16 Apr 2010

Australian Consumer Law now in force - at least, most of it is

The first part of Australia's ambitious reforms of consumer law, the Trade Practices Amendment (Australian Consumer Law) Act (No. 1) 2010, is now in operation - excluding the unfair contracts terms provisions - as of 15 April 2010. It is expected that the unfair contracts terms provisions will commence on 1 July 2010.

The Australian Consumer Law reforms which are now in effect will give courts:

  • additional powers to impose civil penalties on corporations and individuals for breaches of certain unfair competition and consumer protection provisions of the Act of up to $1.1 million for a corporation and $220,000, or disqualify a person from managing a corporation
  • the power to order a company in breach of certain unfair competition and consumer protection provisions to provide refunds to redress the loss or damage suffered by third parties and consumers.

The ACCC will have new powers to issue:

  • a notice requiring a party to provide information and or documents to substantiate any claims made - such as any advertising - in relation to the supply of goods and services
  • an infringement notice to companies and individuals within 12 months after an alleged contravention of certain unfair competition and consumer protection provisions imposing a fine of up to $6,600 for a company and $1,320 for an individual
  • a public warning notice if the Commission has reasonable grounds to suspect that certain conduct may contravene certain provisions of the unfair competition and consumer protection provisions of the Act or if a person refuses or fails to comply with a substantiation notice.

What does this mean for you?

This amendment adds some real teeth to the powers to enforce the TPA. In particular the ACCC can in effect reverse the onus to require any advertiser to justify their claims by issuing a substantiation notice - irrespective of whether the ACCC has any basis to believe the advertising may not be 100 percent accurate.

There are also, for the first time, penalties of up to $1.1 million for "unconscionable conduct", including unconscionable conduct towards small business.

These changes reinforce the need for Australian companies to review and update their compliance programs.

Contraventions of the consumer and fair trading parts of the Act now face a much stiffer regime for enforcement and the costs of a careless or inadvertent breach has now become much higher.

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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.