Competition and Consumer Law Update – October 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 October 2020. The previous August and September 2020 update is available here.
ACCC loses case against Employsure and appeals
Justice Griffiths in the Federal Court of Australia has dismissed the ACCC’s case against Employsure, which offers employment relations advice to businesses. The ACCC made the following allegations against Employsure regarding breaches of the Australian Consumer Law, each of which was dismissed by the Court:
1. The ACCC alleged that Employsure ran Google Ads which misrepresented that it was affiliated with a government agency, an example of which is set out below:
Justice Griffiths found that the ads were not misleading, because a reasonable business owner would understand that they were not affiliated with the government as they were marked with the word ‘Ad’ and did not link to a ‘.gov’ URL.
2. The ACCC also alleged that these ads misrepresented that Employsure provided a free helpline, when in fact it used this helpline primarily to secure leads for its paid services. However, his Honour found that the helpline did offer free advice (albeit with a commercial purpose), and therefore the representations to this effect were not misleading.
3. The ACCC alleged that Employsure acted unconscionably in relation to three specific small businesses who had contacted it believing that it was associated with a government agency and were signed up to long-term contracts. The Court found that this was not unconscionable conduct but, rather, was merely ‘forceful marketing’.
4. Finally, the ACCC alleged that Employsure included unfair terms in its standard form contracts with small business regarding unilateral price increases, no early termination, and penalties for default. Justice Griffith found that these terms were not unfair, as they were either necessary to protect Employsure’s legitimate interests or were ‘balanced provisions’.
The ACCC has appealed the decision insofar as it relates to the Google Ads, arguing that the Court made an error in finding that reasonable business owners would have noted ‘small differences within the ads’ when seeking urgent workplace advice. The ACCC media release on the trial decision can be viewed here, and the ACCC media release on the appeal can be viewed here.
Viagogo ordered to pay $7 million penalty for misleading representations
Justice Burley in the Federal Court of Australia has ordered online ticket reseller Viagogo pay a penalty of $7 million for making false or misleading representations that:
1. it was the ‘official’ seller of tickets when it was in fact an unofficial reseller;
2. certain tickets on its website were more scarce than they actually were; and
3. consumers could purchase tickets for a price which did not include substantial additional fees, which were not disclosed until late in the booking process.
In ordering the $7 million penalty, Justice Burley described the misrepresentations as “serious” and “deliberate”, and noted that the scarcity representations were made on “an industrial scale”. His Honour also had regard to the need to deter other companies from engaging in similar conduct, and to make it clear to online companies that they are subject to the Australian Consumer Law. The ACCC media release can be viewed here. We have covered the decision on liability in detail in our website article.
iSelect ordered to pay $8.5 million in penalties for misleading consumers
The Federal Court of Australia has ordered iSelect, which provides an electricity comparison service, to pay $8.5 million in penalties for misleading consumers by representing that it would compare all electricity plans offered by its partners and recommend the most suitable plan. Instead, during the period between November 2016 and December 2018, iSelect restricted the number of electricity plans which it compared and therefore recommended plans that were not necessarily the most suitable. iSelect also failed to disclose that certain plans were only available via the call centres of its retail partners, and misrepresented the price of some plans due to an error in its website code. iSelect admitted liability and made joint submissions with the ACCC regarding appropriate penalties, which were accepted by Justice Moshinsky. The ACCC media release can be viewed here.
ACCC commences proceedings against Fuji alleging unfair contract terms
The ACCC has issued proceedings in the Federal Court of Australia against printing company Fuji Xerox Australia, alleging that its standard form small business contracts contain 173 unfair contract terms relating to automatic term renewals, excessive exit fees, and unilateral price increases. The ACCC alleges that these contract terms create a “significant imbalance” in the rights and obligations between Fuji and its small business customers and is seeking orders including declarations that these terms are void and an injunction to prevent Fuji from relying upon them. The ACCC media release, including the Concise Statement used to commence the proceedings, can be viewed here.
ACCC sues Agrison for misleading tractor warranties
The ACCC has issued proceedings in the Federal Court of Australia against Agrison, a Victorian business which sells tractors around Australia. The ACCC alleges that Agrison represented online and in print advertising that its tractors were supported by a five-year warranty and a national after-sales service network, and that Agrison would provide timely after-sales support to customers. However, according to the ACCC, Agrison did not have a service network to provide support or repairs throughout Australia, the warranty was a limited “parts only” warranty, and spare parts were not available within a reasonable timeframe. The ACCC is seeking orders including declarations, injunctions, and pecuniary penalties. The ACCC media release, including the Concise Statement used to commence the proceedings, can be viewed here.
Consumer Data Right Rules amended
As reported in our June/July 2020 update, the Consumer Data Right Rules, which are intended to give consumers greater control over their banking data, went live on 1 July 2020. The ACCC has now amended the rules to permit accredited intermediaries to collect data on behalf of third parties, provided that consumers consent. This means, for example, that an accredited business could use outsourced software to retrieve data from banking institutions. The ACCC media release can be viewed here.
Amaysim and Lycamobile agree to pay penalties regarding ‘unlimited’ plans
Telecomm companies Amaysim and Lycamobile have agreed to pay penalties totaling $126,000 after the ACCC issued them with infringement notices regarding their ‘unlimited’ plans. The ACCC alleged that the companies separately engaged in misleading or deceptive conduct by representing that their mobile plans were ‘unlimited’, when in fact they had a capped data allowance with charges for exceeding this cap. The ACCC media release can be viewed here.
EZ Smile pays penalties regarding dentistry misrepresentations
EZ Smile, a company which sells teeth straightening devices directly to consumers, has agreed to pay a penalty of $12,600 after the ACCC alleged that representations made on its website were false or misleading. EZ Smile had stated on its website:
‘EZ SMILE PTY LTD is an Australian based cosmetic teeth straightening company based in Sydney, Australia’, ‘the orthodontists in our lab will need to take a closer look at your teeth …’ and ‘your aligners are made in our clinical lab by experienced orthodontic professionals’.
The ACCC alleged that this represented that EZ Smile’s treatment plans and devices were supplied by dental professionals, including orthodontists who were registered in Australia, when this was not the case, as EZ Smile’s products were manufactured in China. The ACCC media release can be viewed here.