Penalties for breaching the Australian Consumer Law increase significantly
The Australian Federal Parliament has passed legislation that increases the maximum fines for breaches of the Australian Consumer Law (ACL), following a report from Consumer Affairs Australia and New Zealand recommending the increase.
The maximum penalty for a relevant breach of the ACL (including misleading and deceptive conduct and unconscionable conduct) for corporations has increased from $1.1 million to the greater of:
- AU$10 million;
- if court can determine the total value of the benefit obtained from the offence, three times the value of that benefit; and
- if the court cannot determine the total value of the benefit, 10% of the corporation’s annual turnover in the preceding 12 months.
The maximum penalty for individuals has also increased from $220,000 to $500,000.
The Australian Competition and Consumer Commission (ACCC) released a statement endorsing these changes, with ACCC Chair Rod Sims saying that “penalties need to hit the bottom line so they are not simply seen as the cost of doing business”.
This is a significant change that may impact the compliance priorities of corporations doing business in Australia, particularly given that the Federal Court has found that the ACL may apply to overseas companies which sell goods to Australian consumers.
The change also comes shortly after the Federal Court has ordered significant penalties, in the several millions of dollars, under the former penalties framework in several recent decisions. This change therefore paves the way for the ACCC to seek even higher penalties than it has been to date.
The new penalties framework comes into effect on the day after the Bill receives royal assent and will apply to contraventions that occur after that date. It will not have retrospective effect.