This is the latest in a series detailing developments in competition and consumer law in Australia, including the activities of Australia’s competition and consumer regulator, the Australian Competition and Consumer Commission (ACCC), published judgments, recently issued proceedings and any relevant changes in the law.
This article covers events which occurred between September 2022 and March 2023. The previous update is available here.
Uber ordered to pay $21 million penalty despite agreeing to $26 million
The Federal Court has ordered Uber to pay a penalty of $21 million after Uber admitted that it had breached the Australian Consumer Law by falsely representing that riders may be charged a cancellation fee if they cancelled their trip, even if they were cancelling during Uber’s ‘free cancellation period’. Uber also admitted that it engaged in misleading or deceptive conduct by displaying a price range estimate for its Uber Taxi ride service which was higher than the actual fare most of the time. The parties submitted that a $26 million penalty was appropriate, but Justice O’Bryan, in a rare occurrence, found that the lower figure of $21 million was more appropriate, on the basis that the original evidence adduced to support the penalty was “grossly inadequate” and that the proposed penalty of $8 million for the Uber Taxi ride representation was not proportionate to the relatively low number of affected consumers. The ACCC media release can be viewed here.
Full Federal Court increases Employsure penalty
As reported in a previous Competition and Consumer Law Update, the Full Court of the Federal Court previously found that Employsure had breached the Australian Consumer Law by using Google advertisements which represented that it was affiliated with a government agency. The Full Court has now overturned the previous decision that Employsure pay $1 million in penalties, and instead ordered that it pay $3 million in penalties. The Full Court found that the higher penalty was necessary to deter Employsure and other companies from engaging in similar activities in the future. The ACCC media release can be viewed here.
Federal Court orders Mercedes-Benz to pay $12.5 million in penalties
The Federal Court has ordered Mercedes-Benz to pay $12.5 million in penalties for failing to adequately notify customers about the compulsory recall of vehicles with Takata airbags. The Taka Recall Notice required vehicle manufacturers to notify consumers about the recall using “appropriately urgent terms”, but Mercedes-Benz admitted that it failed to do so by describing the recall as a “precaution” and falsely stating that the airbags had not caused any accidents. This is the first time that a company has been penalised for failing to comply with a mandatory recall notice. The ACCC media release can be viewed here.
Full Court dismisses appeal against Mazda judgment
The Full Court of the Federal Court has dismissed an appeal by the ACCC against a previous judgment that Mazda did not engage in unconscionable conduct in its dealings with certain customers. As we previously reported, the ACCC was successful in arguing that Mazda engaged in misleading and deceptive conduct and made false representations to consumers by denying refund requests in relation to vehicles that had serious and recurring faults, but was unsuccessful in arguing that this amounted to unconscionable conduct. The Full Court has now rejected the ACCC’s appeal. Unless the ACCC makes a special leave application to the High Court, the case will be referred back to the trial judge for a hearing on penalties. The ACCC media release can be viewed here.
ISPs to pay a total of $33.5 million in penalties for NBN maximum speed claims
Several leading Australian ISPs have been ordered to pay a combined total of $33.5 million in penalties after they each admitted to making misleading statements to consumers regarding the maximum speed of their NBN services. The ISPs falsely represented that their fibre to the node NBN services could reach speeds of up to 50Mbps or 100Mbps, when in fact they did not have adequate systems and policies in place to ensure that this was possible. The ISPs have each implemented programs to contact impacted customers and offer refunds. The ACCC media release can be viewed here.
Booktopia ordered to pay $6 million for misleading statements
The Federal Court has ordered online retailer Booktopia to pay $6 million in penalties for, between 2020 and 2021:
- including a statement in its Terms of Business that consumers were only entitled to a refund, repair, or replacement if they notified Booktopia within two business days of receiving a faulty product;
- including a statement in its Terms of Business that consumers were not entitled to a refund for digital products for any reason; and
- telling 19 individual consumers that it did not have an obligation to provide a refund or replacement if the consumer had not notified Booktopia within two business days of receiving a faulty product.
The Court held that each of the above statements was misleading, because consumers are entitled to a refund or replacement for faulty products (including digital products) within a reasonable time under the Australian Consumer Law. The Federal Court also ordered Booktopia to implement a compliance program and publish a notice on its website correcting the claims. The ACCC media release can be viewed here.
SmileDirectClub ordered to pay $3.5 million in penalties
The Federal Court has ordered that SmileDirectClub pay $3.5 million in penalties for falsely representing that consumers may be entitled to a private health rebate for part of the cost of the company’s teeth aligners, when in fact 98.5% of Australian private health companies did not provide the relevant coverage. The Court also ordered that SmileDirectClub compensate affected consumers and implement a compliance program. The ACCC media release can be viewed here.
NQ Cranes to pay $1 million penalty for cartel conduct
NQ Cranes has been ordered to pay a $1 million penalty after admitting that it had entered into an anti-competitive cartel agreement with a competitor that had the purpose of allocating overhead crane service customers in parts of Queensland and Newcastle. The companies had agreed not to target each other’s current customers and to instead focus on competing against other companies in the industry. The ACCC media release can be viewed here.
ACCC sues Fitbit for representations regarding faulty devices
The ACCC has commenced proceedings against Fitbit, alleging that between 2020 and 2022 it made misleading statements to consumers that they would not be entitled to a refund unless they returned a faulty product within 45 days. The ACCC also alleges that Fitbit supplied replacement devices which were also faulty, and then represented to consumers that they were not entitled to a second replacement device if they were outside the ‘limited warranty period’ for the original device. Under the Australian Consumer Law, consumers have a right to a refund or replacement to a faulty good regardless of whether this is requested within a 45 day ‘refund period’. The ACCC media release can be viewed here.
ACCC institutes proceedings against Dell in relation to add-on monitors
The ACCC has instituted Federal Court proceedings against Dell for allegedly misrepresenting that ‘add-on’ monitors were offered with a greater discount than was actually the case. The ACCC claims that the monitors were presented with a ‘strikethrough’ price which was higher than if the monitor had been purchased alone, which made it appear that the discount for consumers was higher than was actually the case. The ACCC media release can be viewed here.
Bloomex sued for misleading online advertising
The ACCC has commenced proceedings against Bloomex, alleging that the online florist and gift retailer:
- displayed products on its website with a star rating purportedly based on customer reviews, but did had not incorporated any customer feedback into those star ratings since 2015 (and, in some cases, included ratings from customers of Bloomex’s overseas businesses);
- displayed its products with a ‘strikethrough’ price which was higher than the price point at which the product had previously been sold; and
- included a mandatory surcharge of between $1.95 to $4.85 on orders, without adequately disclosing this to customers.
The ACCC media release can be viewed here.
ACCC commences proceedings against DG Institute
The ACCC has sued DG Institute for allegedly making false and misleading statements about two of its programs:
- In relation to its Real Estate Rescue program, the ACCC alleges that DG Institute misrepresented to prospective students that, if a bank repossesses a home, the homeowner loses all the equity, in an attempt to seek to buy properties from financially distressed homeowners. The ACCC alleges that this was misleading, as a homeowner may retain some of the value of their equity when their house is repossessed.
- In relation to its Master Wealth Control program, the ACCC alleges that DG Institute misrepresented that a ‘Vestey Trust’ would be “completely bulletproof” from creditors, when this was not the case.
The ACCC is also seeking orders personally against Ms Grubisa, the director of DG Institute, on the basis that she was involved in the contravening conduct. The ACCC media release can be viewed here.
Legislative and Other Developments
ACCC announces 2023-2024 enforcement priorities
The ACCC has announced its enforcement priorities for 2023-2024, which include:
- greenwashing claims (further details of which are set out below);
- scam detection and disruption;
- deceptive advertising in the digital economy;
- unfair contract terms;
- competition and consumer issues in relation to the pricing and selling of essential services such as energy;
- consumer guarantees in relation to high value goods such as motor vehicles;
- competition and consumer issues relating to digital platforms; and
- consumer product safety issues for young children.
The enforcement priorities provide some guidance in relation to how the ACCC will deploy its resources over the coming year, in addition to its enduring compliance and enforcement priorities such as cartel conduct, anti-competitive conduct, and conduct impacting First Nations Australians. The ACCC media release can be viewed here, and a summary of the enforcement priorities can be viewed here.
ACCC announces greenwashing campaign
The ACCC has announced a broad investigation into “greenwashing”, meaning unsubstantiated environmental or sustainability claims made by companies when marketing their goods and services to Australian customers. The ACCC has indicated that it will be issuing substantiation notices to business regarding claims such as “environmentally friendly” and “sustainable”, requiring the business to provide a scientific basis for the claims. The ACCC media release can be viewed here.
The ACCC has also announced that its initial “sweep” into greenwashing on the internet unearthed “widespread concerning claims” and that, of the 247 businesses reviewed during the sweep, 57 percent were identified as having made possible greenwashing claims. The ACCC is engaging directly with the affected businesses. The ACCC media releases on the initial results of its sweep can be viewed here.
ACCC to target social media influences and fake online reviews
The ACCC has announced that it intends to conduct a “sweep” to identify misleading testimonials and endorsements by social media influences, following over 150 tips that the consumer watchdog received in response to a Facebook post. The ACCC is targeting influences who fail to disclose their affiliation with a product or company that they are promoting. The ACCC intends to review Instagram, TikTok, Snapchat, YouTube, Facebook, and Twitch in order to identify sectors where this practice is widespread. The ACCC media release can be viewed here. The ACCC has also announced a similar “sweep” for business using fake online reviews to promote their products and services. The ACCC media release can be viewed here.
Various companies agree to financial penalties
Various companies have agreed to financial penalties following ACCC action:
- Mosaic Brands has paid $226,400 in penalties for misrepresenting that its face masks were “FDA and CE approved” and that its hot water bottle was “ACCC approved”. The ACCC media release can be viewed here.
- Jim’s Group has paid $24,420 in penalties in relation to its Jim’s Dog Wash franchise. The ACCC issued infringement notices in relation to Jim Group’s failure to disclose certain information to prospective franchisees, such as the number of former franchisees and their contact details. Jim’s Group also misrepresented to a franchisee that their cooling off rights ended once they paid a deposit, which is not the case under the Franchising Code. The ACCC media release can be viewed here.
- ING Bank has paid penalties of $53,280 for missing deadlines under the Consumer Data Right Rules regarding the disclosure of data for certain financial products, and for misrepresenting to consumers that its “accredited person request service” had been operational since 1 July 2021. The ACCC media release can be viewed here.