ACCC

Two businesses in hot water for claiming products were made in Australia

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The Australian Competition and Consumer Commission (ACCC) has recently targeted two businesses for misleading consumers.

 

Firstly, Ozwear Connection (Ozwear) created a false impression by making misleading representations to consumers.  Between January and April 2018 Ozwear suggested its ‘Classic Ugg’ footwear range were ‘100% Aussie owned’ and made using ‘the best materials available in Australia’.  The footwear even had a tag in the shape of Australia which stated, “this exclusive premium label is uniquely Australian owned brand for authentic Australian Ugg boots”.

 

It turns out the footwear was actually made in China, and therefore Ozwear was misleading consumers.  The ACCC considered that “Country of origin representations can be a powerful marketing tool for businesses, as many consumers are willing to pay extra for Australian made products.”

 

Ozwear was hit with penalties totalling $25,200.00 and the ACCC has stated that “Businesses are warned that making misleading claims or representations about a product’s country of origin will attract ACCC scrutiny and enforcement action.”

 

Secondly, Birubi Art (Birubi) breached the Australian Consumer Law by claiming its products were made in Australia and hand painted by Australian Aboriginal persons.  This was incorrect. Despite the products being made in Indonesia, between July 2015 to November 2017 Birubi sold over 18,000 products using words such as ‘Aboriginal Art’, ‘Genuine’ and ‘Australia’. 

 

Now that a verdict has been reached, a hearing will be held to determine what penalties should be imposed on Birubi.  The ACCC stated: “The ACCC will not hesitate to take further action against traders who mislead consumers about the nature of their products, in order to ensure confidence in the Indigenous Australian art industry”.

 

It is evident from these two recent cases that breaches of Australian Consumer Law will attract the attention of the ACCC and penalties are likely to follow.  Section 18 of the Competition and Consumer Act 2010 (Cth) covers misleading and deceptive conduct.  It states that ‘a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.’

 

This makes it essential for businesses to examine their processes, products, representations and advertising to ensure they are not contravening Australian Consumer Law. 

 

At Coutts, we can assist you with understanding and complying with the requirements of Australian Consumer Law including to update your terms and conditions, provide legal advice on your disclaimers or your marketing material.  Please do not hesitate to contact us if you have any enquiries.

For further information contact:

Rebecca Watts
Lawyer
rebecca@couttslegal.com.au
02 4607 2148

 

 

 

This blog is merely general and non specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.

Small Business Grant – what is it and who is eligible?

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The Small Business Grant provides small business owners in NSW who don’t pay payroll tax, a grant of $2,000 for each new full-time position employed in their business.

1.     Who is eligible?

This one-off payment is available for each new full-time position in your business and to be eligible, at a minimum, you must:

(a)   have an active ABN; and

(b)   not be liable to pay payroll tax during the initial 12-month employment period for a new employee.

 

The current payroll tax threshold for this financial year is $850,000. For more details on payroll tax liabilities and to see if you may be liable for payroll tax, please visit Revenue NSW’s website at: https://www.revenue.nsw.gov.au/taxes/payroll.

 

It is important to note that this grant only applies for employment that commences prior to 1 July 2019.

 

2.     What type of employment is eligible for the grant?

In order to be eligible for the grant, the new employee must be employed in a role that is a “new job”.

A “new job” is created if the number of your full time equivalent (FTE) employees increases (and is maintained) over a 12-month period from the creation of the new position.

When registering a new job for the grant, the Small Business Grant (Employment Incentive) online application will assist you in calculating your FTE. Alternatively, you can manually calculate your FTE using a formula.

If your FTE falls below the required number for more than 30 days, the Chief Commissioner may not approve your application for the grant.

 

3.     Are there any exclusions?

You are not able to claim the grant for an employee if:

(a)   that employee is not considered a common law employee;

(b)   that employee was employed by you in the previous 12 months before you applied for the grant;

(c)   any wages paid by you for that employee are exempt wages under the Payroll Tax Act 2007 (NSW); or

(d)   you are already entitled to a grant, subsidy or other assistance from the government for that employee.

 

Public, local or municipal bodies or authorities are also excluded from claiming this grant.

 

4.     How much is the grant?

The grant is a one-off payment of $2,000 for each eligible full time employee.

In the case of part time or casual employees, the grant amount will be pro-rated based on a formula.

 

5.     How do I register?

You will need to apply online for the grant once the new employee commences. You can then claim the grant once the position has been filled for 12 months. The online form can be accessed at https://www.revenue.nsw.gov.au/grants/sbg/online

 

At Coutts we provide a range of services to businesses including drafting employment agreements for clients as well as providing advice on employment relationships and obligations under the Fair Work Act 2009 (Cth) and relevant Awards. We also assist with grant applications and advice.

To learn more about the Small Business Grant please go to: https://www.revenue.nsw.gov.au/grants/sbg

For further information please don’t hesitate to contact:

Keely Irving
Lawyer
keely@couttslegal.com.au
02 4607 2124

 

This blog is merely general and non specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.

Can I write anything I want in a review, irrespective of commercial relationships?

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The short answer to this question may well be “no” following recent case law and examination by the Australia Competition and Consumer Commission (ACCC) in respect of consumer reviews.

Recently, the ACCC has recognised the fact that online consumer reviews are relied upon more and more by consumers as a means of making more informed purchasing decisions. As such, the ACCC has taken an interest in protecting the integrity of such reviews, to ensure businesses are not using this method of advertisement to conduct in a misleading or anti-competitive way.

The ACCC has published a supplier guide called “What you need to know about: Online reviews – a guide for business and review platforms” (the guide) which can be found here.

This guide includes a set of principles that are aimed are preventing the occurrence of misleading reviews online. These principles refer to information contained on ‘review platforms’ which can include blogs, business websites and social media.

The three principles discussed in this guide are:

1.       Be transparent about commercial relationships

Commercial relationships between review platforms, reviewed businesses and/or reviewers could lead to unfair advantages between competing reviewed businesses, according to the ACCC.   Consumers usually expect that reviews on independent review platforms such as Yelp, Google Reviews or OpenTable are not affected by commercial relationships. A business for example, can pay for advertising on a platform’s website or even pay commission payments to the review platforms for purchases made from the platform. The guide and the ACCC is concerned that these commercial relationships may result in reviews with higher ratings, possibly through the removal/non-placement of negative reviews, than would occur if there were no commercial relationship.

It is integral that these types of relationships do not create an unfair advantage and mislead consumers. Disclosure of such commercial relationships to consumers is one way of ensuring you are not breaching the Competition and Consumer Act.

 

2.       Do not post or publish misleading reviews

Reviews that are presented by a business as impartial, but were actually written by the reviewed business, a business competing with the reviewed business, third persons paid to write a review when they have not used the product or service or someone who has used the product or service but who writes an inflated review because they have been provided with a financial (or any other) benefit, may mislead customers and therefore lead to a breach of Australian Consumer Law.

In the guide, the ACCC recommends removing any reviews which are known to be fake, biased or misleading.  From a practical perspective, we understand that removal of an existing review can be challenging and as such it is important to ensure that the way you and your business make reviews, elicit reviews or deal with reviews complies with the Australian Consumer Law and not in any way misleading or problematic.

 

3.       The omission or editing of reviews may be misleading

Although the ACCC recommends the removal of reviews that are fake or biased, the guide also indicates that the removal or editing of reviews, especially when this has an effect on the overall rating given by a review platform, may also lead to misleading conduct.

The ACCC has previously taken action against companies for posting fake or misleading customer reviews and testimonials, or even preventing customers from making reviews. For example, in the relatively recent decision of the Federal Court in the case ACCC v Meriton Apartments Pty Ltd [2017] FCA 1305, Meriton Apartments was found to have contravened the Australian Consumer Law.

In that case, Meriton had a relationship with TripAdvisor which involved sending the emails of their guests to TripAdvisor, which would then be used by TripAdvisor to send an email invitation to the guest to write a review about their stay. It was found that Meriton was inserting the letters “MSA” into the email addresses of guests who had made complaints about their stay, meaning they would never receive the email invitation from TripAdvisor. Not only were the wrong email addresses being “used”, Meriton withheld a number of emails during periods where there had been a major fault within the hotel, such as a hot water failure.

Meriton’s breach does not necessarily fall within the principles discussed in the guide, proving further how broad the Australian Consumer Law is.  The case is also illustrative that it is imperative that businesses are proactive in ensuring any reviews or testimonies published and relied on by consumers are not misleading or deceptive.

It is integral that as a business owner, you are aware of your obligations under Australian Consumer Law in relation to reviews by customers and particularly reviews that you request or that you yourself provide.

 

Coutts can assist your business and provide advice as to risks in reviews and your conduct under this body of legislation to ensure you have peace of mind that your business activities around reviews do not breach the requirements of consumer law.

For further information about reviews about your business or the Australian Consumer Law, please don’t hesitate to contact:

Keely Irving
Lawyer
keely@couttslegal.com.au
02 4607 2124

 

Be Aware Of Your Rights As A Consumer

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Have you purchased a faulty product and the supplier has refused you a refund because the manufacturer’s warranty has expired?

Does your new motor vehicle need to go back to the dealer for constant repairs?

Is the supplier trying to avoid responsibility for product faults by shifting blame to the manufacturer?

In circumstances like the above, it is important to know what your legal rights are - and what steps to take next.


The Australian Consumer Law

The Australian Consumer Law (the ACL) came into force in 2011 and introduced a uniform law for consumer transactions throughout Australia.

Under the ACL, a “consumer” is a person who acquires:

  • any type of good or service costing up to $40,000 (this amount will likely be increased in the next few years);

  • a good or service which is normally used for a personal, domestic or household purpose (without any upper monetary limit on the purchase price); or

  • a commercial road vehicle used mainly for the transportation of goods.

Courts have interpreted the words “personal, domestic or household purpose” broadly and therefore the ACL will apply to goods such as luxury motor vehicles with a purchase price over $40,000 - even if they are subsequently used in a business. The ACL will also apply where goods are leased or obtained via hire purchase.

The consumer protections contained in the ACL will generally not apply to products purchased from one-off sales by private sellers (for example, at a garage sale or school fete), products purchased at an auction or products purchased for re-supply or for use in a manufacturing process.

 

Consumer Guarantees in the ACL

The ACL prescribes various “consumer guarantees” for the supply of goods, including that goods: 

  • are of acceptable quality (i.e. goods must be acceptable in appearance and finish, free from defects and faults, safe and durable);

  • are fit for any purpose which the purchaser made known to the supplier;

  • match their description (for example, as contained in an advertisement or a statement made by a sales representative);

  • match any sample or demonstration provided by the supplier (for example, a motor vehicle test drive or a display product); and

  • are free of any hidden security interests, charges or rights of third parties.

  • It is important to remember that:

  • the consumer guarantees prescribed by the ACL cannot be excluded or modified by the supplier -  i.e. they set a minimum legal benchmark for all consumer transaction. Significant financial penalties have been imposed on companies that have made statements in their contractual documentation, advertising or product labels inconsistent with the ACL consumer guarantees;

  • the consumer guarantees are not in any way limited by the terms of a manufacturer or supplier warranty; and

  • the consumer guarantees apply to the sale of second hand products and also to all repair works performed by the supplier or manufacturer, including the installation of replacement parts.

  • The ACL also contains similar consumer guarantees in relation to the supply of services.

Remedies available

The ACL introduced a new suite of remedies for consumers where goods fail to meet one or more of the consumer guarantees.

Where the fault with a product is regarded as a “minor failure” then the supplier has the right to choose whether to either repair or replace the product or to provide a refund of the purchase price.

Where the fault with a product is regarded as a “major failure” then the consumer has the right to choose whether to either reject the product and receive a full refund or replacement product - or keep the product on the basis that it is repaired.

It can often be difficult to determine whether a fault amounts to a “minor” or “major” failure and consumers must be careful not to reject goods for a fault which may not amount to a “major” failure. Factors to consider include the nature, seriousness and number of fault/s, when those fault/s arose, whether the fault/s can be easily and quickly repaired, the nature and price of the products and whether the fault/s create any safety issues (for example, a defective vehicle engine).

Consumers must also be mindful that their right to reject a product suffering a “major” failure can be lost in certain circumstances. For example, where the goods have been destroyed or damaged, where the goods have been permanently attached to other property or where too much time has elapsed from when the product was first purchased and/or when the fault first arose. 

It may also be possible for consumers to obtain compensation from suppliers where loss has been caused by either a minor or major failure. For example, the cost of hiring a replacement vehicle during a lengthy repair process. However, not all ancillary loss will be compensable - only loss which is reasonably foreseeable.

Claims against the manufacturer

A consumer may also have a direct right to claim against the product’s manufacturer. This could be crucial where the supplier has disappeared or gone into liquidation - or is not being responsive to your communications.  In most cases, the manufacturer will be a large multi-national company with an Australian subsidiary and will have processes in place to deal with consumer claims.

The ACL prescribes that the following “consumer guarantees” apply to manufactures:

  •  that their goods are of acceptable quality;

  • that their goods will satisfy all descriptions made by the manufacturer; and

  • that they will take reasonable steps to provide spare parts and to make available repair facilities for a reasonable time after the purchase of their products.

However, a manufacturer will not be liable for faults to goods caused after they have left the manufacturer’s control (for example, if the product is damaged on the shop floor).

The ACL does not provide a right for consumers to obtain a refund or replacement product directly from the manufacturer - however consumers can seek compensation directly from a manufacturer for any decrease in value of the goods or any ancillary loss suffered by the consumer. In many cases, manufacturers may agree to provide a full refund or replacement product if the product is returned – even where there is no express manufacturer’s warranty or where it has expired.

Summary and Tips

  • many consumers are unaware of their rights under the ACL and wrongly believe that their rights are limited to the terms of the manufacturer’s warranty;

  • when problems develop with products it is important to act quickly and keep all relevant communications  in writing;

  • obtain photos and video recordings of the faults (with dates);

  • insist on obtaining documentation describing the nature of all repairs performed and the installation of any replacement parts;

  • consider carefully whether there may be a “major failure” and whether you have a proper basis to reject the product;

  • consider whether to make a claim directly on the manufacturer;

  • put the supplier and manufacturer on notice of any ancillary loss being caused by the faulty product and keep documents to prove the amount of such loss.

At Coutts we can assist you with any difficulties you are experiencing with faulty products such as motor vehicles, boats, computers and electrical goods.

For further information contact:

Daniel St George
Senior Associate
daniel@couttslegal.com.au
1300 268 887

So, you think your employees are casual? Think again!

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A recent decision handed down by the Federal Court of Australia has sent shockwaves through the business community, and most relevantly, employers who believe they have employed staff as casuals. This decision could see casual employees now becoming entitled to part-time or full time employee benefits.

 

WorkPac Pty Ltd v Skene [2018] FCAFC 131 was handed down by the Full Federal Court on 16 August 2018.  The case involved an entitlement to annual leave under the Fair Work Act for an employee who had worked as a “casual” for approximately four years.

 

WorkPac Pty Ltd (“WorkPac”) operated a labour-hire business and employed Mr Skene as a fly-in, fly-out dump-truck operator, from 2010 to 2014, at coal operations in Queensland. Upon the cessation of his employment, Mr Skene claimed that he was a permanent full-time employee of WorkPac and as such, he was entitled to annual leave and other entitlements a full-time employee is entitled to, as provided in the National Employment Standards (and as set out in sections 87 and 90 of the Fair Work Act). WorkPac argued that Mr Skene was in fact a casual employee as defined in their employment agreement and enterprise agreement, and as a result, was not entitled to annual leave and the related entitlements he claimed.

 

The Full Bench found that Mr Skene was entitled to accrued annual leave of $6,700.00, and further, that Mr Skene was also entitled to $21,000.00 in compensation. Significantly, The Court also set a future date for the Court to decide if WorkPac will be fined for their failure to pay Mr Skene permanent employment entitlements and as such their breach of the Fair Work Act – it is not yet over for WorkPac.

 

So the question posed is, I am an employer should I worry about this? Simple - this case may leave employers and businesses open to claims from ‘casual employees’, for entitlements reserved for part-time or full-time permanent employee’s only. Further, employees have six years to make these claims, and as such, business owners and employers may be hit with claims from employees who were terminated (or left) the business years ago.

 

The National Employment Standards, modern awards and enterprise agreements – can’t I rely on the definition of ‘casual’ in the award or agreement? 

 

The National Employment Standards (“NES”) set out the minimum standards that apply to the employment of employees, and importantly, provide for the payment of annual leave, sick leave, and other part time or full-time benefits. The NES standards cannot be displaced, meaning, an employer cannot “contract out” of these minimum standards.

 

The NES were relevant in this case as the applicable award and enterprise agreement that covered Mr Skene had attempted to define a casual employee through the use of their agreements. Prior to this case, this approach was widely accepted.

 

The Court however found differently. The Court found that modern awards and enterprise agreements were not the appropriate place to define whether an employee was ‘casual’, and as such, whether an employee is in fact casual will fall on the legal definition as defined by case law.

 

How is a casual defined (and can an employer define who is a casual)?

The Court recognised the difficulty in identifying how the term ‘casual employment’ is currently defined. The phrase ‘casual employee’ is not defined in the Fair Work Act, and as such, the Court was required to turn to previous caselaw and the indicators of a ‘casual employee’. The Court repeated that the following features are indicators of a casual employee:

1.     Firstly, the Court referenced that the term ‘casual employee’ has no precise meaning. The Court reiterated that the question of whether any particular employee is a casual employee, depends on the objective characterisation of the nature of the particular employment as a matter of fact and law, having regard to all of the circumstances [159]. This means whether an employee is actually a casual will be determined on a case by case basis; 

2.     The features of informality, uncertainty and irregularity of employment indicate casual employment [162];

3.     A casual employee will not have any commitment from the employer for continuing and indefinite work, according to an agreed pattern of work [172];

4.     Likewise, a casual employee will not give any firm commitment to the employer of continuing and indefinite work [172]; and

5.     Other caselaw have identified irregular work patterns, uncertainty, discontinuity, intermittency of work and unpredictability as indicia of casual employment [173].

 

The Court also referenced the fact that if a worker meets the definition of a full or part-time employee, they are not required to be paid a casual loading. If, however, an employee elects to pay a worker casual loading, the mere fact of this payment does not automatically render an employee as casual. This means that, even if you are paying an employee casual loading (because you have deemed them as casual), you may still be required to pay the said employee full or part-time entitlements – a double dipping on the employee’s behalf.

 

What do I need to do?

Following the findings of this case, it is an extremely important time to review the structure and employment of your current workforce. In particular:

 

1.     Review your current employment agreements and ascertain if the agreements reflect the employment status of each staff. It is common for staff members to commence as casuals, and as time progresses, their role shifts into that of part-time or full-time employment;

2.     Question yourself:

a)     Are you only relying on the definition of ‘casual’ in the relevant award or enterprise agreement when defining the employment of your staff?

b)    Is there a mutual commitment between yourself and a casual staff member, for ongoing employment?

c)     If you have classified an employee as casual, do they have irregular work patterns, with uncertainty, discontinuity, intermittency of work and unpredictability?

d)     Do you or your employee believe or know that they are casual?

 

If you have casual employees and the findings of this case have you concerned, you should contact us to seek advice on whether your casual employees are in fact casual, and how careful contract drafting may assist to avoid staff members ‘double dipping’ or making a claim against you for further entitlements. 

 

For further information contact:

Allyce Silm
Lawyer
allyce@couttslegal.com.au
02 4607 2119

 

 

 

Large Retailers subject to penalties following investigations with the ACCC

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Two large and well known retail corporations, Fitbit (Australia) Pty Limited (‘Fitbit’) and Apple Inc (Apple US), have recently been penalised for false and misleading representations conducted by the Australian Competition and Consumer Commission (ACCC) following extensive investigations.

 

In early June, the ACCC accepted a court enforceable undertaking from Fitbit in response to over one hundred consumer complaints made in relation to warranties for faulty products. During the period of November 2016 to March 2017, Fitbit misinformed consumers that the warranty they offered for faulty products was only available for a single year. Further, they represented that consumers could only get a replacement for faulty goods for 30 days from purchase or the remainder of the calendar year, depending on which was a longer period.

 

Apple US has also received a $9 million penalty for their false and misleading representations of the rights consumers are entitled to for their faulty products. Apple US and Apple Pty Ltd (Apple Australia) misrepresented to 275 consumers that they were not eligible for a remedy on a software error (“error 53”) if their iPad or iPhones had been repaired by a third party. The Court confirmed that repairs by third parties did not extinguish consumers right to a remedy or deny them their consumer guarantees.

 

These matters demonstrate that businesses must make it clear that the warranties offered with their products are added to the remedies available under the legislation, instead of entirely replacing legislated warranties.

 

What are our automatic rights as Consumers?

It is important to understand what your rights are as a consumer as these matters demonstrate how easily consumers can be misled in relation to consumer guarantee obligations, particularly when consumers experience faults in products. Legislation currently establishes a legal obligation for businesses to provide guarantees for consumers, in relation to:

  • Products and services hired, sold or leased under $40,000.00.

  • Products and services hired, sold or leased over $40,000.00 generally bought for household, domestic or personal use.

  • Business vehicles/trailers mainly used for transporting goods on public roads, regardless of cost.


Consumers have rights which include, but not limited to, their goods being free of any undisclosed security, as well as being fit for their purpose, acceptable in appearance/finish, free from defects and goods that are safe and durable to a reasonable consumer. Guarantees for goods may be excluded, however, in matters of change of mind, misuse of products or in instances where a consumer is aware of faults prior to making a purchase.

 

If a product fails to meet a consumer guarantee, consumers have the right to request a repair, replacement or refund. However, consumers may not always be entitled to these requests. The resolution for a consumer issue will depend on whether the issue is deemed to be major or minor. Apple has ensured that refunds or replacements are available to consumers experiencing a major failure.

 

Further information relating to:

  • Fitbit’s representations of faulty products can be found here.

  • Apple’s representations of faulty products can be found here.

 

Coutts are experienced in providing advice on consumer guarantees and informing you of your rights arising under Australian Consumer Law. For further information contact:

Carrie Alton
Lawyer  
carrie@couttsmallikrees.com.au
02 4036 3307

Riley Earle
Lawyer
riley@couttsmallikrees.com.au
02 4607 2114

Scam Awareness Week 2018

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Did you know this week is Scam Awareness Week? ACCC Scam Awareness Week, focusing on: “Stop and check: is this for real?”

In light of the commencement of Scam Awareness Week earlier this week, the Australian Competition and Consumer Commission (“ACCC”) has released the ninth annual Targeting Scams Report which shows the extent of the losses the Australian public has endured at the hands of scammers. A copy of the full report can be found here.


The report states that annual losses of the Australian public in 2017 totalled an astonishing $340 million, surpassing last year’s figure by $40 million, with the average victim losing $6500 per scam. This figure, terrifying enough, ranks investment scams as causing the greatest loss to consumers (with a figure of over $64 million), and dating and romance scams a close second (with a combined figure of over $42 million).


The increasingly complex and aggressive techniques scammers are employing to obtain personal information, is becoming a frightening and very real issue in today’s modern day and age, with over 33,000 reports being received by Scamwatch in the last year. The report also details that the most common forms of reported scams in 2017 were phishing, identity theft and false billing scams.  


In light of the ever-evolving technology world, of particular interest is the loss caused to Australian businesses as a result of scammer’s hacking business emails accounts and IT systems. Following a successful hacking, the scammers observe communications between businesses, customers, and associated financial transactions, and wait for the most appropriate time to act, by sending an email from the hacked account with “new bank account details” for payment.  Coutts reminds its clients of the importance to have strong internal systems and processes in place to verify payments to third parties, in order to avoid this unfortunate situation.


In the spirit of Scam Awareness Week, the ACCC is urging people to “Stop and check: is this for real?” before giving out personal information. In addition, the ACCC Deputy Chair Delia Rickard reminds consumers to remember the following, when receiving a threatening phone call that doesn’t feel right:


1.        “The ATO will never threaten immediate arrest”;
2.        “Telstra will not ask to access your computer”; and
3.        “Centrelink will never require a fee to pay money owing.”


Australian consumer law contains a number of protections which can be engaged when individuals, or businesses, fall victim to a scam. These protections can be found in the law surrounding misleading or deceptive conduct, harassment, and door-to-door sales.


If you’ve been put in a situation where something doesn’t feel right, visit  www.scamwatch.gov.au to report and view current reported scams.

 

For further information contact:

Allyce Silm
Lawyer
allyce@couttslegal.com.au
02 4607 2119

 

Daniel St George
Senior Associate
daniel@couttslegal.com.au
02 9220 1760

 

26 April 2018 - A Day For Ten Million Dollar Penalties - A Snapshot on Telstra & Ford Penalties

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It is important to be clear, accurate and upfront with consumers about potential costs of services for the consumer and also consumer law rights as evidenced by two Federal Court orders on 26 April 2018 each for $10 million penalties for major companies- Telstra and Ford.  Below is a snapshot on the two ten million dollar penalties.

TELSTRA PENALTY: Following action by the ACCC, on 26 April 2018 the Federal Court ordered Telstra to pay $10 million in penalties for incorrect or misleading consumer representations regarding the “Premium Direct Billing” service.  Telstra charged consumers for phone ringtones and digital games that these consumers purchased without knowing.  The “Premium Direct Billing” service was added to consumer accounts as a default service without the consumers properly being informed of this.  If any consumer (including the children using their parent’s service) accessed the “Premium Direct Billing” then that consumer would purchase the additional digital content and be billed by Telstra. 

The Federal Court found Telstra failed to properly inform the consumers and profited from the incorrect statements and misleading conduct.

Telstra estimate at least 100,000 consumers were affected.  So far there have been $5 million of refunds offered by Telstra to affected consumers and anticipate a further few million of refunds yet to come.

Telstra no longer offers the “Premium Direct Billing” service.

If you think you are an affected Telstra consumer, that signed up to “Premium Direct Billing” without your knowledge or consent, contact Telstra on 13 22 00 or email Telstra to request a refund.

https://say.telstra.com.au/customer/general/forms/Email-Complaint

It is clear that the ACCC is looking into third party billing services more generally beyond Telstra.

FORD PENALTY: On 26 April 2018, the Federal Court ordered Ford to pay $10 million in penalties plus costs for their poor response to consumer complaints regarding three Ford vehicles being the Ford Fiesta, Ford Focus and Ford EcoSport, each of which featured problematic “PowerShift” transmission.  Ford breached section 21 of the Australian Consumer Law.

On 27 July 2017 the Australian Competition and Consumer Commission (ACCC) commenced proceedings against Ford Motor Company of Australia Pty Ltd (Ford) in the Federal Court in relation to Ford's response to customer complaints about Fiesta, Focus and EcoSport vehicles fitted with the PowerShift transmission.

Among other things, Ford failed to provide consumers with sufficient correct information about their rights under the Australian Consumer Law including the consumer guarantee provisions.  Furthermore, the processes that Ford put in place to respond to consumer complaints failed to consider individual circumstances (effectively a blanket procedure with little flexibility).  Consumers were misinformed about their consumer rights and felt they were forced to take up time sensitive offers made by Ford Australia on a misinformed basis that a refund or no-cost replacement was not a viable option.  The offers included non-disclosure provisions meaning that the consumers were not able to discuss the actual settlement they reached with Ford.  Consumers purchased new replacement vehicles at additional cost to the consumer and at financial benefit from Ford.

Ford has undertaken to take corrective action including establishing an independent complaints review program and making Field Services Actions for consumer vehicles available to provide information regarding known vehicle issues and manufacturing defect histories performed on those consumer’s vehicles.  Ford will need to adopt and implement an upgraded compliance system following independent third party advice and an upgraded complaints handling system.

If you made a request for refunds or replacement vehicles to Ford between 1 May 2015 and 1 November 2016 for Ford Fiesta, Ford Focus and Ford EcoSport, you may be eligible to register to have your complaint reviewed by registering at:

www.ford.com.au

 

For further information contact:

Alexandra Johnstone
Partner
alexandra@couttslegal.com.au
02 4607 2110

 

Labelling for Businesses

ACCC launches guidance on country of origin labelling for businesses

Today, the ACCC has published its revised guidance on country of origin labelling which will help businesses comply with the Australian Consumer Law (ACL) when making country of origin claims.

The ACL provides ‘safe harbour’ defences for ‘Made in’, ‘Product of’ and ‘Grown in’ country of origin claims. If goods satisfy the criteria, the business is deemed not to have engaged in misleading or deceptive conduct or made a false or misleading representation under certain sections of the ACL. Businesses that do not qualify for these defences are still able to make country of origin claims provided they are not false, misleading or deceptive.The ACCC’s guidance provides information and examples to illustrate when businesses can rely on the ‘safe harbour’ defences in the ACL.

The Country of origin claims and the Australian Consumer Law publication is available on the ACCC website. For further information, please also see the ACCC’s media release.

Government releases competition review papers

The Harper panel has now released an issues paper and fact sheet regarding the Australian Government’s ‘root and branch’ review of competition laws and policy.

Copies of these documents are attached and can be found online at http://competitionpolicyreview.gov.au/consultation/

Submissions will be open until Tuesday 10 June 2014 and can be submitted online at http://competitionpolicyreview.gov.au/submissions/.