ACCC 2022 in Review | Consumer Protection
2022 saw a focus on digital platforms and the digital economy and, consequently, significant enforcement activity in this space by the ACCC. This focus included proceedings by the regulator against Meta and Airbnb and secured significant penalties against Google and Trivago in the Federal Court.
While the ACCC also intended to prioritise environmental and sustainability claims, these plans really only came to fruition in the latter half of the year when the ACCC announced in October 2022 that it would be cracking down on greenwashing and (as a first step) undertaking sweeps of company websites. There was also less enforcement activity in telecommunications sectors than expected, with the ACCC only commencing proceedings against Telstra in 2022.
The other major development in the consumer law area saw changes to the penalties regime, which the ACCC had been championing for some years, being passed by the Commonwealth Parliament in October 2022. The new regime comes into force in November 2023, giving businesses the year to comply with the ACL.
Key enforcement activity
Truth in advertising
As part of its usual focus on ‘truth in advertising’, the ACCC obtained significant penalties against companies that engaged in false or misleading advertising. The ACCC also commenced proceedings against Dell Australia in 2022.
Significant penalty for misleading hotel recommendations
In one of the most significant penalties in Consumer Protection last year, the Federal Court ordered Trivago to pay $44.7 million for its misleading representations about hotel room rates. The ACCC initially commenced Court proceedings against Trivago in 2018, with the Federal Court finding in January 2020 that Trivago had misled consumers through its website by effectively promoting the best value deals when actually favouring the travel websites that paid Trivago the highest cost-per-click fees. Trivago appealed the Court’s decision, which the Full Federal Court dismissed in November 2020.
Misleading product claims
Mosaic Brands came under ACCC scrutiny again in 2022 for advertising face masks as having KN95 ratings and also water bottles as having “ACCC Approval”, both of which were incorrect. The ACCC issued Mosiac with two infringement notices totalling $266,400. As we reported in our ACCC 2021 Year in Review Mosaic Brands previously paid $630,000 in penalties for false or misleading claims about hand sanitiser and face mask products.
Dell Australia Pty Limited
Allegedly misleading was/now pricing
The ACCC has also commenced proceedings against Dell Australia Pty Limited for allegedly false or misleading was/now pricing for computer monitors. The ACCC alleges that, between August 2019 and December 2021, consumers who purchased a computer from Dell’s website were presented at the checkout were presented with an option to add a monitor as part of the transaction. The images used at checkout often included both an add-on price for the monitor and a higher ’struck through‘ amount, suggesting to consumers that the product had previously been sold at the higher price. However, the ACCC alleges that the monitors were often not sold at the struck through price or hadn’t been sold at that price for a reasonable period beforehand. As such, it contends that consumers were not receiving a genuine saving by purchasing the product at the advertised discounted price.
Upon the ACCC commencing proceedings, ACCC Commissioner, Ms Liza Carver stated that,
"cases involving allegations of misleading ‘was/now’ pricing by large retailers of consumer goods are a priority for the ACCC. …and further explained, these proceedings are also significant because the alleged misleading conduct related to the online marketing of computers and monitors at a time when many families were in Covid lockdown."
Dell is defending the claim in
which the ACCC is seeking declarations, pecuniary penalties, compliance orders,
publication orders, consumer redress orders and costs. The trial is scheduled
for 28 March 2023.
Misleading product claims
In a joint agreed statement of facts filed on 9 June 2022, Samsung admitted to misleading consumers about the suitability of various Samsung Galaxy phones to be submerged in pool or sea water and then charged while such water remained in the charging port. Samsung was ordered by the Federal Court to pay $14 million in penalties.
Within the health sector, there were two key consumer protection cases in 2022. We discuss both of these in further detail in the Healthcare section of this report.
False and misleading rebate statements
As we reported in our ACCC 2021 Year in Review publication, in July 2021, the international dental company SmileDirectClub was found to have misled 26,300 Australian consumers into believing that they would be eligible for almost $1,000 in savings following the purchase of 3D-printed teeth aligners. Following proceedings commenced by the ACCC, SmileDirectClub admitted to the misleading conduct and in November 2022 was ordered to pay penalties totalling $3.5 million in addition to compensating affected consumers and implementing a compliance program.
Health Insurance Comparison Choosewell Pty Ltd
Unsolicited consumer agreements
In September last year, Health Insurance Comparison Choosewell Pty Ltd (HICC), a health insurance comparison provider that runs the website www.compareclub.com.au, admitted that it breached the ACL by failing to bring to consumers’ attention their termination rights under the ACL. Following the ACCC action, HICC entered into a three-year undertaking not to enter into unsolicited sales contracts without giving consumers verbal and written information regarding their termination rights, and to notify the private health insurance provider providing the policy where the insurance agreement was initiated by an unsolicited approach to a consumer. HICC also paid a penalty of $13,320.
As predicted in our ACCC 2021 Year in Review, the ACCC was also focused on the digital economy last year. In particular, the ACCC commenced several proceedings, including Meta (formerly, Facebook) and Airbnb, and secured significant penalties against Trivago and Uber.
Meta and Meta Platforms Ireland Limited
Publication of allegedly misleading crypto advertisements
In commencing proceedings against Meta, the ACCC has instigated world-first litigation alleging that Meta engaged in false, misleading or deceptive conduct by publishing scam cryptocurrency advertisements on Facebook. The ACCC estimates the scams caused Australian consumers up to $99 million in losses. In the Facebook advertisements, users would be presented with links to sponsored posts on Facebook, relating to cryptocurrency investments. The ACCC alleges that Meta breached the ACL (as or the Australian Securities and Investments Commission Act (ASIC Act), which covers financial products) by failing to prevent the publication of the crypto advertisements, and by taking insufficient steps to remove them. As such, Meta is said to have aided and abetted or was knowingly involved due to its awareness of the practice – as many well-known celebrities referenced in the advertisements complained to Meta that the scammers were using their likenesses without their approval. Despite these complaints, the ACCC assert that Meta did nothing (or not enough) to prevent the ongoing scam activity.
Meta is defending the case in which the ACCC is seeking declarations, injunctions, penalties and costs. We discuss this case in further detail in the Technology section of this report.
Alleged misleading currency references
In June 2022, the ACCC commenced proceedings against Airbnb, Inc and Airbnb Ireland (together, Airbnb). The ACCC alleges that, between January 2018 and August 2021, Airbnb misled consumers by failing to clearly inform consumers that the dollar sign they were displaying on their website was in American dollars, instead of Australian dollars. Consumers booking accommodation on Airbnb’s website went through several pages on which a dollar price was shown without any reference to the fact that the price was in USD. It was only when a consumer reserved a property (late in the buying process) that they were taken to a page that explained the displayed price was in USD. Consequently, users in Australia were unwittingly paying, on average, 30% more for accommodation than what they thought would be changed and also currency conversion fees. The ACCC further alleges that when some consumers raised this issue with Airbnb, they were falsely told that they had made the selection to be charged in USD and that Airbnb continued with this practice until contacted by the ACCC.
Upon commencing proceedings, Ms Cass-Gottlieb commented that,
"we allege that Airbnb’s misleading conduct meant that consumers were deprived of the opportunity to make an informed choice about whether, and at what price, to book their holiday accommodation on the Airbnb platform."
Airbnb is defending the claim in which the ACCC is seeking penalties and compensation for the consumers impacted. The ACCC and Airbnb have been ordered to attend mediation by 31 March 2023.
Rare reduced penalty for misleading pricing and cancellation information
Uber was ordered to pay $21 million by the Federal Court this year, a (surprising) reduction on the parties’ agreed penalty of $26 million, in proceedings commenced by the ACCC for its cancellation fee warnings and the Uber Taxi function. Uber admitted to breaching the ACL in the following ways:
- Its cancellation message was, between at least December 2017 and September 2021, misleading as consumers were warned of a cancellation fee even when cancelling during the ‘free cancellation period’. Uber agreed that over two million customers saw this message.
- Uber Taxi represented to consumers what the fare would allegedly cost if they were to book a taxi for the same trip. The Uber app would always display the estimated taxi fare range as higher than the actual fares. This service was only available in Sydney and was discontinued in August 2020.
While Uber and the ACCC had agreed that a penalty of $26 million was appropriate for the conduct, the Judge disagreed, finding little logic to back up this amount. Ultimately, the Judge reduced the penalty to $21 million.
Funeral services providers
Although not a priority for 2022, the ACCC continued to observe practices in the funeral services sector after publishing its report on the funeral sector in December 2021. Given the comments made by ACCC Deputy Chair, Ms Delia Rickard, in October 2022 – when she warned funeral services providers that it would take action against funeral providers trying to take advantage of the beneficiaries of Government support under the collapsed Aboriginal Community Benefit Fund – we expect the ACCC’s attention on this sector is far from over.
Bowra & O’Dea
Court enforceable undertaking for misleading component pricing and unfair terms
Western Australian based funeral services provider, Bowra & O’Dea, paid a penalty of $26,640 for allegedly failing to advertise certain unavoidable costs, including cemetery fees or the costs for a casket or coffin. Additionally, the company accepted that its contract contained terms that unfairly allowed it to vary prices without notice and to permit it to recoup from consumers of late payment fees as well as interest – all without allowing the consumer to terminate.
The ACCC has accepted a court-enforceable undertaking from Bowra & O’Dea, which has now amended its website to include all unavoidable costs in advertised prices for funeral and cremation services. The action marks the fourth foray into the funeral and cremation services sector in the past two years as the ACCC seeks to tidy up poor ACL compliance and other conduct that reduces competition and harms consumers.
Consumer guarantees have long been a key area of focus for the ACCC and one of the key statutory mechanisms designed to address the inevitable power imbalance between manufacturers and retailers and consumers. As was the case in 2021, we saw less enforcement action in this area than expected, however, the ACCC did bring proceedings against several high-profile brands for breaches of the consumer guarantee regime, including Mazda and Fitbit. It was also able to utilise its other enforcement powers to issue penalties and obtain undertakings from several other businesses.
Misleading statements of consumer guarantee rights and remedies
In April 2022, the ACCC appealed against the Federal Court’s decision that Mazda has not engaged in unconscionable conduct. In the original proceedings (commenced in October 2019), the ACCC alleged that Mazda had acted to mislead consumers concerning their consumer guarantee rights and that the relevant conduct was so egregious that Mazda had acted unconscionably. The ACCC alleged that Mazda informed nine consumers that they were only entitled to a repair after experiencing major faults with their new Mazda cars less than two years after their purchase, when in fact the ACL entitles consumers to a refund or replacement for a major fault that arises a reasonable time after the purchase. The ACCC also alleged that consumers who had requested that Mazda provide them with refunds were ignored or had their requests refused.
In November 2021, the Federal Court found that Mazda had engaged in ’misleading and deceptive‘ conduct concerning the consumer guarantee regime. However, the ACCC was unsuccessful with its arguments that Mazda’s conduct was so serious as to be unconscionable. The Court rejected this more serious allegation because, despite the ’poor consumer outcomes‘, the ACCC did not prove that Mazda failed to take consumers’ safety concerns seriously, and so did not ultimately reach the level of unconscionable conduct.
In April 2022, the ACCC appealed against the Federal Court’s decision that Mazda did not engage in unconscionable conduct. Upon filing its appeal in April 2022, ACCC Commissioner Ms Liza Carver remarked that the ACCC viewed Mazda’s conduct as being particularly egregious (and therefore unconscionable) given it actively provided misleading information to consumers and failed to follow its own policies in responding to complaints from consumers. The ACCC’s decision to appeal the Court’s decision on unconscionability, despite its victory in the claim for misleading and deceptive conduct, (which we note was made very at the start of Ms Cass-Gottlieb’s tenure) suggests that the ACCC may still be prepared to fight matters on principle or for their precedent value. The appeal was heard in August 2022 and, at the time of this publication, we await the Full Court’s decision.
Allegedly misleading statements on consumer refund rights
In October this year, the ACCC commenced proceedings against Fitbit for misleading consumers as to their rights when their Fitbit devices failed. The ACCC alleges that Fitbit misled customers in its refusal to provide refunds or replace faulty devices. The ACCC alleges that Fitbit, one of the global leaders in wearable fitness devices, made false representations to consumers about their consumer guarantee rights. Specifically, the ACCC alleges that Fitbit represented to consumers that:
- Consumers would only be entitled to a refund for a faulty product if they returned the product within 45 days of their purchase.
- Where consumers experienced a fault with their device and were provided with a replacement, consumers were told that they were not entitled to any further replacement devices if Fitbit’s ’limited warranty period’ of two years since the purchase of the original device had expired.
The ACCC alleges these representations were false and misleading because, under the ACL, consumers are entitled to free repairs, replacements or refunds on a product (depending on the nature of the fault) where a defect arises a reasonable time after the purchase and manufacturers’ warranties do not limit those rights. Fitbit is defending the matter, which is listed for a case management hearing on 20 March 2023.
A&C Labels Pty Ltd (trading as Tiger Mist)
Allegedly misleading statements on consumer refund rights
In May last year, the ACCC alleged that statements made by Tiger Mist on their website may have misled consumers into believing they were not entitled to return a faulty product. At the time, Tiger Mist stated on its website that consumers could only return a faulty item if they contacted Tiger Mist within 30 days of receiving the item and that the item was required to be returned in its original packaging. The ACCC issued Tiger Mist with two infringement notices for misleading representations as to consumers’ rights to return faulty items totalling $26,640.
In a statement to the press, ACCC Commissioner Ms Liza Carver reminded businesses that,
"Under the Australian Consumer Law, a consumer’s right to a remedy for a faulty product is not limited to a specific time period, and consumers do not need to return the faulty product in its original packaging to obtain a refund, replacement or repair."
Protection of vulnerable consumers
The protection of vulnerable consumers is one of the ACCC’s enduring priorities. Each year, using data gained from its hugely successful consumer hotline, it analyses consumer complaints across multiple Australian industries looking for long-term trends and spikes in poor conduct. It then uses this data to look at parts of the economy that require its intervention – whether through education campaigns, infringement notices or prosecutions. Consequently, while its concerns tend to stay focussed on perpetually vulnerable members of the community, such as Australia’s indigenous communities, the elderly and those experiencing disabilities or mental illness, the ACCC’s focus frequently moves from sector to sector.
Despite that data-driven approach, 2022 was a year that saw little action in this space. Other than the penalty levied against the funeral director Bowra & O’Dea, detailed in our funeral services providers section above, the ACCC appears to have taken minimal public action protecting particularly vulnerable consumers. Given the obvious importance of this space, it is interesting that so little action occurred during 2022.
The practice of making false marketing claims about the environmental sustainability of products often referred to as ‘greenwashing’ has attracted the attention of the ACCC. Although an enforcement priority for 2022, it was not until late 2022 that the ACCC announced a new crackdown on greenwashing. Our previous article discusses this further. Specifically, in October 2022, the ACCC announced that it would be undertaking a sweep of 200 company websites to identify misleading claims concerning product’s ’green’ credentials. In announcing its greenwashing crackdown, the ACCC highlighted a lack of government regulation of commonly used green terms and expressed concern that the lack of clarity around their meaning was causing issues for businesses and consumers. This year, we will see the results of the sweep and expect to see the ACCC bring enforcement proceedings as well as issue infringement notices against different businesses engaged in greenwashing.
Unfair Contract Terms
2022 was a crucial year for the unfair contract terms regime, with the passing of long-awaited legislation enacting penalties for using unfair contract terms. We discuss this in further detail in the Unfair Contract Terms section of this report.
Alleged poor franchise disclosure
Jim’s Group Pty Ltd, the franchisor of the Jim’s Dog Wash, has paid $24,420 in penalties after the ACCC issued it with two infringement notices for alleged failures to disclose information to franchisees and false and misleading representations made to franchisees. Specifically:
- In its franchise disclosure documents Jim’s Dog Wash allegedly significantly understated the number of former franchisees within the Dog Wash division and failed to provide the contact details of those former franchisees, both requirements of the Franchising Code.
- Jim’s Group allegedly misrepresented to a franchisee that their cooling off rights under the Franchise Code ended 14 days after entering into the franchise agreement or making a payment to the franchiser, whichever was earlier. Under the Franchise Code, a franchisee can terminate the agreement and receive a refund within 14 days of signing the agreement, even if they have previously paid a deposit.
In 2022, the Federal Court ordered significant penalties against various businesses for breaches of the Australian Consumer.
- Google – The Federal Court has ordered Google to pay $60 million in penalties for making misleading representations to consumers about the collection and use of their personal location data on Android phones between January 2017 and December 2018.
- Uber – Although the ACCC and Uber, in its joint submission to the Federal Cour,t had suggested a higher penalty of $26 million, the Federal Court ordered Uber pay $21 million for its admitted breaches of the ACL. Ms Cass-Gottlieb commented that the $21 million penalty awarded against Uber for its misleading conduct and false or misleading representations, “clearly signals to businesses that misleading consumers about the cost of a product or service is a serious matter which can attract substantial penalties.”
- Trivago – after losing its appeal, the Federal Court ordered Trivago to pay $44.7 million for its misleading and deceptive conduct. Trivago admitted it received approximately $58 million in cost-per-click fees from companies it advertised on its website.
- Samsung – Samsung's penalty of $14 million was described by Ms Cass-Gottlieb as "a strong reminder to businesses that all product claims must be substantiated."
- Telstra and other telecommunication providers – the Federal Court ordered various telecommunication service providers to pay penalties totalling $33.5 million after each admitted making false or misleading representations to consumers when promoting certain NBN internet plans. Each company had promised to tell consumers within a reasonable timeframe if the speeds they were paying for could not be reached on their NBN connections.
New penalty regime
Under the previous regime, the maximum penalty for breaches of the ACL have increased up to five-fold and under the new regime are the greatest of:
- $50 million (up from $10 million)
- three times the value of the ’reasonably attributable‘ benefit obtained by the unlawful conduct (unchanged), or
- if the Court is unable to calculate that benefit, 30% of the adjusted turnover during the breach period (up from 10% of the adjusted turnover)
However, perhaps the most important change is that penalties will apply to the use of unfair contract terms. We discuss this in further detail in the Unfair Contract Terms section of this report.
Although Greenwashing was set to be a priority for 2022, we did not see much movement from the ACCC in this area until late in the year. We expect that the ACCC will launch into 2023 with a focus on misleading environmental and sustainability claims, after its 2022 announcement that it intended to sweep 200 company websites for misleading environmental claims. The ACCC will also be sweeping 100 businesses for fake and misleading online reviews and testimonials, which will also lead to further prosecutions and infringement notices.
Consumer guarantees have long been a high priority issue for the ACCC and we expect this to continue for the foreseeable future. In July 2022, the ACCC released a report on the caravan industry, which found that some 80% of purchasers of new caravans surveyed experienced issues with their caravans. Further, 40% of retailers reported being denied reimbursements from suppliers where they had provided a remedy to a consumer. In light of this damning report, we expect the caravan industry to be a particular focus for the ACCC with regard to consumer guarantees in 2023.
Companies that breach certain provisions of the CCA could face new, much higher penalties in the years to come. Under the new regime, the penalty is up to $50 million or greater of three times the benefit derived from the relevant breach or 30% of annual turnover. Companies should utilise 2023 to get into shape before the penalties kick in.
Penalties will also, for the first time, apply to the use of unfair contract terms from 10 November 2023. We, therefore, expect to see a significant educational campaign by the ACCC, warning businesses to ensure their compliance before the penalty regime commences. The ACCC may also commence proceedings in a couple of key instances in order to bring further publicity to the changes. 2023 will most certainly be a ’watch this space‘ year for unfair contract terms, which we discuss in further detail in the Unfair Contract Terms section of this report.
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