fraudulent transactions by third parties — liability — agreed penalty — regulator standing to enforce civil penalty provisions for failure to have appropriate controls in place by financial services providers

Abstract:

In proceeding brought by the Australian Securities and Investments Commission (ASIC), the Federal Court has ordered Macquarie Bank Ltd (Macquarie) to pay a penalty of $10 million for failing to have effective controls preventing unauthorised fee transactions by third parties on customer accounts, in contravention of s 912A(1)(a) and (5A) of the Corporations Act 2001 (Cth).

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Qantas and ACCC agree on $100M penalty to settle Federal Court proceedings relating to cancelled flights; Qantas also provides undertaking to pay $20M in consumer compensation

Date: 6 May 2024
Source: Australian Competition and Consumer Commission

The Australian Competition and Consumer Commission (ACCC) has reached an agreement with Qantas to seek Federal Court orders imposing a $100 million pecuniary penalty for misleading consumers in advertising tickets for cancelled flights. Qantas has also provided the regulator with a court-enforceable undertaking to pay approximately $20 million in compensation to 86,697 affected customers.

Proposed settlement of Federal Court proceedings

As outlined in our previous Latest Legal Update, the ACCC brought Federal Court proceedings against Qantas in August 2023, alleging that between 21 May 2021 and 26 August 2023, the airline continued to offer for sale tickets on flights that it had already cancelled, and to display details of these flights on the ‘Manage Booking’ page of its online portal for customers who had purchased tickets for such flights with no notification of their cancellation. The ACCC argued that in doing so, Qantas had made false and misleading representations to customers that scheduled flights were still available and that it would use reasonable endeavours to operate them and thus contravened s 18, 29(1)(b) and 29(1)(g) of the Australian Consumer Law (ACL).

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Federal Court’s first ruling against a non-cash payment facility involving crypto

Court: Federal Court of Australia
Judge(s): Downes J
Judgement date: 3 May 2024
Catchwords: s 911A of the Corporations Act 2001 (Cth) contraventions — exemptions from holding an Australian Financial Services Licence — non-cash payment facility — digital currency and crypto assets — authorised representative — financial product and financial product advice — ss 12DA and 12DB of the Australian Securities and Investments Commission Act 2001 (Cth) contraventions — promotion of non-cash payment facility involving crypto — false or misleading representations —misleading or deceptive conduct of the Corporations Act 2001 (Cth) contraventions — unauthorised customer account withdrawals — lack of adequate systems to prevent or detect fraudulent transactions by third parties — liability — agreed penalty — regulator standing to enforce civil penalty provisions for failure to have appropriate controls in place by financial services providers

Abstract:

In proceeding brought by the Australian Securities and Investments Commission (ASIC), the Federal Court has declared that BPS Financial Pty Ltd (BPS) contravened s 911A(1) and 911A(5B) of the Corporations Act 2001 (Cth) (Corporations Act) and ss 12DA(1), 12DB(1)(a) and 12DB(1)(e) of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) in respect of a non-cash payment facility that relates to the “Qoin” crypto-asset tokens and digital wallets (together as “Qoin Facility”), which BPS established in 2020.

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Review of Australia’s credit reporting framework

Date: 29 April 2024
Source: Attorney-General's Department

On 26 April 2024 the Australian Government released an issues paper inviting feedback on the performance of Australia’s credit reporting framework for the purpose of developing recommendations for government to improve the framework’s overall operation.

The issues paper forms part of an independent statutory review of:

• credit reporting provisions in Part 111A of the Privacy Act 1988 (Cth); and
• mandatory credit reporting provisions in Part 3-2CA of the National Consumer Credit Protection Act 2009 (Cth).

The paper canvases issues including:

• whether to expand mandatory credit reporting to all credit providers, including but not limited to smaller ADIs, non- bank lenders, BNPL providers, pay day lenders and consumer lessors;

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ASIC orders retailer to end Centrepay credit arrangements

Date: 26 April 2024
Source: Australian Securities & Investments Commission (ASIC)

The Australian Securities and Investments Commission (ASIC) has ordered that Coral Coast Distributors (Cairns) Pty Ltd (Coral Coast) can no longer sign up customers into credit agreements for purchases through Centrepay deferred deductions arrangements in its Urban Rampage stores. This is the first time ASIC has issued a final stop order under the design and distribution obligations (DDO) regime.

ASIC previously made an interim stop order preventing Coral Coast from entering into new credit agreements via Centrepay. The stop order was initially in place for 21 days, before being extended while an ASIC delegate made a final determination.

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Federal Court orders Macquarie Bank to pay $10M penalty for unauthorised customer account withdrawals

Date: 22 April 2024
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

Macquarie Bank Ltd (Macquarie) has been ordered by the Federal Court to pay a $10 million penalty for its failure to establish effective controls preventing unauthorised fee transactions by third parties on customer accounts in contravention of s 912A(1)(a) and (5A) of the Corporations Act 2001 (Cth).

The Federal Court found that, between 1 May 2016 and 15 January 2020, Macquarie had failed to implement effective controls to prevent or detect transactions conducted by third parties through Macquarie’s bulk transacting system, which were outside the scope of their authority that only permitted them to withdraw their fees from their client’s Cash management accounts, such as the fraudulent transactions made by financial adviser, Ross Hopkins.

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ASIC appeals Federal Court decision against finding of unfair contract terms in Auto & General’s insurance contracts

Date: 19 April 2024
Source: Australian Securities and Investments Commission

The Australian Securities and Investments Commission (ASIC) has appealed the Federal Court’s decision to dismiss proceedings against Auto & General Insurance Co Ltd (A&G) in relation to alleged unfair contract terms under the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).

ASIC had alleged that a term in A&G’s insurance contracts was unfair for requiring policyholders to notify it if “anything changes about your home or contents” and that a failure to provide a notification may allow A&G to reduce or refuse to pay claims, cancel or not offer to renew their contracts.

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ACCC initiates greenwashing proceedings against GLAD bags manufacturer

Date: 18 April 2024
Source: Australian Competition and Consumer Commission

The Australian Competition and Consumer Commission (ACCC) has initiated proceedings against Clorox Australia Pty Ltd (Clorox) for the alleged false or misleading representations that its GLAD-branded kitchen tidy bags and garbage bags were made from 50% recycled ‘ocean plastic’ when the bags were instead made from plastic not sourced from the ocean or sea.

Clorox is a manufacturer, supplier and marketer of food care and waste disposal products to supermarkets and online retailers. During the period of June 2021 to July 2023, Clorox supplied GLAD-kitchen tidy bags and garbage bags which were blue in colour and had a “wave top” design.

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Federal Court finds Sunshine Loans charged prohibited amendment or rescheduling fees in SACC loans (Australian Securities and Investments Commission v SunshineLoans Pty Ltd (No 2))

Date: 15 April 2024
Court: Federal Court of Australia
Judge(s): Derrington J
Judgment date: 12 April 2024
Catchwords: s 47(1)(d) National Consumer Credit Protection Act 2009 (Cth) and ss 24(1A)(a) and (b) National Credit Code contraventions — small amount credit contracts — permitted fees — liability — regulator standing to enforce civil penalty provisions in the National Credit Code

Abstract:

In proceedings brought by the Australian Securities and Investments Commission (ASIC), the Federal Court has found SunshineLoans Pty Ltd (Sunshine Loans) liable for charging customers who entered into small amount credit contracts (SACCs) amendment and rescheduling fees that are prohibited under the National Credit Code (Code). A further hearing will be held to determine relief and penalties.

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Federal Court finds DG Institute made false or misleading representations, sole director knowingly concerned in contraventions (Australian Competition and Consumer Commission v Master Wealth Control Pty Ltd)

Date:10 April 2024
Court: Federal Court of Australia
Judge(s): Jackman J
Judgment date: 9 April 2024
Catchwords: Consumer law – misleading and deceptive conduct – accessorial liability

Abstract:

The Federal Court has found Master Wealth Control Pty Ltd (Master Wealth Control), trading as DG Institute, made false or misleading representations in the promotion and sale of two education programs for control of wealth. Its director, Ms Dominique Grubisa, was also found liable for aiding, abetting and procuring contraventions and being knowingly concerned in and party to the contraventions.

Background

DG Institute offered two education programs relating to property and business investment to consumers called Real Estate Rescue (RER) and Master Wealth Control (MWC) from April 2017 to November 2022. Both programs were promoted through free in-person and online seminars and in videos featuring Ms Grubisa on its website.

During this period, at least 1,900 and 1,800 students were enrolled in the RER and MWC programs respectively and each paid between $4,500 to $9,200 to participate. DG Institute earned a total of over $18 million in revenue from both programs.

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CCA amendments establishing designated complaints function for ACCC to commence 1 May 2024

Date: 9 April 2024
Source: Parliament of Australia

Abstract:

The Competition and Consumer Amendment (Fair Go for Consumers and Small Business Act 2024 (Cth) (Act) passed both houses of Parliament on 26 March and received Royal Assent on 8 April 2024. It will commence operation on 1 May 2024.

The Act amends the Competition and Consumer Act 2010 (Cth) (CCA) to insert a new Part XIE which establishes a designated complaints framework, allowing consumer and small business advocacy groups approved by the Minister to submit designated complaints to the Australian Competition and Consumer Commission on issues of significant or systemic market issue affecting consumers and/or small businesses, or relating to breaches of the Australian Consumer Law (ACL) or the CCA.

The ACCC must respond to designated complaints publicly within 90 days and indicate whether or not it will take further action on them. If it determines that further action is warranted, it must set out the proposed action, commence undertaking it within 6 months and then report on the outcome.

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EU Directive on Empowering Consumers for the Green Transition comes into force

Date: 4 April 2024
Source: European Commission

On 27 March 2024, the new European Union (EU) Directive on Empowering Consumers for the Green Transition (Directive) entered into force. The rules empower consumers for the green transition by ensuring better information on durability and reparability of goods and consumer guarantee rights are provided at the point of sale, and aims to prevent greenwashing and early obsolescence practices.

The Directive amends the existing Consumer Rights Directive and the Unfair Commercial Practices Directive to best support changes in consumer behaviour to promote a more resource-efficient, sustainable and circular economy. Companies will no longer be able to make vague environmental claims that they are “green” or “environmentally friendly” if they cannot demonstrate their statements and displaying uncertified sustainability logos will be prohibited.

To ensure consumers are well informed, information on a good’s commercial guarantee of durability must be offered by producers on a harmonised label and on legal guarantee of conformity via a harmonised notice. The European Commission will specify the content and design of the harmonised label and notice through the implementation of acts by 27 September 2025.

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Sweeping changes to the Food and Grocery Code of Conduct recommended

Date: 8 April 2024
Source: Treasury

Abstract:

The Interim Report for the Independent Review of the Food and Grocery Code of Conduct has found that the current voluntary industry code of conduct, the Food and Grocery Code of Conduct (Code), is ineffective and in need of strengthening.

While noting there is a heavy imbalance in market power between suppliers and supermarkets in Australia’s heavily concentrated supermarket industry, the Review does not support a forced divestiture power to address market power issues.

The Interim Report proposes eleven recommendations for the Code’s improvement, of which eight are firm recommendations and three are subject to further stakeholder feedback.

Firm recommendations

The Code is currently voluntary and is not enforceable by the Australian Competition and Consumer Commission (ACCC). The Interim Report recommends that the Code be made mandatory and apply to all supermarkets with annual revenues over $5 billion (this covers Coles, Woolworths, ALDI, and Metcash, who are currently signatories), with all suppliers to be automatically covered. This would allow stronger enforcement by the ACCC, including penalties for serious breaches amounting to the greater of:

• up to $10 million;
• 10% of a supermarket’s annual turnover; or

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Federal Court finds Vanguard engaged in greenwashing by misrepresenting ESG credentials of investment fund (Australian Securities and Investments Commission v Vanguard Investments Australia Ltd [2024] FCA 308)

Date: 3 April 2024
Court: Federal Court of Australia
Judge(s): O’BRYAN J
Judgment date: 28 MARCH 2024
Catchwords: CONSUMER LAW – ss 12DB and 12DF ASIC Act – greenwashing – ESG representations

Abstract:

In proceedings brought by the Australian Securities and Investments Commission (ASIC), the Federal Court has found Vanguard Investments Australia Ltd (Vanguard) liable for breaching the consumer protection provisions in ss 12DB and 12DF of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) by making false or misleading representations about the ESG screening criteria for its Ethically Conscious Global Aggregate Bond Index Fund (the Fund). A hearing as to penalties will occur at a later date.

 

The case:

ASIC alleged that in Product Disclosure Statements (PDS), media releases, website content, a Youtube video interview and at a promotional event presentation later published online, Vanguard had made representations that the Fund offered an ethically conscious investment opportunity by seeking to track the Bloomberg Barclays MSCI Global Aggregate SRI Exclusions Float Adjusted Index (Index)) and that before being included in the Index (and thus, the Fund), securities were researched and screened against ESG criteria and those that breached the criteria were excluded or removed.

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New legislation to increase the accessibility and affordability of financial advice

Date: 28 March 2024
Source: Treasury

Summary originally published by Capital Monitor

The Government has introduced the first tranche of legislation to deliver its comprehensive package of reforms to ensure Australians have access to quality and affordable financial advice, said Assistant Treasurer Stephen Jones. There are over five million Australians at or approaching retirement who need assistance to navigate the pension and superannuation systems. Unfortunately, the average cost of financial advice puts professional advice out of reach for many Australians. The Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024 implements reforms which reduce unnecessary red tape that adds to the time and cost of preparing financial advice.

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Federal Court dismisses ASIC claim in relation to alleged unfair contract terms in insurance contracts (Australian Securities and Investments Commission v Auto & General Insurance Company Limited)

Date: 25 March 2024
Court: Federal Court of Australia
Judge: Jackman J
Judgment date: 22 March 2024
Catchwords: INSURANCE — Unfair contract terms regime — Where term of product disclosure statement required insured to “tell us if anything changes while you’re insured with us” — Whether term unfair — How lack of transparency should be taken into account under unfair contract terms regime.

Abstract:

The Federal Court (Jackman J) has dismissed the Australian Securities and Investments Commission’s (ASIC’s) claim that certain terms in insurance contracts issued by Auto & General Insurance Company Limited (A&G) were unfair under the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).

Background

A&G issued approximately 1.4 million home and contents insurance contracts between April 2021 and May 2023 under numerous brands such as Budget Direct, ING and Virgin Insurance.

Each contract contained terms requiring the insured to notify the insurer of certain events during the insurance period. These notification obligations included broadly-worded obligations to “[t]ell us if anything changes while you’re insured with us” and “[w]hile you’re insured with us… tell us if anything changes about your home or contents”.

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Online florist Bloomex to pay $1M penalty for misleading price representations and star ratings (Australian Competition and Consumer Commission v Bloomex Pty Ltd)

Date: 18 March 2024
Court: Federal Court of Australia
Judge(s): Anderson J
Judgment date: 15 March 2024
Catchwords: CONSUMER PROTECTION – misleading or deceptive conduct by making false representations in respect of advertised discounts, customer ratings and prices – agreed declaratory relief, injunctions and a compliance program agreed – penalty disputed and total penalty of $1 million imposed

Abstract:

The Federal Court has ordered online floristry and gift retailer Bloomex Pty Ltd (Bloomex) to pay a penalty of $1,000,000 for making misleading or deceptive representations in ‘strikethrough’ discounts, displaying false star ratings and imposing inconsistent price surcharges.

Background

Bloomex is one of the largest online florists in Australia and advertised approximately 730 products through its website. During the relevant period of February 2019 to March 2023, Bloomex’s website was visited 6.3 million times and contained the following representations:

• Discount Representations: discounted product listings that had a purchase price and a strikethrough price with the statements “You Save” and “50% off” despite products never having been sold at the strikethrough price;

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ACCC launches inquiry into general internet search services in Australia

Date: 18 March 2024
Source: Australian Competition and Consumer Commission

The Australian Competition and Consumer Commission (ACCC) has released an issues paper for its new inquiry into the state of competition in general internet search services such as Google and Bing in Australia. This new inquiry is part of the ACCC’s ongoing Digital Platform Services Inquiry (see our previous Latest Legal Update here).

The issues paper seeks the views of interested parties about the level of competition present in general search services as well as general trends in search quality and the relationship between the two.

The inquiry will also consider the impacts of regulatory and industry developments including those in other jurisdictions and the emergence of AI-powered search engines and its potential impact on competition in the market for general search services. The report will not examine issues relating to generative AI more broadly, including privacy, online safety, or misinformation issues.

The ACCC previously considered competition and consumer issues in general search and web browser services in its September 2021 and July 2019 Digital Platforms Inquiry reports.

Interested parties have been asked to make submissions to the ACCC by 17 April 2024.

See the ACCC’s media release here and the issues paper here.

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US House of Reps passes bill to ban TikTok if company doesn’t cut ties with China

Date: 14 March 2024
Source: Protecting Americans from Foreign Adversary Controlled Applications Act

Social media platform TikTok is under threat of becoming banned in the United States (US) as the House of Representatives have passed a bill that, if successful in the Senate, would outlaw the application if it fails to sever ties with Chinese owner ByteDance.

The bill passed 352-65 with overwhelming bipartisan support just a week after it was first introduced. It faces a potentially less easy path through the Senate however as Democrat-controlled Senate has expressed a less rushed approach to the ban.

White House National Security Adviser Jake Sullivan said "do we want TikTok, as a platform, to be owned by an American company or owned by China? Do we want the data from TikTok – children's data, adults' data – to be staying here in America, or going to China?"

On the other side of the debate, senators like Republican Robert Garcia from California argued that the potential ban would have a negative impact on small business owners, entrepreneurs and young people, stating that it will “eventually backfire on the US itself".

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Draft Buy Now Pay Later legislation released for consultation

Date: 13 March 2024
Source: Treasury.gov.au

On 12 March 2024 the Australian Government released for consultation the Treasury Laws Amendment Bill 2024 (Cth) (Amending bill). The Amending bill, if passed will regulate Buy Now, Pay Later (BNPL) products within Australia.

The Amending bill amends the National Consumer Protection Act 2009 (Cth), extending its application to BNPL products and bringing them into the existing regulatory framework for other credit products. The proposed legislation will require providers of BNPL products to hold an Australian Credit Licence and take steps to ensure that they are lending responsibly and meeting industry standards concerning product disclosure, dispute resolution and hardship assistance.

The draft bill is accompanied by an explanatory memorandum and draft regulations accompanied by an explanatory statement.

Submissions for interested parties will remain open until 9 April 2024 before the introduction of a final bill to Parliament later this year.

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ACCC’s 2024 compliance and enforcement priorities reinforce focus on consumer protection

Date: 12 March 2024
Source: Australian Competition & Consumer Commission (ACCC)

On 7 March 2024 the Australian Competition and Consumer Commission released its compliance and enforcement priorities for 2024/25. ACCC Chair Gina Cass-Gottlieb announced the priorities in her address to the Committee for Economic Development Australia.

The ACCC’s priorities span across both competition and consumer law. Many of the issues identified in the ACCC’s 2022 and 2023 compliance and enforcement priorities remain a focus for the ACCC again this year. Other priorities have gained further prominence due to prevailing economic trends and conditions including the cost-of-living crisis (and price increases across a range of products and services) and the drive towards green and sustainable alternatives for the benefit of consumers and the environment.

Exclusive arrangements by firms with market power and competition and consumer issues relating to digital platforms and in global and domestic supply chains are among the enforcement priorities from 2023/4 that were not listed in the 2024/5 priorities.

New ACCC compliance and enforcement priorities for 2024:

• Supermarkets: In view of the ACCC’s 12-month price inquiry into competition in the supermarket and grocery sector, the inclusion of this new priority is not surprising.

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ACCC releases 2024 compliance and enforcement priorities

Date: 7 March 2024
Source: Australian Competition & Consumer Commission (ACCC)

The ACCC has released its compliance and enforcement priorities for 2024. ACCC Chair, Gina Cass-Gottlieb outlined these regulatory priorities in the annual Committee for Economic Development Australia (CEDA) address. The priorities span across both competition and consumer law and many of the issues identified in the ACCC’s 2022 and 2023 compliance and enforcement priorities remain a focus for 2024 including essential services, the environment and sustainability and the digital economy. New priorities for the ACCC in 2024 include competition and consumer issues in the aviation and supermarket sectors.

A full transcript of Ms Cass-Gottlieb’s speech is available here and a summary of the Compliance and Enforcement Priorities for 2024 is here. The ACCC’s press release is here.

A further Latest Legal Update containing more detailed analysis of the ACCC’s 2024 compliance and enforcement priorities will be published shortly.

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Federal Court issues record contempt penalty of $1.5M to Ultra Tune for failure to comply with Franchising Code obligations (Australian Competition and Consumer Commission v Ultra Tune Australia Pty Ltd (No 3))

Date: 4 March 2024
Court: Federal Court of Australia
Judge(s): Bromwich J
Judgment date: 1 March 2024

Catchwords: Contempt of court – breach of compliance orders – endorsement pursuant to r 41.06 – dispensing with r 41.06

Abstract:

In previous proceedings compliance orders containing a number of obligations were made against the respondent Ultra Tune Australia Pty Ltd (Ultra Tune). Ultra Tune failed to comply with these, and the ACCC brought further proceedings for alleged contempt of court. Despite a technical issue with the orders, the Federal Court held that Ultra Tune was guilty of four contempt charges and imposed a record contempt penalty of $1.5M.

The case

In proceedings brought by the Australian Competition and Consumer Commission (ACCC) in 2019 (Ultra Tune Australia Pty Ltd v Australian Competition and Consumer Commission [2019] FCAFC 164), Ultra Tune was found to have contravened ss 18 and 29 of the Australian Consumer Law (ACL) and cl 15CTH_REG_2014-168_SCH1PT3DV2SUBDVACL15 of the Franchising Code, by failing to disseminate mandatory documentation to franchisees in a timely manner and misleading a prospective franchisee regarding the details of the proposed transaction.

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ASIC’s appeal successful in its misrepresentation case against ACBF and Youpla (Australian Securities and Investments Commission v ACBF Funeral Plans Pty Ltd (in Liq))

Date: 4 March 2024
Court: Federal Court of Australia – Full Court
Judge(s): Murphy, O’Bryan and Shariff JJ
Judgment date: 29 February 2024

Catchwords: Consumer law – Alleged false and misleading representations and misleading or deceptive conduct in marketing and selling funeral insurance plans to Indigenous communities

Abstract:

The Australian Securities and Investments Commission (ASIC) has successfully appealed against ACBF Funeral Plans Pty Ltd (ACBF) and Youpla Group Pty Ltd (Youpla), with the Full Federal Court finding that their representation that they were under Aboriginal ownership or management from 1 January 2015 to 30 November 2018 was false.

Background:

ACBF, a Youpla subsidiary, offered, promoted and sold their funeral expenses insurance policy named the “Aboriginal Community Funeral Plan” (ACF Plan) primarily to Aboriginal consumers and promoted the plan as “Australia’s only funeral insurance plan dedicated to the Aboriginal community”.

In 2017, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry made adverse findings against ACBF. In 2020, ASIC initiated proceedings against ACBF and Youpla for contraventions of ss 12DA and 12DB of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) alleging the following misrepresentations:

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ASIC issues interim stop order to retailer for Centerpay deductions

Date: 4 March 2024
Court: Federal Court of Australia
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

The Australian Securities and Investments Commission (ASIC) has issued an interim stop order under s 739 of the Corporations Act 2001 (Cth) (Corporations Act) to Coral Coast Distributors (Cairns) Pty Ltd (CCD), which operates Urban Rampage retail stores, to halt its practice of having customers enter into credit agreements for purchases through Centrepay deductions.

As these deductions constituted a credit facility, CCD was required to adhere to the design and distribution (DDO) regime, contained in Pt 7.8A of the Corporations Act by publishing a Target Market Determination (TMD) to identify the class of consumers for whom the product was suitable and taking steps to ensure it would be marketed to that class. ASIC considered that CCD's Target Market Determination (TMD) lacked detail, particularly regarding consumers' financial capacity assessment and that this resulted from CCD’s inability to ensure that this form of credit facility was suited to the needs of the consumers identified in the TMD.

The decision was driven by concerns over financial harm to First Nations consumers, particularly those in remote Indigenous communities who are low-income Centrelink recipients with limited access to other credit forms.

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ACCC seeks consumer and industry stakeholder feedback in supermarkets inquiry

Date: 1 March 2024
Source: Australian Competition and Consumer Commission

The Australian Competition and Consumer Commission (ACCC) is consulting both consumers and industry stakeholders for input into its inquiry into pricing and competition in the Australian supermarket sector. The regulator has published an issues paper seeking submissions from participants in grocery supply chains and issued an online consumer survey.

Background

The Federal Government issued formal directions to the ACCC to conduct an inquiry into competition and consumer issues in the supermarket sector (Inquiry) on 1 February 2024, in response to concerns from both consumers and suppliers about the growing costs of living.

The Inquiry’s Terms of Reference consider the following matters:

• the structure of markets for supply of groceries by suppliers, wholesalers and retailers;
• the approach of suppliers, wholesalers and retailers when setting grocery prices;
• factors affecting input prices along the supply chain; and
• non-price aspects of competition in markets for groceries such as loyalty programs and discounts for future or other services.

See the Ministerial direction here. For further information, see the ACCC’s last comprehensive inquiry into the grocery sector completed in 2008 here.

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Treasury announces review of Australia’s credit reporting framework

Date: 1 March 2024
Source: The Australian Treasury

The Australian Government has announced an independent review of Australia’s Credit Reporting Framework.

The review will evaluate the effectiveness and efficiency of the credit reporting provisions in the Privacy Act 1988 (Cth) and the National Consumer Credit Protection Act 2009 (Cth) in enabling effective lending decisions by credit providers while ensuring the personal information of consumers is adequately protected.

The review is being conducted by former Australian Prudential Regulation Authority (APRA) senior executive Heidi Richards, with a report to be delivered by 1 October 2024.

For more information, see the terms of reference for the review here, and Treasury’s statement here.

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TGA issues infringement notices for unlawful import, advertisement and supply of medicines totalling over $155,000

Date: 28 February 2024
Source: Therapeutic Goods Administration

The Therapeutic Goods Administration (TGA) has recently issued a total of 17 infringement notices to three different parties for unlawful import, advertisement, and/or supply of medicines not unapproved or unregistered under the Australian Register of Therapeutic Goods (ARTG).

Individual fined for alleged advertisement and supply of unapproved erectile dysfunction medicines

In February 2023, the TGA and NSW Police seized over 55,000 potentially dangerous products connected to an individual operating in the Newcastle area. The products seized were not listed in the ARTG and have not been approved for supply in Australia. Testing of the products revealed that the search had identified several prescription-only medicines such as Tadalafil, Sildenafil and Dapoxetine that the individual had no authority to import nor advertise directly to consumers under the Therapeutic Goods Act 1989 (Cth) (Therapeutic Goods Act).

The NSW individual was issued 13 infringement notices totalling $42,900. For further details, see the TGA’s media release on the matter here.

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ACCC takes action against Grays for false or misleading representations in car auction listings

Date: 26 February 2024
Source: Australian Competition and Consumer Commission

The Australian Competition and Consumer Commission (ACCC) has initiated legal proceedings in the Federal Court against Australia-wide online auction business Grays eCommerce Group Ltd (Grays) for false or misleading listings about cars involving their features, characteristics, legal title or undisclosed obvious faults.

Grays has admitted to engaging in misleading or deceptive conduct in making false or misleading representations about cars listed for sale between 1 July 2020 and 30 June 2022 contravening ss 18, 29 and 33 of the Australian Consumer Law (ACL). At least 750 consumers purchased vehicles with misleading descriptions. Some then had to convince Grays to provide a remedy and waited months to have an outcome while others paid for vehicle repair themselves or resold their vehicles at a loss.

On 23 February, the ACCC accepted a court-enforceable undertaking from Grays under s 87B of the ACL that will commence once the court’s final orders are made. The undertaking includes:

• jointly seeking declarations, compliance program orders and a pecuniary penalty of $10 million;
• reviewing complaints during the relevant period and customer contacts during the term of the undertaking to identify and inform consumers eligible for redress;

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Sydney Airport slots reform to target competition and consumer outcomes

Date: 23 February 2024
Source: Minister for Infrastructure, Transport, Regional Development and Local Government

The Australian Government has announced reforms to the Sydney Airport demand management scheme which are intended to deliver better efficiency, competition and consumer outcomes. The management scheme allocates slots to airlines which are permissions for an aircraft to either enter or leave an airport gate at a particular time. The Hon Catherine King MP states the scheme will be updated so that it better aligns with modern international standards.

Competition outcomes

The proposed reforms will seek to improve competition among airlines competing for slots at Sydney Airport by:

• increasing transparency about how the slots are allocated through monitoring reports;
• publishing independent audits of slot usage to detect and deter anticompetitive behaviour;
• updating the compliance regime to include penalties that address anti‑competitive behaviours, and bolster enforcement tools for the government.

The government intends that the reforms will benefit new entrant airlines, address slot misuse and create a more level playing field in the slot allocation process.

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CER declares installer ineligible to install small solar photovoltaic systems for 12 months

Date: 16 February 2024
Source: Clean Energy Regulator

On 5 February 2024, the Clean Energy Regulator (CER) declared that Mr David Keith Coulthard, accredited Clean Energy Council installer, is ineligible to install small generation solar photovoltaic (PV) systems under the Small-scale renewable energy scheme for 12 months.

Accredited installers must be onsite during the set-up, mid-installation check-up and testing and commissioning of small solar PV systems to be eligible to receive Small-scale Technology Certificates (STCs). STCs can be sold to recoup costs of purchasing and installing or transferred to others at negotiated prices.

During 1 February 2022 and 5 August 2022, Mr Coulthard made false statements that he was the accredited installer or supervisor of 12 solar PV systems when he had not attended the sites himself. The CER exercised their power under reg 20AG of the Renewable Energy (Electricity) Regulations 2001 (Cth) (Regulations) in making the declaration and did not pursue court action after considering the nature of the offending and Mr Coulthard’s cooperation. Any solar PV systems installed by Mr Coulthard during the 12 month period will be ineligible to receive STCs.

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Mazda ordered to pay $11.5 million penalty for false representations on consumer guarantee rights

Date: 15 February 2024
Court: Federal Court of Australia
Judge(s): O’Callaghan J
Judgment date: 14 February 2024

Catchwords: Consumer law – misleading and deceptive conduct – false or misleading representations – existence, exclusion or effect of any condition, warranty, guarantee, right or remedy

Abstract:

The Federal Court has ordered Mazda Australia (Mazda) to pay a pecuniary penalty of $11.5 million for making false or misleading representations in response to nine consumers’ requests for a refund or replacement of their vehicles with serious faults.

Background:

Nine consumers who bought Mazda vehicles between 2013 and 2017 experienced major failures within two years of purchase and took their vehicles to Mazda dealers for repeated repairs. Mazda refused to provide refunds or free replacements when requested and pressured consumers to accept lesser offers only after multiple failures.

The ACCC instituted proceedings against Mazda in October 2019 alleging unconscionable conduct and false and misleading representations. In November 2021, the Federal Court found that Mazda had engaged in misleading and deceptive conduct contravening ss 18(1) and 29(1)(m) of the Australian Consumer Law (ACL).

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Legislation to establish ACCC designated complaints framework introduced into Parliament

Date: 15 February 2024
Source: Parliament of Australia

Abstract:

Legislation providing for certain consumer and business advocacy groups to make complaints to the Australian Competition and Consumer Commission (ACCC) has been introduced in the Federal Parliament.

The Competition and Consumer Amendment (Fair Go for Consumers and Small Business) Bill 2024 (Cth) (Bill) provides for groups designated by the Minister to be empowered to make complaints to the ACCC regarding significant or systemic market issue affecting Australian consumers or small business, and which relate to a breach of the Competition and Consumer Act or the Australian Consumer Law. The ACCC would be required to assess and publicly respond to such designated complaints within 90 days, specifying what if any further action it will take.

A designated complaints mechanism, also sometimes referred to as “super complaints”, was an election commitment of the Labor Government and has since been subject to Treasury consultation with industry stakeholders. The framework draws on a similar super complaints function which has operated in the United Kingdom since 2003.

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Westpac ordered to pay $1.8 million penalty for unconscionable pre-hedging in interest rate swap deal

Date: 12 February 2024
Court: Federal Court of Australia
Judge(s): Lee J
Judgment date: 31 January 2024

Catchwords: Corporations – unconscionable conduct – insider trading – pre-hedging – Corporations – breach of financial services licensee obligations – services not provided efficiently, honestly and fairly

Abstract:

The Federal Court has ordered Westpac Banking Corporation (Westpac) to pay penalties of $1.8 million for unconscionable conduct in an $12 billion interest rate swap deal and $8 million towards for the Australian Securities and Investments Commission’s (ASIC) costs.

Background:

On 20 October 2016, Westpac executed the largest interest rate swap in Australian financial market history (Swap Deal) to allow a consortium of investors from the IFM group and AustralianSuper to acquire a 50.4% interest in Ausgrid. Westpac had previously quoted the consortium an execution margin on the basis that it would not receive notice of the Swap Deal to prevent on-market pre-hedging. Despite awareness of its clients’ concerns regarding potential pre-hedging, Westpac made internal plans to pre-hedge up to 50% of the interest rate and failed to disclose these plans to the consortium.

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Final Report into Franchising Code finds it is generally fit for purpose but recommends some regulatory changes

Date: 9 February 2024
Source: Federal Treasury

The Final Report on the review of the Franchising Code of Conduct (Franchising Code) conducted by Dr Mihael Schaper was released on 8 February 2024 with 23 formal recommendations and 34 suggestions for implementation.

The Franchising Code is a mandatory industry code under the Competition and Consumer Act 2010 (Cth), which regulates franchisor-franchisee relationships.

The review spanned from August to December 2023. Input was received in over 40 meetings with industry stakeholders, 95 submissions and a total of 544 survey responses.

The Report concludes that the Franchising Code is generally fit for purpose, however recommended some changes to existing provisions to ensure wider coverage across franchisees and promote best practice across the sector’s operations.

Key findings and recommendations of the Report include:

• Franchising sector: the need for better statistical metrics to measure demographics and success of franchise sector;
• Scope and structure of the Code: a lack of understanding about the Franchising Code’s purpose and scope, especially amongst franchisees;
• Entering into a franchise agreement: detailed disclosure requirements are burdensome for franchisors to comply with and franchisees to understand;

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Court declares Westpac engaged in unconscionable conduct for interest rate swap, maximum penalty applied

Date: 5 February 2024
Source: Australian Securities and Investments Commission (ASIC)

Abstract:

The Federal Court has declared Westpac Banking Corporation (Westpac) engaged in unconscionable conduct in October 2016 when executing a $12 billion interest rate swap transaction, the largest of its kind in Australian financial market history. Westpac will pay the maximum penalty of $1.8 million in relation to the conduct, together with $8 million for ASIC's litigation and investigation costs. Westpac's unconscionable conduct arose when it engaged in pre-hedging ahead of an interest rate swap transaction with a Consortium comprising AustralianSuper and IFM entities.

Summary originally published by Capital Monitor.

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$302,500 penalty paid by Outdoor Supacentre for spam breaches

Date: 31 January 2024
Source: Australian Communications and Media Authority (ACMA)

Outdoor Supacentre has paid a $302,500 penalty for sending 83,273 marketing text messages that were in breach of the Spam Act 2003 (Cth). The ACMA has also accepted a three year court-enforceable undertaking that Outdoor Supacentre will appoint an independent consultant to review and report on their internal procedures.

Businesses must have a user’s consent before sending electronic marketing messages. Under s 18, these messages must also allow users to unsubscribe, which must be actioned within five business days if requested.

In response to increased consumer complaints during 2022 and 2023, the ACMA issued Outdoor Supacentre five alerts regarding the alleged non-compliance of their text messages sent without an ability to unsubscribe.

The ACMA investigation spanning communications between 1 December 2022 and 4 May 2023 found 81,698 texts were sent without the user’s consent and 1,575 texts were sent to customers who had already unsubscribed. The relevant text messages concerned sale offers or promotions and did not allow users to effectively unsubscribe, falling under ‘commercial electronic messages’ with an ‘Australian link’ under s 16(1) of the Spam Act 2003 (Cth).

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ACCC releases childcare services inquiry recommendations

Date: 29 January 2024
Source: Australian Competition and Consumer Commission

Abstract:

The Australian Competition and Consumer Commission (ACCC) has released its recommendations and findings from its year-long inquiry into childcare services, which examines how childcare markets and competition are working for Australian households.

In the final report of its inquiry, the ACCC finds that the functioning of the childcare market under current regulations is not delivering on key policy objectives, including relating to accessibility and affordability.

The report makes thirty-one findings and eight recommendations, including that Government consider a mix of different regulatory measures to improve childcare outcomes.

The ACCC’s media release is available here and the childcare services inquiry’s final report here.

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ACCC inquiry to examine competition and prices in the supermarket sector

Date: 25 January 2024
Source: Australian Competition and Consumer Commission

On direction from Treasurer Jim Chalmers, the Australian Competition and Consumer Commission (ACCC) will carry out an inquiry into Australia’s supermarket sector. The year-long inquiry will cover competition in the supermarket sector, pricing practices of the supermarkets and the relationship between wholesale, including farmgate, and retail prices. The inquiry will also look at any emerging issues related to more recent trends, including online shopping, changes in technology, and loyalty programs.

ACCC Deputy Chair Mick Keogh stated that the inquiry “will examine the nature of the current competitive environment between supermarkets, as well as the barriers to greater competition and new entry in the sector.”

The Treasurer is empowered to direct the ACCC to hold a price inquiry into a particular matter under Part VIIA of the Competition and Consumer Act 2010 (Cth).

An issues paper is expected to be published in February seeking views on the key issues the ACCC will consider in the inquiry, with an interim report due to be provided to the Government later this year. The final report is anticipated in early 2025.

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TM — use of BED & BATH not an infringement, but applicant’s reputation leads to a success in claims under the ACL and passing off

Date: Bed Bath ‘N’ Table Pty Ltd v Global Retail Brands Australia Pty Ltd [2023] FCA 1587
Court: Federal Court of Australia
Judgment date: 14 December 2023
Catchwords: TRADE MARK INFRINGEMENT – deceptive similarity – independent reputation in “BED BATH” or whether the words are descriptive – relevance of confusion evidence
TRADE MARK DEFENCES TO INFRINGEMENT – s 122(1)(b)(i) good faith defence – defence would not apply if there was infringement
TRADE PRACTICES – well-established reputation of the applicant – wilful blindness of the respondent – elements established of breaches of ss 18 and 29 of the ACL and of passing off

Abstract:

In Bed Bath ‘N’ Table Pty Ltd v Global Retail Brands Australia Pty Ltd [2023] FCA 1587, Global Retail Brands Australia Pty Ltd, which owns stores and trade marks incorporating the word “House”, was found not to infringe the trade marks comprising the words “BED BATH N’TABLE”, by use of “BED & BATH” in its logo.

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ACCC to have increased powers under expanded News Media and Digital Platforms Bargaining Code

Date: 18 December 2023
Source: The Hon Stephen Jones MP

All recommendations made in Treasury’s review of the News Media and Digital Platforms Mandatory Bargaining Code (the Code) will be implemented by the Government, as announced by Government Ministers Michelle Rowland and Stephen Jones.

Treasury made five recommendations to improve the Code’s operation, in response to which the Government will introduce legislative amendments to facilitate the Australian Competition and Consumer Commission (ACCC) preparing periodic reports on the digital platforms that should be covered by the Code. In addition, the ACCC will have compulsory information-gathering powers to assist it to prepare these reports, and to allow scrutiny of commercial deals between the digital platforms and Australian news businesses.

The joint media release from MPs Michelle Rowland and Stephen Jones is available here and the full Government response is available here

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ACCC provides guidance on unfair contract terms in franchise agreements

Date: 18 December 2023
Source: Australian Competition and Consumer Commission (ACCC)

Abstract:

The ACCC has released a report detailing key findings of recent targeted compliance checks on franchisors under the Australian Consumer Law’s unfair contract terms (UCT) regime. The report also sets out the ACCC’s recommendations for reducing UCT risk in franchise agreements.

Background

The ACCC’s compliance checks involved reviewing the franchise agreements of 10 newly established and small franchise systems (2 to 32 franchisees) in a variety of industries.

In its report, the ACCC indicates that many franchise agreements are likely to be standard form small business contracts that are subject to the UCT regime, given that prospective franchisees “generally have limited or no opportunity to meaningfully negotiate the terms within a franchise agreement”.

The ACCC found that all 10 franchise agreements contained potentially unfair terms. The key terms of concern were:

• unilateral variation clauses;
• withholding or set-off clauses;
• audit power clauses;
• restraint of trade clauses; and
• termination clauses.

In addition to the specific recommendations outlined below, the ACCC reiterated that the above types of clauses (and the terms of franchise agreements more generally) should not go beyond what is reasonably necessary to protect the franchisor’s legitimate business interests.

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Franchisor of “Delicia” health food stores gives ACCC undertaking and pays infringement notice for Franchising Code breaches

Date: 13 December 2023
Source: Australian Competition and Consumer Commission (ACCC)

Abstract:

Delicia Franchising Pty Ltd (Delicia), the franchisor of approximately 10 “Delicia Acai & Protein Bar” stores predominantly based in South Australia, has given an enforceable undertaking to the ACCC for admitted breaches of its marketing fund obligations under the Franchising Code of Conduct (Franchising Code). Delicia also paid an infringement notice for its most recent contravention.

Franchisors’ marketing fund obligations

Under the Franchising Code, a franchisor with a marketing fund must:

• prepare an annual marketing fund statement within 4 months after the end of each financial year that includes sufficient detail to give meaningful information about income sources and expenditure items (cl 15(2)); and
• give franchisees a copy of that statement within 30 days after preparing it: cl 15(4).

Delicia’s breaches

The ACCC alleged, and Delicia admitted, that although Delicia prepared an annual statement for each of the 2020-2022 financial years, Delicia breached the Franchising Code by:

• failing to give franchisees copies of those statements within 30 days; and

failing to include sufficient detail in those statements (the statements only described significant expenditures at a high level without providing further explanatory information).

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Government consults on designated ACCC complaints function

Date: 11 December 2023
Source: Andrew Leigh – MP

Abstract:

The Assistant Minister for Charities, Competition and Treasury Andrew Leigh has released a statement announcing draft legislation that if enacted will create a designated complaints function within the Australian Competition and Consumer Commission (ACCC).

Under the proposed legislation, designated consumer and small business advocates will be able to submit a complaint to the ACCC where they have evidence of a significant or systemic market issue affecting Australian consumers or small businesses.

In practice, this will mean that when a complaint is lodged the ACCC will be obligated to consider and publicly respond to the complaint within 90 days. The ACCC will also be required to state any further action that will be taken in response to the complaint when applicable.

The consultation period is open until 3 January 2024.

View the exposure draft legislation and explanatory materials here.

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Class action launched against JB Hi-Fi for extended warranty sales

Date: 11 December 2023
Source: Supreme Court of Victoria

A class action against electronics retailer JB Hi-Fi has been filed in the Victorian Supreme Court alleging that extended warranties sold by the electronics retailer since 2011 were of little to no value as consumers already had access to the same remedies by virtue of the consumer guarantees provided under the Australian Consumer Law (ACL) for no cost.

The pleadings allege that JB Hi-Fi engaged in misleading or deceptive conduct and unconscionable conduct by misleadingly implying that its extended warranties provided additional protections not covered by the ACL and that its promotional material failed to make clear the limits of the rights available under extended warranties.

The class action is seeking compensation for consumers who purchased an extended warranty from JB Hi-Fi any time between 1 January 2011 and 8 December 2023.

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High Court finds class action waiver clause unfair, allows Ruby Princess appeal

Date: 6 December 2023
Court: High Court
Judge(s): Gageler CJ, Gordon, Edelman, Gleeson, Jagot JJ 
Judgment date: 6 December 2023

Catchwords: CONSUMER PROTECTION - Extraterritorial application of s 23 of Australian Consumer Law - Whether s 5(1)(g) of Competition and Consumer Act 2010 (Cth) extended application of s 23 of ACL to contract- Whether class action waiver clause constituted unfair term under s 23 of ACL and void.

REPRESENTATIVE PROCEEDINGS - Whether class action waiver clause unenforceable as contrary to Pt IVA of Federal Court of Australia Act 1976 (Cth)

PRIVATE INTERNATIONAL LAW – Forum – Exclusive jurisdiction clause – Whether strong reasons not to grant stay of proceedings.

Abstract:

In Karpik v Carnival plc [2023] HCA 39 the High Court determined an interlocutory application arising out of representative proceedings brought on behalf of passengers of the Ruby Princess cruise ship against Carnival plc and Princess Cruise Lines Ltd (Princess) claiming losses caused by illness and deaths caused by the COVID-19 outbreak. The main proceedings were recently determined by the Federal Court in In Karpik v Carnival plc (The Ruby Princess) (Initial Trial) [2023] FCA 1280.

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Telstra pays $24 million in penalties and consumer refunds after ACMA finds TCP Code breaches

Date: 6 December 2023
Source: ACMA

Abstract:

An investigation by the Australian Communications and Media Authority (ACMA) has found that Telstra wrongly billed 6,532 customers over a period of time ranging from April 2012 to August 2023 breaching billing accuracy provisions in the Telecommunications Consumer Protections Code 2019 (Code) and prior versions of the Code. ACMA’s investigation also found that Telstra breached s 121 of the Telecommunications Act 1997 (Cth) in failing to comply with a prior ACMA direction to comply with billing accuracy requirements given in 2020.

The earlier direction to comply with the Code was given as a result of previous charging accuracy issues that resulted in more than 10,000 customers being overcharged a cumulative $2.5 million over a 12-year period. Another similar instance also occurred in 2022.

As a result, ACMA has issued Telstra with a further direction to comply with the Code and an infringement notice imposing a penalty of $3,010,320. Telstra has also refunded over $17.7 million to customers with a further $3.4 million to be refunded by the end of the year.

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Supermarket competition at the centre of Senate inquiry

Date: 5 December 2023
Source: The Greens

The Australian Greens party has moved to establish a Parliamentary Senate inquiry into alleged price gouging by major supermarkets. Senator Nick McKim announced the inquiry will focus on the impact of market concentration on food prices and the pattern of pricing strategies. Senator McKim referenced the market power held by what he describes as the “duopoly” of Coles and Woolworths.

The inquiry proposed by the Greens sets out nine terms of reference, including:

• the effect of market concentration and the exercise of corporate power on the price of food and groceries;
• the pattern of price setting between the two major supermarket chains; and
• the contribution of home brand products to the concentration of corporate power.

The inquiry will move through the Senate this week.

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ASIC announces 2024 enforcement priorities

Date: 24 November 2023
Source: Australian Securities and Investments Commission

Summary originally published by Capital Monitor.

ASIC announced its enforcement priorities for 2024, indicating its enforcement focus for the coming year and communicating its intent to industry and stakeholders. In 2024, two new priorities have been added in relation to the superannuation industry, including a focus on member services failures and misconduct relating to the erosion of superannuation balances. New priorities relating to insurance claims handling, compliance with financial hardship obligations and the reportable situation regime have also been added. In addition, ASIC will be taking action against misconduct relating to used car financing to vulnerable consumers and gatekeepers such as auditors, registered liquidators and financial services and credit licensees who do not comply with their legal obligations.

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Hungry Jack’s trade mark not deceptively similar to McDonald’s mark, found to breach ACL (McD Asia Pacific LLC v Hungry Jack’s Pty Ltd [2023] FCA 1412)

Date: 20 November 2023
Court: Federal Court of Australia 
Judge(s): Burley J
Judgment date: 16 November 2023 
Catchwords: Trade marks – Application for cancellation – Infringement – Deceptive similarity

Abstract:

Mcd Asia Pacific LLC v Hungry Jack’s Pty Ltd [2023] FCA 1412 involved a trade mark dispute where the Applicants (collectively referred to as McDonald’s) alleged that the Respondent (Hungry Jack’s) infringed upon two registered trade marks through the usage of two deceptively similar marks. Burley J found that the infringement case failed, as BIG JACK and BIG MAC are not deceptively similar; nor were MEGA JACK and MEGA MAC. However, Hungry Jacks was found to have engaged in misleading and deceptive conduct in breach of s 18 of the Australian Consumer Law when it represented its burger contained 25% more Australian Beef.

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Retail clients compensated over $17.4 million following breaches of financial services laws by OTC derivative issuers

Date: 9 November 2023
Source: Australian Competition and Consumer Commission (ACCC)

Abstract:

The Australian Securities and Investments Commission (ASIC) has overseen over $17.4 million in combined compensation payments to more than 2,000 retail clients affected by breaches of financial services laws by eight retail over-the-counter (OTC) derivative issuers.

Since March 2021, approximately $4.3 million in compensation has been paid to over 1,500 retail clients of the following contracts for difference (CFD) issuers: Capital Com Australia Pty Ltd, CMC Markets Asia Pacific Pty Ltd, Eightcap Pty Ltd, IG Australia (IG Markets Limited and IG Australia Pty Ltd), Pepperstone Group Limited, Saxo Capital Markets (Australia) Limited, and StoneX Financial Pty Ltd trading as City Index.

The affected clients suffered losses on more than 150,000 CFD trades across 100 different CFD instruments which exceeded the leverage ratio limits prescribed by the ASIC Corporations (Product Intervention Order – Contracts for Difference) Instrument 2020/986. The CFD issuers self-reported the breaches, identifying the underlying causes to be change management weaknesses and manual errors, and undertook remediation programs. ASIC reviewed the compensation paid by the CFD issuers, prompting four issuers to agree to pay additional compensation of $2.8 million.

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Further modernising business communications measures for corporations, competition, consumer, superannuation and insurance sectors

Date: 30 October 2023
Source: Federal Register of Legislation

Abstract:

The Governor-General has issued the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Commencement Proclamation 2023 (Cth) (Proclamation) to prescribe 1 January 2024 as the start date for the modernised publication measures under the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Act 2023 (Cth) (Modernising Business Communications Act).

The Governor-General has also made the Treasury Laws Amendment (Modernising Business Communications) Regulations 2023 (Cth) (Amendment Regulations) to modify corporations, consumer credit, insurance and superannuation regulations in line with the Modernising Business Communications Act.

Proclamation

The Proclamation fixes 1 January 2024 as the start date for the modernisation of certain publication requirements in the Corporations Act 2001 (Cth) (Corporations Act), the Competition and Consumer Act 2010 (Cth) (CCA) and other legislation, as set out in Pt 4, Sch 1 of the Modernising Business Communications Act.

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Joint ACCC/OAIC Compliance and Enforcement Policy for the Consumer Data Right

Date: 25 October 2023
Source: Office of the Australian Information Commissioner (OAIC)

The Australian Competition Consumer Commission (ACCC) and the Office of the Australian Information Commissioner (OAIC) have published a joint policy to outline their approach toward compliance and enforcement of the Consumer Data Right (CDR).

The CDR allows consumers to have more control over their personal data held by businesses and how this data is shared. The CDR regulatory framework consists of:

• Core provisions under the Competition and Consumer Act 2010 (Cth), the Privacy Act 1988 (Cth) and the Australian Information Commissioner Act 2010 (Cth);
• Rules made under legislation (Rules);
• the Competition and Consumer Regulations 2010 (Cth); and
• Consumer Data Standards made under the Rules.

The OAIC and ACCC will encourage and monitor compliance with the CDR through consumer complaints, mandatory reporting from businesses who hold consumer data, and audits, assessments and information requests for further compliance information.

The OAIC and ACCC will separately exercise discretion for enforcement, giving priority to matters causing harm to the greater CDR regime, widespread detriment to CDR consumers or vulnerable consumers and other conduct of significant public interest. Examples of conduct that are enforcement priorities include…

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Jeep distributor undertakes to improve complaints handling for consumer guarantee claims

Date: 25 October 2023
Source: Australian Competition and Consumer Commission (ACCC)

Abstract:

The Australian Competition and Consumer Commission (ACCC) has accepted a court-enforceable undertaking given by Stellantis (Australia and New Zealand) Pty Ltd (Stellantis) under s 87B of the Competition and Consumer Act 2010 (Cth). Stellantis, the importer and distributor of Jeep vehicles in Australia, has committed to improving the way it handles consumer guarantee complaints.

Under the Australian Consumer Law (ACL), there are certain consumer guarantees that apply to the sale of new and used vehicles, and remedies for breach of these guarantees. The ACCC received many consumer complaints about Stellantis’ complaints-handling process, including lengthy delays in obtaining a remedy, vehicles requiring multiple repairs for the same issue, and delays in spare parts being provided. Stellantis acknowledged the ACCC’s concerns that its staff may lack understanding about the company’s ACL obligations due to deficient internal policies.

Stellantis has undertaken to review and improve its complaints-handling procedures and staff training to ensure that consumers who experience a ‘major failure’ with their vehicle are given the refunds or replacements that they are entitled to.

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ASIC revises licensee obligations under the reportable situations regime

Date: 24 October 2023
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

The Australian Securities & Investments Commission (ASIC) has made the ASIC Corporations and Credit (Amendment) Instrument 2023/589 (Instrument), which enacts key alterations to the reportable situations regime. Under the prior regime, Australian financial services (AFS) licensees and Australian credit licensees were mandated to notify ASIC regarding certain reportable situations, particularly ‘significant’ infringements of ‘core obligations’ under s 912D of the Corporations Act 2001 (Cth) (Corporations Act) and s 50A of the National Consumer Credit Protection Act 2009 (Cth).

Under the Instrument , certain breaches relating to misleading or deceptive conduct under subsection 1041H(1) of the Corporations Act and subsection 12DA(1) of the Australian Securities and Investments Commission Act 2001, and false or misleading misrepresentations under s12DB(1) of the ASIC Act, are no longer considered significant breaches of core obligations requiring reporting. For a breach to be eligible for these exemptions, it should:

• Affect only a single individual or those jointly involved in financial or credit-related products;
• Not cause, nor be likely cause, financial harm to anyone, irrespective of potential remediation ; and
• Not lead to or likely lead to another reportable scenario.

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ACCC/AER annual report summarises annual enforcement outcomes

Date: 24 October 2023
Source: Australian Competition and Consumer Commission

The Australian Competition and Consumer Commission (ACCC) and Australian Energy Regulator have released their annual report for 2022–2023 which highlights the performance of both regulators in their enforcement of Australia’s competition, consumer and electricity and gas laws. The information contained in the report demonstrates the ACCC’s continued commitment to its compliance and enforcement priorities.

Competition law enforcement

In 2022–2023, the ACCC:

• assessed 305 mergers and 23 non-merger authorisation applications;
• commenced 11 court cases with 14 court cases continuing;
• completed 19 in-depth competition investigations;
• increased activity for Consumer Data Right, accrediting 40 data recipients; and
• continued focus on cartel conduct, including litigation involving Alkaloids of Australia, BlueScope Steel and Bingo Industries.

Consumer law enforcement

The ACCC also continued rigorous enforcement of consumer laws, including:

• product safety monitoring with 2,586 mandatory injury reports assessed;
• achieving 6.95 million ScamWatch website views; and
• completing 48 in-depth Australian Consumer Law and industry code investigations.

View the ACCC annual report 2022–23 here.

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Nutrano pays $24,850 in penalties for alleged Horticulture Code breaches

Date: 23 October 2023
Source: Australian Competition and Consumer Commission (ACCC)

Abstract:

Seven Fields Operations Pty Ltd, a fruit grower and trader trading as Nutrano, has paid penalties totalling $24,850 in response to two infringement notices issued by the Australian Competition and Consumer Commission (ACCC). The ACCC alleged that Nutrano contravened s 51ACB of the Competition and Consumer Act 2010 (Cth) by breaching clauses 12(1) and 29(1) of the Horticulture Code, a mandatory industry code set out in the Competition and Consumer (Industry Codes—Horticulture) Regulations 2017 (Cth).

The ACCC undertook an investigation after receiving complaints from citrus growers about the lack of transparency regarding the price Nutrano paid them for their produce and the timing of final payments.

The ACCC alleged that Nutrano failed to specify the price it received for produce in grower statements and traded under Horticulture Produce Agreements (HPAs) which failed to adequately specify the quality requirements and specifications that would be used to determine the quality of a grower’s produce, in contravention of the Horticulture Code. Nutrano’s HPAs also contained clauses that were potentially unfair within the meaning of the Australian Consumer Law, including clauses giving Nutrano absolute discretion to change the produce specifications.

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Key findings from OAIC annual report 2022-23

Date: 19 October 2023
Source: Office of the Australian Information Commissioner (OAIC)

Abstract:

The Office of the Australian Information Commissioner (OAIC) has published its annual report for 2022-23 (Report), which highlights the work undertaken by the OAIC to uphold privacy and information access rights. The OAIC’s regulatory activities include conducting investigations, handling complaints, reviewing decisions made under the Freedom of Information Act 1982 (Cth), monitoring agency administration, and providing advice to the government and the community.

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Ticketek pays $515,040 penalty for repeat spam breaches

Date: 19 October 2023
Source: Australian Communications and Media Authority (ACMA)

Abstract:

Ticketek Pty Ltd (Ticketek) has paid a $515,040 penalty in response to an infringement notice issued by the Australian Communications and Media Authority (ACMA) following an investigation that found that Ticketek had sent 98,000 texts and emails in breach of s 16(1) the Spam Act 2003 (Cth) (Spam Act).

ACMA has alleged that throughout 2022, Ticketek had sent around 41,000 marketing texts and emails without the consent of recipients and around 57,000 texts and emails to people who had previously unsubscribed. Despite being issued with a formal warning from ACMA in 2019, Ticketek continued to breach its obligations under the Spam Act.

Ticketek had mischaracterised some emails as being non-commercial because they contained event information for ticket holders. However, the emails also contained advertising material and promotions for upcoming events, meaning they were not exempt from spam rules and required consent to be sent.

ACMA has also accepted a three-year court-enforceable undertaking from Ticketek under s 38 of the Spam Act to report to ACMA and appoint an independent consultant to review and improve its compliance with spam rules.

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ACCC Chair reiterates need for reform in Digital Future Summit address

Date: 18 October 2023
Source: Australian Competition and Consumer Commission

In an address at King and Wood Mallesons' Digital Future Summit on 17 October 2023, Chair of the Australian Competition and Consumer Commission (ACCC) Gina Cass-Gottlieb reiterated the need for regulatory reform to address competition and consumer issues identified by the ACCC in its digital platforms work, including its Digital Platform Services Inquiry. See our previous Latest Legal Update: Platform for change: ACCC reinforces calls for targeted regulation of digital platforms to address competition and consumer issues.

Ms Cass-Gottlieb restated some of the ACCC’s proposed reforms, noting that it is “critical [Australia has] fit-for-purpose regulatory tools that ensure effective and robust competition and consumer protection.”

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X (formerly Twitter) fined $610,500 for shortfalls in measures to address child sexual abuse material

Date: 18 October 2023
Source: Australian Government eSafety Commissioner (ACMA)

Abstract:

After failing to comply with a legal notice given by the eSafety Commissioner in February 2023, X (formerly Twitter) has been issued with an infringement notice for $610,500 and has 28 days to pay the penalty or request a withdrawal. The Basic Online Safety Expectations (Expectations) under the Online Safety Act 2021 (Cth) require tech companies to answer questions about the measures taken to address child sexual abuse material. X did not provide any response, or provided inaccurate or incomplete responses, to important questions including:

• the time taken to respond to reports of child sexual exploitation;
• the measures in place to detect child sexual exploitation in livestreams;
• the tools and technologies used to detect child sexual exploitation material; and
• the number of safety and public policy staff employed after the acquisition and job cuts in October 2022.

Google has similarly failed to comply with the eSafety Commissioner’s notice, and has been issued a formal warning for providing generic responses to specific questions and providing aggregated information when asked questions about specific services.

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ACMA takes action against two telcos for breaching anti-scam rules

Date: 18 October 2023
Source: Australian Communications and Media Authority (ACMA)

Abstract:

The Australian Communications and Media Authority (ACMA) has taken action against two telcos, Vonage Business Inc (Vonage) and Twilio Inc (Twilio), for allowing their customers to send SMS with text-based sender IDs (ie shortened business names) without sufficiently checking whether the sender IDs were being used to perpetrate scams, in breach of the with the Reducing Scam Calls and Scam SMs Code (Code).

ACMA audits and investigations revealed that:

• Vonage allowed over 11,780 non-compliant SMS to be sent, including 3,387 scam texts impersonating businesses such as Commonwealth Bank, ApplePay and Australia Post;
• Vonage failed to report to ACMA for three consecutive quarters the number of scam SMS it had blocked; and
• Twilio had inadequate systems in place to comply with the anti-scam rules, but there was no evidence that scammers took advantage of these vulnerabilities.

ACMA has formally directed these telcos to comply with the Code. Telcos that breach ACMA directions to comply with the Code face penalties of up to $250,000.

Australian telcos have reported blocking almost 257 million SMS scams since the anti-scam rules came into effect in July 2022.

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Treasury consults on regulation of digital and crypto assets

Date: 17 October 2023
Source: The Treasury

Abstract:

The Federal Government has released a proposal paper that recommends making crypto exchanges and digital asset platforms subject to existing Australian financial services laws and requiring platform operators to obtain an Australian Financial Services Licence. The proposal paper also recommends requiring digital asset platforms adhere to minimum standards for holding tokens, standards for custody software, and standards when transacting in tokens. Feedback on the proposal paper is due by 1 December 2023, with further consultation on draft legislation planned for 2024.

In recent years, consumers have suffered harm and lost assets due to the collapse of crypto platforms. The proposed regulatory framework intends to increase oversight, protect consumers, support innovation, provide certainty in the industry, and ensure consistency with other jurisdictions.

The proposal paper discusses approaches to regulating digital asset intermediaries, licensing digital asset intermediaries, introducing minimum standards for facility contracts, and introducing minimum standards for ‘financialised functions’.

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Tesla pays $155,460 in penalties for alleged breaches of button battery safety and information standards

Date: 12 October 2023
Source: Australian Competition and Consumer Commission (ACCC)

Abstract:

Car manufacturer Tesla Motors Australia Pty Ltd (Tesla) has paid penalties totalling $155,460 in response to ten infringement notices issued by the Australian Competition and Consumer Commission (ACCC) for alleged breaches of mandatory button battery safety and information standards.

The ACCC alleged that Tesla failed to comply with both mandatory safety standards and mandatory information standards for products powered by button batteries in contravention of sections 106 and 136 the Australian Consumer Law. Between June 2022 and May 2023, Tesla supplied three models of Tesla key fobs (Model 3/Y, Model X and Model S) and two models of Tesla illuminated door sills (Model 3 and Model S) without conducting the required safety tests and providing mandatory safety warnings.

Button batteries, when ingested or inserted, can result in serious injury and death. The mandatory product and information standards for button batteries, which came into effect in Australia in June 2022, seek to mitigate the risk of injury and death caused by button batteries, especially for young children.

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ACCC warns caravan industry against misleading price and caravan weight claims

Date: 12 October 2023
Source: Australian Competition and Consumer Commission (ACCC)

Abstract:

The Australian Competition and Consumer Commission (ACCC) has put the caravan industry on notice that misleading representations are in contravention of the Australian Consumer Law (ACL) and may result in strong enforcement action.

In July 2022, the ACCC published the New caravan retailing: Ensuring industry compliance with the Australian Consumer Law report, which identified issues relating to the treatment of consumers and compliance with consumer law in the market for new caravans. The ACCC has continued to receive and investigate consumer complaints about caravans.

Some recent examples of misrepresentation include:

• statements about ‘price certainty’ in which the retailer told customers that the price of the caravan they ordered was fixed, but subsequently sought to increase the price while also giving the customer an option to cancel the contract; and
• inaccurate statements about the important features of the caravan, including weight and tonnage.

These caravan retailers have removed the false and misleading representations from their marketing materials and have committed to training their staff to improve compliance with the ACL.

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Telecommunications Industry Ombudsman identifies consumer complaints in Annual Report 2022-23

Date: 11 October 2023
Source: Telecommunications Industry Ombudsman (TIO)

Abstract:

The Telecommunications Industry Ombudsman (TIO) has released its Annual Report 2022-23 (Report), outlining top complaints made by consumers and small businesses about phone, internet and landline services. In the financial year ending 30 June 2023, the TIO received 66,388 complaints from consumers and small businesses (a decrease of 16.5% from the previous year).

Key findings from the Report include:

• Complaints about mobile services accounted for 48% of all complaints (the highest proportion in 6 years).
• For all service types, there was an increase in complaints in relation to poor customer service, failure to cancel a service, inadequate fault testing, and non-financial loss (including delays, stress and inconvenience). There was a decrease in complaints about service and equipment fees, intermittent service or drop outs, slow data speed, and other common issues.
• The TIO received 29.5% more complaints about Optus than in the previous financial year (a total of 20,323 complaints), largely in relation to the Optus data breach in September 2022.
• There were 1,634 complaints relating to financial hardship (an increase of 1.2%), with a majority these complaints being from residential consumers who experienced issues with their mobile service

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New mandatory safety standard protecting young children from choking hazards

Date: 6 October 2023
Source: Product Safety Australia, Australian Competition & Consumer Commission (ACCC)

Abstract:

Following consultation and advice from the Australian Competition & Consumer Commission (ACCC), the Albanese Government has approved a new mandatory safety standard for toys marketed at children under three years of age. The mandatory standard, set out in the Consumer Goods (Toys for Children up to and including 36 Months of Age) Safety Standard 2023 (Cth) (Standard), seeks to minimise the risk of choking and suffocation for small children.

Every year in Australia, approximately 2,500 young children present to hospital emergency departments due to injuries from dangerous or unsuitable toys. These toys often include rattles, teethers, dummies, and other toys that have small parts.

The Standard introduces strict design, construction, and testing requirements for all toys that are manufactured, designed, labelled, and marketed as playthings for children up to and including 36 months of age. The requirements ensure that toys do not contain small parts that can come loose during play or after reasonable wear and tear, aiming to prevent choking, suffocation, and death. The Standard also requires toys that contain button batteries to have secured battery compartments only accessible by a tool.

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Telecommunications Amendment (Disclosure of Information for the Purpose of Cyber Security) Regulations 2023 (Cth)

Date: 5 October 2023
Source: Federal Register of Legislation
Jurisdiction: Commonwealth
Status: Commenced

Abstract:

The Telecommunications Amendment (Disclosure of Information for the Purpose of Cyber Security) Regulations 2023 commenced on 30 September 2023, extending the operation of sections 15A and 15B of the Telecommunications Regulations 2021 for a further twelve months. This will allow the Australian government additional time to weigh the ongoing appropriateness and effectiveness of the regulations and to implement a more permanent solution in primary legislation.

These sections allow the disclosure of information or documents to financial services entities (s 15A) or government entities (15B), circumventing the prohibitions contained in s 276 of the Telecommunications Act 1997, if it is for the purpose of cyber security. Sections 15A(2) and 15B(2) provide the specified circumstances that must be present for the disclosure to be allowable under the regulations.

The amendment also changes the form by which the Minister for Communications may specify additional types of information or documents as disclosable under the sections, from a notifiable instrument form to a legislative instrument form.

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ASIC appeals Federal Court findings in case against ACBF Funeral Plans

Date: 4 October 2023
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

In September 2023, the Federal Court of Australia ordered ACBF Funeral Plans Pty Ltd (ACBF) to pay a $1.2 million penalty for misrepresenting the sale and promotion of a funeral expense insurance policy (ACF Plan) to consumers, primarily Indigenous people, in contravention of ss 12DA(1), 12DB(1)(a) and 12DB(1)(e) of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) (ACBF Funeral Plans Pty Ltd [2023] FCA 1041; BC202312500). See our previous Latest Legal Update here.

The court accepted the Australian Securities & Investments Commission’s (ASIC) claim that ACBF, by offering, promoting and selling the ACF Plan and representing that the ACF Plan provided a lump sum payout, had engaged in conduct that was misleading or deceptive and had made false or misleading representations. ASIC also alleged that ACBF falsely represented that it was owned or managed by Indigenous persons. Dismissing this claim, the court found that ACBF did make such representations, but that the representations were not false. ASIC is appealing this part of the decision.

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ASIC Action Against Cigno Australia and BSF Solutions for Alleged Unlicensed Credit Operations

Date: 4 October 2023
Source: Australian Securities & Investments Commission (‘ASIC’)

Abstract:

The Australian Securities and Investments Commission (ASIC) has initiated civil penalty proceedings against Cigno Australia Pty Ltd (Cigno) and BSF Solutions Pty Ltd (BSF), and their respective directors, concerning allegations of unlicensed credit activity.

Between July and December 2022, ASIC claims that the two companies provided short-term credit to over 100,000 consumers through a 'No Upfront Charge Loan Model' without holding valid Australian credit licenses. Under this scheme, consumers were charged excessive fees, sometimes amounting to more than 600% of the total loan value, which is in violation of the National Consumer Credit Protection Act 2009 (Cth). ASIC is concerned that this lending model was intentionally designed to circumvent consumer protection laws, allowing the companies to impose substantial fees on vulnerable and financially distressed consumers.

Moreover, ASIC also alleges that Cigno and BSF charged consumers over $70 million in fees while providing more than $34 million in loans without the requisite licenses. ASIC also believes that both directors participated in these unauthorised credit operations.

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Government responds to Privacy Act Review Report

Date: 29 September 2023
Source: Australian Government Attorney-General’s Department

On 28 September 2023, the Australian Government responded to the Privacy Act Review Report (Report) released by the Attorney-General in February 2023 after nearly three years of extensive consultation. The Report reviews the scope and application of the Privacy Act 1988 (Cth) (Privacy Act), including whether the Privacy Act is fit for purpose and whether individuals should have direct rights of action to enforce privacy obligations, among other issues of protection, regulation, and enforcement.

Of the 116 proposals in the Report, the Government agrees to 38 proposals, agrees in-principle to 68 proposals and notes 10 proposals. ‘Agrees in-principle’ indicates that the Government would like to conduct a comprehensive impact analysis and further engagement before making a final decision on the implementation of the proposals.

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Fintech company pays $53,280 penalty for potentially misleading representations about crypto product

Date: 27 September 2023
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

Bobbob Pty Ltd (Bobbob), a fintech company, has paid $53,280 in response to four infringement notices issued by the Australian Securities & Investments Commission (ASIC). ASIC was concerned that Bobbob was making certain representations about a crypto-asset linked investment product (product) that had the potential to mislead consumers about the product’s approvals, risks, characteristics and benefits.

In the infringement notices, ASIC stated that it had reasonable grounds to believe that Bobbob had contravened s 12DB(1)(e) of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) by making false or misleading representations about:

• whether the product was approved or licensed by ASIC;
• the similarity of the product to a bank account, including the risk profile;
• whether the product was a safe and stable investment with minimal risk of capital loss; and
• whether the product earned all customers an interest rate of 7.6% per annum from the time they invested.

The product was offered between April and December 2022. During this time, approximately 700 customers deposited funds totalling $1.6 million. Bobbob has since returned all funds to customers (with interest).