Competition and Consumer Law Update – June/July 2020 Edition

Competition and Consumer Law Update – June/July 2020 Edition

Competition and Consumer Law Update – June/July 2020 Edition

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 in June and July 2020, including the ACCC’s continuing response to the COVID-19 pandemic. The previous April and May 2020 update is available here.

Kogan discount code promotion found to be misleading

Justice Davies in the Federal Court of Australia has found that the 2018 EOFY promotion run by online retailer Kogan constituted false or misleading representations in breach of the Australian Consumer Law (ACL). The promotion involved a discount code which consumers could use on Kogan’s website to reduce listed prices by 10%. However, Kogan had increased the price of many of its products immediately before the promotion, meaning that, even with the discount provided by using the code, the price of the products was in many cases the same as, or greater than, the pre-discount price. Justice Davies found that this was misleading, as consumers would have understood the promotion to mean that they were receiving a discount, when this was not the case. The issue of penalties will be determined at a later date. The ACCC media release can be viewed here.

ACCC’s appeal against flushable wipes decision dismissed

The Full Court of the Federal Court of Australia has dismissed the ACCC’s appeal against the Federal Court’s decision (covered in our June 2019 update) that Kimberly-Clark did not mislead consumers by representing that its toilet wipes were flushable. The ACCC argued that the wipes, which were advertised as “flushable”, caused significant blockages in household and municipal sewer systems because they did not fully disintegrate. However, the Full Court found that there was no appealable error in the primary Judge’s reasoning, as the ACCC’s case had been predicated on showing that Kimberley-Clark’s wipes caused actual harm (as opposed to merely a risk of harm) to sewerage systems, which it had failed to prove. The ACCC media release can be viewed here.

ACCC loses appeal against TPG ‘prepayments’ clause

The Full Court of the Federal Court has dismissed the ACCC’s appeal against the Federal Court’s decision (covered in our October 2019 update) that a term in some of TPG’s prepaid plans requiring customers to make a ‘prepayment’ for the plan was misleading. The ACCC argued that the term ‘prepayment’ was misleading because it represented that customers could use the money for out-of-plan services and that TPG would refund the money to customers if their plan was cancelled, neither of which was the case. The Full Court found that the term ‘prepayment’ did not convey these representations, so it was not misleading to make them. The ACCC media release can be viewed here.

Sony ordered to pay $3.5 million penalty for PlayStation refund misrepresentations

The Federal Court of Australia has ordered Sony to pay $3.5 million in penalties for making misleading representations to consumers who had sought refunds for allegedly faulty PlayStation games. Representatives from Sony had made the following misrepresentations to consumers:

  1. that Sony is not required to refund a game once it had been downloaded, or if 14 days had passed since it was purchased;
  2. that Sony did not need to provide a refund unless the game developer authorised it; and
  3. that Sony could provide refunds using virtual PlayStation currency instead of money.

Each of these statements misrepresented consumers’ rights under the consumer guarantees in the ACL, which do not expire once a digital product has been downloaded or after a certain period of time has elapsed, and which require refunds to be paid using the same currency with which the product was purchased. Sony admitted liability and made joint submissions to the Federal Court with the ACCC regarding appropriate penalties, which Justice Steward accepted. The ACCC media release can be viewed here.

Quantum Housing ordered to pay $700,000 in penalties for misrepresentations but ACCC appeals part of the decision

The Federal Court of Australia has ordered Quantum Housing to pay a $700,000 penalty for sending misleading letters and emails to investment property owners. The letters and emails pressured the owners to use property managers approved by Quantum Housing, but did not disclose that Quantum Housing had commercial links with these property managers. The letters and emails also stated that property managers must meet accreditation guidelines issued by Quantum Housing to preserve the owners’ National Rental Affordability Scheme incentives, when this was not the case. Justice Colvin also ordered Quantum Housing’s director, Cheryl Howe, to pay $50,000 in penalties for being knowingly concerned in the breaches. Quantum Housing went into liquidation in December 2019. The ACCC media release can be viewed here.

The ACCC also argued that Quantum Housing’s conduct was unconscionable under the ACL. Justice Colvin dismissed this argument because he found that the conduct did not depend on exploiting a special disadvantage of the financially savvy investors. The ACCC has appealed this finding, arguing that it is not necessary for there to be a special disadvantage on the part of the target of alleged unconscionable conduct for that conduct to breach the ACL. The ACCC media release on the appeal can be viewed here.

Service Seeking ordered to pay $600,000 penalties for misleading reviews

Service Seeking, an online tasking platform, has been ordered to pay $600,000 in penalties in relation to its “Fast Feedback” system. This system enabled companies and individuals promoting their own services on the site to use a template to draft their own reviews after completing a task, which was then emailed to the customer. If the customer did not respond within three days, the review was automatically published under the customer’s name. The ACCC alleged that this was misleading, as it represented that the reviews had been written by customers when this was not the case. Justice Jackson awarded the penalties on the basis that the contraventions were a “systemic course of conduct” and “an abuse of trust”. This is the latest in a series of actions taken by the ACCC regarding misleading online reviews and testimonials. The ACCC media release can be viewed here.

Medibank ordered to pay $5 million in penalties for misrepresentations

The Federal Court of Australia has ordered Medibank to pay $5 million in penalties for making false representations to members of certain Medibank AHM policies that they were not covered for joint investigations or joint reconstruction procedures, when these policies in fact entitled them to this coverage. Medibank self-reported the conduct to the ACCC in August 2018 and has undertaken to contact the affected policy-holders. Notwithstanding this, Justice Anderson ordered Medibank to also pay $5 million in pecuniary penalties, having regard to the seriousness of the contraventions and the fact that the contraventions continued after Medibank became aware of the conduct. The ACCC media release can be viewed here.

ACCC commences proceedings against Google for use of personal data

The ACCC has launched Federal Court proceedings against Google alleging that the internet giant misled Australian consumers regarding its use of their personal information. According to the ACCC, Google failed to properly inform consumers about its shift in 2016 to combine personal information in consumers’ Google accounts with data regarding activities on non-Google sites. As a result, data obtained from non-Google sites was linked to customers’ Google accounts, which included personally identifiable information. Google used this combined data to better target advertisements to these users. The ACCC alleges that Google failed to obtain informed consent of its consumers regarding this change, as it presented consumers with an “I agree” prompt such as this which did not adequately disclose the nature of the change:

 The ACCC media release can be viewed here.

ACCC commences legal action against Dodo and iPrimus for NBN speed claims

The ACCC has instituted proceedings against Dodo and iPrimus, both owned by Vocus Group. The ACCC alleges that the ISPs made false or misleading claims regarding the download and upload speeds their NBN customers could expect. According to the ACCC, Dodo and iPrimus calculated the ‘typical evening speed’ used in their advertising by making reference to only the daily 75 fastest speeds observed across their network, excluding slower speeds. The ACCC is seeking declarations, penalties, and costs against the ISPs. The ACCC media release, including the Concise Statement used to institute the proceedings, can be viewed here.

Proceedings issued against Megasave Couriers regarding franchising misrepresentations

The ACCC has commenced proceedings against franchisor Megasave Couriers and its director Gary Bourne in the Federal Court of Australia. The ACCC alleges that Megasave represented to prospective franchisees that they would receive guaranteed minimum weekly payments for a period of time and would be guaranteed a minimum annual income, despite the fact that Megasave repeatedly failed to make these payments to its franchisees. Megasave also attempted to impose additional terms on franchisees requiring them to submit weekly sales leads, which were not part of the original franchising agreements. Mr Bourne has undertaken not to dispose of his assets and the assets owned by any company he controls, including Megasave. The ACCC media release, including the Concise Statement used to institute the proceedings, can be viewed here.

ACCC sues Decathlon for selling sporting goods without compulsory warnings

The ACCC has commenced proceedings against sports retailer Decathlon, alleging that Decathlon sold sports and recreational goods that did not comply with applicable product safety standards. In particular, the complaint concerns basketball rings, basketball backboards and inflatable swimming pools sold by Decathlon which the ACCC alleges did not contain compulsory warning stickers. The ACCC also alleges that Decathlon falsely represented that some of the backboards could be installed on brickwork, when this was not the case. The ACCC media release, including the Concise Statement used to institute the proceedings, can be viewed here.

ACCC applies for special leave to appeal Pacific National merger decision

As covered in our previous update, the Full Court of the Federal Court of Australia rejected the ACCC’s appeal against a decision that Pacific National’s acquisition of the Acacia Ridge terminal from Aurizon was not likely to substantially lessen competition. The ACCC has now sought special leave to appeal this decision to the High Court of Australia. The special leave application has not yet been heard. The ACCC media release can be viewed here.

EB Games to refund customers for Fallout 76

The video games retailer EB Games has provided a court-enforceable undertaking to the ACCC that it will refund customers who contacted EB Games between 14 November 2018 and 31 October 2019 to request a refund for the Fallout 76 game, which was launched in a notoriously bug-ridden state. Representatives of EB Games had told customers who complained about a range a faults with the game that they were not entitled to a refund. EB Games has acknowledged that this was likely misleading, as under the ACL consumers have a right to ask for a repair, replacement or refund when they have purchased a product with a major fault. The ACCC media release can be viewed here.

Qantas and Etihad to refund cancelled flights

Qantas and Etihad have each decided to contact customers to inform them that they are entitled to refunds for flights which have been cancelled or suspended as a result of COVID-19 travel restrictions. The ACCC had previously raised concerns with the airlines after receiving complaints from customers who were given flight credits rather than refunds. The ACCC media releases can be viewed here and here.

Further undertakings regarding NBN misrepresentations

NBN Co has admitted that it misled more than 20,000 Canberra consumers into believing that their current telephone and internet services would be disconnected if they did not move to the NBN. NBN Co has provided a court-enforceable undertaking to the ACCC that it will reimburse any early termination costs paid by the affected consumers and businesses who choose to return to their previous provider. The ACCC has taken action against several telecoms regarding similar representations over the last few years. The ACCC media release can be viewed here.

Freedom Furniture pays penalties for “no returns” statement

Freedom Furniture has agreed to pay a penalty of $25,200 following infringement notices from the ACCC regarding alleged false or misleading representations. Freedom Furniture had published a statement on its website that “Furniture items cannot be returned or exchanges, except at Freedom’s absolute discretion”. The ACCC claimed that this was a false or misleading representation, because it was likely to give the impression that customers could not return items even if they were faulty, when that is not the case under the ACL consumer guarantees. The ACCC media release can be viewed here.

Get Gizmo agrees to refund consumers charged during cooling off period

Get Gizmo, an electronics retailer, has provided a court-enforceable undertaking to the ACCC that it will refund approximately 4,000 customers who were charged during the 10-day cooling-off period that is mandated for purchases made as a result of unsolicited calls or visits. Get Gizmo and its director, Himanshu Bist, have also undertaken to cease engaging in any further unsolicited sales. The ACCC media release can be viewed here.

Chrisco provides undertakings regarding ongoing payments

Chrisco, a Christmas hampers company, has provided a court-enforceable undertaking which acknowledges that a term in its “HeadStart Plan” which allowed Chrisco to continue to take payments from consumers after they had fully paid for their existing order, may be an unfair contract term. Chrisco also admitted that its advertisements for these plans may have been misleading. Chrisco has agreed to update its agreements and ensure that consumers must opt-in to the ongoing payments. The ACCC media release can be viewed here.

Consumer data right goes live

The Consumer Data Right, which is intended to give consumers greater control over their banking data, as reported in our previous updates, went live on 1 July 2020. Individuals can now ask their bank to share any data the bank has regarding the consumer’s transaction accounts and credit cards. From 1 November 2020, consumers will also be able to access and share data related to their loans and investments from banks. The ACCC media release can be viewed here.

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