19 Nov 2009

Second set of Australian Consumer Law reforms affect ordinary trade

In preparation for the second tranche of the Australian Consumer Law (ACL) reforms (to be introduced into Parliament next year) the Treasury has released a consultation paper with draft Regulation Impact Statements (RIS) for public comment by Friday 27 November.

The draft RIS set out options for various wide-ranging reforms to the Trade Practices Act affecting everyday trade and commerce, and also for implementing some of the recommendations on product liability law made by the Productivity Commission’s Review of the Australian Consumer Product Safety System.

As the RIS attempt to gauge the regulatory burdens and consumer benefits of each proposal, this is a good opportunity for business to identify any overly burdensome reforms and put its views to the Federal Government.

False or misleading in section 53 to be clarified

Currently section 53 of the Trade Practices Act applies to certain representations. Depending upon the type of representation, these are prohibited if they are "false" or "false or misleading". The proposed changes would tidy up the section by prohibiting a representation if it is "false or misleading".

This does have the effect of widening the scope of section 53. As the consultation paper notes, most false or misleading representations are also false or misleading conduct, and hence are already covered by section 52. The key difference, however, is that a breach of section 52 does not result in a criminal prosecution - a breach of section 53 can lead to criminal penalties.

The paper is also proposing a specific prohibition on false or misleading representations concerning testimonials.

Information and standards of disclosure to consumers

The type and style of information provided to consumers are also being considered.

Currently, the Federal Minister can declare, by regulation, a standard to be a consumer product information standard, meaning that goods that fall within that standard cannot be supplied without certain information being supplied. There are also State and Territory information standards applying to certain classes of goods. The result is that if something is not covered by a Commonwealth standard, it could be covered by a State and Territory information standard - but only in that jurisdiction.

The paper sets out two options:

  • incorporate the Trade Practices Act information standards power without amendment into the ACL, which applies to goods only; or
  • include a general power in the ACL to prescribe information standards in relation to both goods and services.

The form in which information is disclosed to a customer is also affected, with three options being proposed:

  • not adopting standard of disclosure requirements in the ACL, so the national law would remain the same, although Victorians would lose their current protections;
  • adopting, in principle, the Victorian requirements that documents specifically required to be provided under the ACL must be clear and legible; or
  • adopting, in principle, the Victorian requirements that all consumer documents must be clear and legible.

Other reforms proposed

Comments have also been sought on the following:

Telemarketing and door-to-door: unsolicited offers and sales that occur in a non-retail environment, in person or via telephone, are currently regulated by different State and Territory laws, as well as certain Federal laws. Stakeholders were keen on harmonising the different compliance regimes. Three options are canvassed: a total ban, and two levels of regulation with different levels of compliance and consumer protection.

Bills and receipts: should business be required to provide receipts or itemised bills in certain circumstances, in addition to existing legal requirements to do so?

Lay-by sales: should there be national regulation of lay-by sales?

Dual pricing: should suppliers be prohibited from selling at more than the lowest appended price where multiple prices are indicated for a good?

Unauthorised advertisements or services: should the ACL ban asserting a right to payment for unauthorised advertisements? Should the recipient of unsolicited services should be liable to pay for them?

Offering gifts and prizes without an intention to provide them, or to provide them as offered: should the prohibition also impose a requirement that gifts and prizes offered are provided within a "reasonable time" and as ordered, thereby removing the need to show the offeror had an intention not to supply?

Accepting payment for goods or services without an intention to provide them, or to provide them as offered: should this be altered in a similar way - that is, a requirement should be imposed to provide goods or services within a "reasonable time" after payment is accepted?

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.