Competition and Consumer Law Update – December 2019/ January 2020 Edition
This is the latest in a monthly 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 in December 2019 and January 2020. The previous November 2019 update is available here.
Trivago found to have misled consumers about hotel rates
Justice Moshinsky in the Federal Court has found that Trivago breached the Australian Consumer Law (ACL) by representing that its website helped consumers identify the cheapest available rates for a given hotel. The Court found that this was misleading or deceptive because Trivago’s website showed search results based on an algorithm that was weighted towards hotel booking sites that paid Trivago the highest commissions, meaning that the search results often did not highlight the cheapest rates. In the circumstances, Trivago was also found to have misled consumers into believing that its website provided an impartial, objective and transparent price comparison for room rates when that was not the case. The Court also found that Trivago misled consumers by presenting standard room prices by ‘striking through’ another rate, to give users the impression they would be saving money by getting a room at cheaper rate, when in fact the rate that was struck through often reflected the price of a more expensive luxury room. ACCC Chair Rod Sims stated that the case serves as a warning for comparison websites and search engines that rank results based on advertising. Trivago has until 17 February 2020 to appeal the decision. The ACCC media release can be viewed here.
Federal Court orders record $125 million penalty against Volkswagen
The Federal Court ordered Volkswagen to pay $125 million in penalties after it admitted that it had breached the ACL by falsely representing that it complied with Australian diesel emissions standards. This is nearly five times higher than the previous record penalty ordered for a contravention of the ACL. Volkswagen admitted that, between 2011 and 2015, many of its vehicles had two operating modes: one was used for emissions testing, and the other was used for normal driving and produced higher emissions. Volkswagen and the ACCC had proposed (by consent) that Volkswagen should pay $75 million in penalties, but Justice Foster rejected this proposal and imposed a penalty of $125 million, based on the ‘egregious nature of the consumer fraud perpetrated by [Volkswagen]’. The maximum penalty awardable for contraventions of the ACL has increased since this proceeding started. The ACCC media release can be viewed here.
Geowash ordered to pay $4.2 million penalty for misleading franchisees
The Federal Court has ordered the former carwash franchisor Geowash and its director and franchising manager to pay penalties totalling $4.2 million. Last year, the Court found that Geowash acted unconscionably and made false and misleading representations by using payments it collected from franchisees for commission payments to its director and franchising manager and for other Geowash expenses, when it had represented to franchisees that this money would be spent establishing each franchisee’s own car wash site. The ACCC media release can be viewed here.
Oscar Wylee sued for misleading charitable donations claims
The ACCC has commenced proceedings against eyewear company Oscar Wylee regarding its advertisements which stated that every time a consumer bought a pair of glasses, it would donate a pair to someone in need:
However, according to the ACCC, Oscar Wylee only donated 3,000 glasses over a period in which it sold over 320,000 glasses. The ACCC also claims that Oscar Wylee represented between 2014 and 2018 that it had partnered with Rose Charities when it had in fact only made a single, small donation to the charity and made a donation of 100 frames in 2014. The ACCC media release, including the originating court documents, can be viewed here.
ACCC commences proceedings against Superfone for misleading telemarketing
The ACCC has commenced proceedings against Superfone, a telecommunications provider, alleging that Superfone made false or misleading representations and breached provisions regarding unsolicited consumer agreements as a result of it making unsolicited telemarketing calls. The ACCC claims that Superfone falsely represented during marketing calls that its services were endorsed by existing telecommunications providers. The ACCC also claims that Superfone’s telemarketers told consumers that they could not terminate their contract without penalty, when in fact consumers who enter into unsolicited consumer agreements have a ten-day cooling-off period under the ACL. The ACCC media release, including the originating court documents, can be viewed here.
Penalties for misleading advertising
Several companies have agreed to pay pecuniary penalties for false or misleading advertising following infringement notices issued by the ACCC:
- Snap Send Solve, an Australian company which runs an app that allows users to report issues to local councils, has agreed to pay a penalty of $12,600 for false or misleading advertising following an infringement notice from the ACCC. The ACCC alleged that Snap Send Solve falsely represented that photographs submitted by users would be sent to local councils, when in fact the company withheld photographs from local councils which did not pay a subscription fee to the company. The ACCC media release can be viewed here.
- 4WD Supacentre, a four-wheel drive and outdoors accessories store, has agreed to pay $63,000 in penalties for misleading consumers about its ‘was/now’ pricing. The ACCC issued infringement notices in relation to Supacentre’s advertising of sales prices by reference to higher ‘was’ prices when the products had not been sold at the ‘was’ price during the previous three months. For example, Supacentre advertised a product with a ‘was’ price of $279, when in fact it had not been advertised at a price higher than $104 during the previous three months. The ACCC media release can be viewed here.
- Grays Ecommerce Group, Berwick Motor Group, and HG Innovations have agreed to pay penalties totaling $63,000 for selling or advertising vehicles which were the subject of an active compulsory recall notice for vehicles fitted with defective Takata airbags. The ACCC alleged that selling or advertising these vehicles amounted to a false representation that they were of salable quality, which was not the case. The ACCC media release can be viewed here.
- Kayo Sports, a sports streaming service, has paid a penalty of $12,600 as a result of an infringement notice issued by the ACCC alleging that Kayo had misled consumers about their eligibility to receive a discounted subscription offer. According to the ACCC, the details of the offer did not adequately disclose that it was only available to consumers who had not previously used Kayo. The ACCC media release can be viewed here.
ACCC releases report into customer loyalty schemes
The ACCC has released its final report into customer loyalty schemes. The report includes recommendations that loyalty schemes improve communication with customers, improve their data protection practices and stop automatically linking credit cards with loyalty scheme profiles. The report also recommends simple changes such as alerting members of when points are about to expire. Competition and consumer issues arising from customer loyalty schemes are one of the ACCC’s current priorities.
New consumer code for providers of solar and energy storage systems
The ACCC has released a new authorised code which improves protections for consumers of products such as solar generation systems, energy storage systems, electrical vehicle storage charging and other energy products and services. Signatories to the New Energy Tech Consumer Code must comply with the minimum standard obligation of good practice and consumer protection, including avoiding high pressure sales tactics, being clear and transparent in advertising and educating consumers about their rights. The ACCC media release, and more information on the Code, can be found here.
Government response to the ACCC’s Digital Platform Inquiry
The Australian Government has provided a response to the ACCC’s Digital Platforms Inquiry, which was released in July 2019. (See more information on the Inquiry here.) The Government’s response provides a roadmap for broad reforms in response to the Inquiry which are aimed at promoting competition, consumer protection and a sustainable Australian media landscape. The ACCC press release can be found here and the Government’s response can be found here.