13 Nov 2014
Highlights of the ACCC's consumer protection and product safety activities in 2013-2014
by Sara Dennis, Grace Ness
Education of consumers and businesses remains a key focus, but also the ACCC has also undertaken considerable monitoring and enforcement activity.
The ACCC released its 2013/2014 annual report at the end of October. This article highlights some key developments and outcomes over the past year in order to give business a useful snapshot of the regulator's activities.
Consumer protection: Compliance and enforcement tools
Over $12 million in penalties and other remedies under the Australian Consumer Law were issued during the past financial year, intended as a strong message to business. The release of the ACCC Compliance and Enforcement Policy in February 2014 highlighted the continued focus on compliance with the ACL.
Some key aspects of the ACCC's 2013/2014 activities were:
- 53 proceedings relating to consumer protection enforcement. Two examples of note are: In November 2013, the Federal Court ordered that Australian Power & Gas pay $1.1 million for illegal door-to-door selling practices. The highest profile case in which the ACCC was involved saw the High Court allow an appeal by the ACCC in relation to misleading advertisements by TPG Internet and reinstate the $2 million penalty ordered by the trial judge.
- Unconscionable conduct, making false and misleading claims as well as deceiving customers were the main elements in consumer claims. For example, Coles Supermarkets was held to have misled consumers by stating that its bread was "Baked Today. Sold Today" or "Freshly Baked In-Store" as bread was partially baked and frozen offsite by a supplier before being finished off in a Coles store. The matter is awaiting judgment on penalty.
- In order to resolve investigations in an expedient manner, a number of undertakings were entered into to remedy harm or accept responsibility and establish or review compliance programs. Examples include refunds provided to affected customers and corrective advertising in the print and electronic media.
- Interestingly, no public warning notices or substantiation notices were issued.
- A number of disqualification orders were issued primarily relating to directors being involved in systematic unconscionable conduct or knowingly acting in breach of the ACL. For example, a company's sole director was ordered to pay penalties totalling $100,000 for deliberately acting to mislead and deceive small businesses in order to generate ink cartridge sales.
- In the same vein, the ACCC received payment for 23 infringement notices from nine traders with penalties totalling over $220,000. For example, Brand Republic paid five infringement notices totalling $51,000 and provided a court enforceable undertaking after supplying children's nightwear that failed to comply with the mandatory standard. Misleading advertisements and statements were also the subject of multiple infringement notices throughout the year.
2013-2014 saw a focus on unsafe imports and chemicals in consumer products. One example of the focus on chemicals is the testing to identify and address concerns with certain cosmetics which are used around the eyes. This is to be a continuing focus of investigation in 2014/2015. There was also considerable focus on button batteries and sunglasses with an emphasis on market surveillance in relation to the latter.
Recalls and reporting
In 2013-2014, 496 recalls were received by the ACCC of which 267 related to general consumer goods. Of these, 91 were actively identified and negotiated by the ACCC. Interestingly, the report noted that the number of recalls that the ACCC has monitored is showing an upward trend over the past five years.
The ACCC also received 2601 mandatory reports submitted when a business became aware of serious injury, illness or death associated with a consumer products. This is a slight increase (of approximately 100 reports) compared to the 2012/2013 financial year. More than half of the reports involved food or drink and twenty recalls resulted from products referenced in mandatory reports.
The ACCC continues to make recommendations to the Minister for Small Business regarding product safety regulation. In March 2014, the new standards for portable pools came into force. In 2015 the new service standard for corded internal window coverings will be introduced.
Having reflected on action taken by the ACCC in the 2013/2014 financial year, it is time to look ahead and to consider whether your business is engaged in activities, or in a sector, in which the ACCC has indicated a particular focus. These include:
- telecommunications, energy, fuel and supermarket sectors;
- online drip pricing and comparator websites; and
- credence claims, carbon price claims and consumer guarantees (particularly in the context of extended warranties).