- Posted by DLA Piper Retail Thera-IP Team
- On 7 March 2019
Last week, the Australian Consumer and Competition Commission (ACCC) announced its annual compliance and enforcement priorities for 2019. The list included a number of priorities that are particularly relevant and important for retail and consumer-facing businesses, including:
- consumer guarantees, particularly in relation to high value white goods and electrical goods;
- customer loyalty schemes;
- advertising practices on social media platforms;
- collection and use of consumer data; and
- franchising arrangements.
This announcement comes as a timely reminder for businesses to ensure they are aware of, and have systems and processes in place to ensure compliance with, the Competition and Consumer Act 2010 (Cth) (CCA), including the Australian Consumer Law (ACL). In particular, if business have operations that fall within one of the priority areas it is particularly important for businesses to review their operations in those areas.
The ACCC has also indicated that it is more willing to investigate and take action against businesses, as a result of additional budget support from the government and pecuniary penalties collected for breaches of the ACL (for more information on these penalties, see our previous post).
Customer Loyalty Schemes
Aside from a handful of cases, this area has not received significant regulatory attention since the early 2000s. In announcing this focus, the ACCC indicated that it will be monitoring whether consumers are properly informed and receive the benefits promoted by many of these schemes, the extent to which the schemes affect customer loyalty, and the impact of such schemes on competing firms and in particular new entrants.
This is an on-going area of focus for the ACCC, however, it is being given particular attention this year in response to a high volume of complaints received by the ACCC in 2018 with respect to failures of high value consumer goods. This includes white goods, electrical goods, and particularly those sold by large retailers and manufacturers.
Advertising Practices on Social Media
Similarly, the ACCC continues to receive complaints, particularly from younger consumers, about the detrimental impact of social media advertising practices. The ACCC is paying particularly close attention to ‘subscriptions traps’ i.e. where an online retailer treats a consumer’s decision to make a single purchase (generally at a discounted price), as consent to signing them up for a paid subscription or membership service, without adequately disclosing on-going fees and auto-renewal mechanisms (which are higher risk provisions under the unfair contract terms regime).
The ACCC has also indicated that it will be closely monitoring the impact of collecting and using consumer data on consumers, with a particular focus on the transparency of data practices and the adequacy of disclosure to consumers. This focus is driven, at least in part, by the ACCC’s digital platforms inquiry.
The ACCC will be closely monitoring franchisors, to ensure compliance with the Franchising Code of Conduct and that small businesses receive protections provided under the CCA.
An underlying theme of the Final Report of the Financial Services Royal Commission was that there are parts of the financial services sector in which there is less competition and that this affects consumers’ level of service. In response, the ACCC has established a Financial Services Competition Branch, which has a permanent competition and investigations team. The ACCC expects to complete a number of in-depth investigations in this area during 2019, which it has flagged may result in court proceedings.
The ACCC will also be continuing to focus on competition and fair trading issues in the agriculture sector, with a particular focus on unfair contract terms in supply agreements and viticulture.
Additionally, the ACCC has indicated that it will continue to focus on a number of areas, including:
- pushing for pecuniary penalties to attach to the inclusion of unfair terms in standard form business-to-business contract term laws;
- consumer guarantees rights in the new car retailing industry; and
- preventing conduct in breach of the ACL and CCA, which has the potential to specifically impact on the welfare of Indigenous Australians, as well as vulnerable or disadvantaged consumers.
Consumer Data Rights
A notable focus for the ACCC will be advancing its work on the Consumer Data Right (CDR), which will allow consumers the right to freely access their data in a way that will enable them to readily compare products and services. The ACCC’s work will start with banking, and then move on to other designated sectors such as telecommunications and energy. The ACCC is currently drafting the rules for the CDR system and expects generic data sharing pilots will be underway by July 2019, with consumer data to be first shared by February 2020.
More information can be found on the 2019 ACCC Compliance and Enforcement Priorities at this link.
This post was co-authored by Luke Bardas (Solicitor), Valiant Warzecha, Nicholas Boyle (Senior Associate) and Melinda Upton.