Legal Insights

Consumer protection

By Shaun Temby, Rebecca Griffiths, Isabelle Heath, Rebecca Power & Alice Robertson

• 07 February 2024 • 7 min read
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Last year represented Ms Cass-Gottlieb’s first full year as Chair of the ACCC. In that period, Ms Cass-Gottlieb led the ACCC in taking steps to further progress its enforcement priorities established by her predecessor, Mr Sims, albeit it is now clear under a different approach. In 2022, Ms Cass-Gottlieb indicated that she preferred a more flexible and less adversarial approach to achieve the ACCC’s enforcement priorities and would use the ‘full toolkit’ of investigatory and enforcement measures available to the ACCC to achieve its aims. While litigating several cases concerning misleading, deceptive or unconscionable conduct, the ACCC has taken a less adversarial approach than in previous years in achieving its objectives and protecting consumers.

2023 enforcement priorities

At the beginning of 2023, as discussed in our enforcement and priorities update, Ms Cass-Gottlieb declared that the ACCC’s consumer protection compliance and enforcement priorities for 2023 would aim to support and build on the enduring priorities established under Mr Sims’ leadership. Additionally, Ms Cass-Gottlieb announced that the ACCC’s specific consumer-related enforcement priorities for the year would focus on misleading environmental and sustainability claims (known as ‘greenwashing’), manipulative or deceptive marketing practices in the digital economy (like fake testimonials or manipulative algorithms) and combatting scams.

Consistent with Ms Cass-Gottlieb’s preference for a flexible and non-adversarial approach, a substantial part of the ACCC’s work towards meeting its priorities in 2023 occurred not through successful contested court actions, but through ‘behind the scenes’ discussions between the ACCC and the alleged offending parties. For example:

  • the negotiated resolution of complaints against Mitsubishi Motors that saw them provide partial refunds to customers misled by a marketing campaign; and
  • the ACCC’s acceptance of an enforceable undertaking from MOO Premium Foods after it made misleading environmental claims about its packaging, which we further discuss in our Environmental claims and sustainability section of this report.

The ACCC also used infringement notices to penalise businesses engaging in misleading pricing conduct, such as Costco and Pet Circle. The ACCC worked proactively to enforce its priorities by conducting internet sweeps to detect greenwashing and other misleading claims made to consumers across digital platforms and also conducted industry-based reviews to detect ACL non-compliance.

Nevertheless, the ACCC showed its commitment to litigating cases in what it considers to be more egregious circumstances of misleading, deceptive or unconscionable conduct. The ACCC commenced six new proceedings last year including against Qantas, eHarmony and a major Australian energy company for various alleged misrepresentations about the pricing or availability of services.

Major developments and activities

ACCC v Mazda

ACCC spinning its wheels over Mazda allegations of unconscionable conduct

In ongoing proceedings brought by the ACCC against Mazda, the ACCC alleges that Mazda engaged in misleading or deceptive conduct and unconscionable conduct in the context of complaints made by nine consumers who had experienced major recurring faults with their new vehicles within two years after they were purchased. In a win for the ACCC in 2019, the Federal Court made findings that Mazda had misled consumers by making 49 misrepresentations to nine consumers as to their consumer rights under the ACL. However, the Court found that Mazda had not engaged in unconscionable conduct in the circumstances.

Both parties appealed the adverse findings made against them, with the ACCC declaring it had appealed because it was not satisfied with Mazda’s offers to redress the situation – such as offers to refund a small part of the purchase price or to replace the car at a significant cost. The ACCC was concerned that Mazda had given consumers the ‘run-around’ and discouraged consumers from pursuing their rights under the ACL. Mazda, on the other hand, insisted that it had not engaged in misleading conduct in circumstances where the consumers knew the truth to begin with, or the misleading impression was subsequently corrected.

Ultimately, the Full Federal Court dismissed both appeals, agreeing with the trial judge that while Mazda had misled particular consumers as to their rights under the ACL it had not engaged in unconscionable conduct. The ACCC has not appealed the decision. The case is now before the trial judge to determine penalties against Mazda for its misleading conduct.

ACCC v Phoenix and CTI

Record penalties: $438m for unconscionable conduct

In July 2023, the Federal Court imposed record penalties of $438m against a former vocational college, Phoenix Institute of Australia Pty Ltd (Phoenix) and its marketing arm Community Training Initiatives Pty Ltd (CTI) following a finding that those entities engaged in unconscionable conduct, in proceedings brought by the ACCC. The Court found that Phoenix had employed a deliberate system that misled prospective students into thinking that they were enrolling in free vocational courses and they would receive a free laptop on enrolment, which was not the case. It found that this was an egregious example of unconscionable conduct as Phoenix and CTI targeted vulnerable consumers (including Indigenous Australians, people from non-English speaking backgrounds and those from regional and remote areas and low socio-economic backgrounds) using aggressive sales techniques. This decision serves as a cautionary tale and a reminder that the ACCC and the Courts will not tolerate misleading marketing strategies, particularly on vulnerable consumers.

ACCC v Qantas

Qantas alleged to be selling ‘ghost flights’

In August 2023, the ACCC launched action in the Federal Court of Australia, alleging Qantas engaged in false, misleading or deceptive conduct in breach of the ACL between May 2021 and July 2022 for selling tickets to what has become known as “ghost flights”. The ACCC contends that Qantas’ conduct was misleading and deceptive by advertising and selling airline tickets for more than 8,000 flights that it had already cancelled but not yet removed from sale. Further, that for more than 10,000 flights scheduled to depart in May to July 2022, Qantas did not notify existing ticketholders that their flights had been cancelled, in some cases for up to 48 days.

Qantas is defending the claims in large part by relying on disclaimers and by arguing that the service Qantas supplies is not carriage of any particular flight but rather a bundle of rights that includes alternative options to which consumers are entitled in respect of a cancelled flight. As such, Qantas does not guarantee particular flight times or flight schedules. The matter has not yet been listed for a final hearing and if the matter doesn’t settle, we don’t expect it to go to trial until early 2025.

Looking ahead

The ACCC will continue to pursue its flexible approach to enforcement into 2024, focussing on achieving its enforcement priorities by (except in the most serious of cases) negotiating with businesses to resolve consumer complaints quickly and cheaply.

For mid-level matters, we expect to see the ACCC issue more infringement notices to deter businesses from engaging in misleading conduct across a wide range of industries. That said, we also expect the ACCC to continue demonstrating its more than capable of litigating more serious matters that have national significance, such as conduct that potentially impacts the ‘cost of living’ and/or that impacts vulnerable sectors of the community. Despite the ACCC’s much-publicised internet ‘sweep’, we don’t expect significant litigation on issues such as greenwashing and misleading marketing practices by social media influencers.

Read more from ACCC Year in Review

We look at the ACCC’s leading cases and other policy and regulatory activities throughout the year and then evaluate how well the ACCC performed against its ongoing enforcement priorities.

By Shaun Temby, Rebecca Griffiths, Isabelle Heath, Rebecca Power & Alice Robertson

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