Table of Contents
THEMES AND CHALLENGES
- the role of the law in encouraging cooperation and resolving conflict in regard to consumers
- issues of compliance and non-compliance
- laws relating to consumers as a reflection of changing values and ethical standards
- the role of law reform in recognising the rights of consumers
- the effectiveness of legal and non-legal responses in achieving justice for consumers
NATURE OF CONSUMER LAW
DEVELOPING NEED FOR CONSUMER PROTECTION
- Rural subsistence society - Before the Industrial Revolution (before 18th and 19th centuries) most people provided their own goods and services.
- The Industrial Revolution- People moved from their small local market situations to large cities and begun working in factories. People were now relying on goods produced by individuals or companies they did not know and more products became available.
- Caveat emptor and laissez faire- It became easier for consumer to be misled or to be sold an inferior or defective product. The concept of Caveat emptor (let the buyer beware) was introduced. There was no government interference in the deals made between buyers and sellers. The philosophy that governments should not interfere in private negotiations between people is termed laissez faire.
- Early consumer protection laws- Both common and statute law gradually recognised the necessity for protecting consumers from unfair business practice. Donoghue V Stevenson (1932) developed common law to recognise that manufacturers have a duty to consumers to provide foods of a certain quality.
- The urban mass-consumption/production society – Protection f consumers becomes a matter of concern to many.
- The modern consumer movement – In the 1960’s, a grassroots self-help consumer movement developed as many Western consumers became dissatisfied with inferior and unsafe products. The worldwide consumer attitude led to the establishment of consumer groups such the Australian Consumer Association in 1959 and the International Organisation of Consumer Unions in 1960 (IOCU) (now called Consumers International)
THE DEFINITION OF CONSUMER
- Generally, the law defines a consumer as:
- A person who acquires good and services in a transaction for his or her own personal or household use.
- He or she may acquire these goods and services through full cash payment of through credit arrangements.
OBJECTIVES OF CONSUMER LAW
- Individuals are usually at a disadvantage when dealing with sellers - imbalance of power.
- Sellers usually have an advantage because they have greater access to legal advice.
- Objectives include
- Equalise the power between consumers and manufacturers. - meeting society’s needs and achieving justice.
- Protect the rights of consumers - protecting individual rights.
- Assist in dispute resolution between consumers and manufacturers - achieving justice.
- The basic assumptions of consumer law are:
- The most efficient way for consumers to get what they want is through “the market” - businesses provide goods and services, not the government.
- Businesses have a lot more power than their consumers.
- The government has to regulate the behaviour of businesses so we can have a market economy that functions properly.
- Competition and Consumer Act 2010 (Cth)
- Objective is to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection.
- The objectives of consumer law is to protect consumers from:
- Misleading or deceptive conduct - false advertising, salespeople who trick customers etc.
- Unconscionable conduct - taking advantage of vulnerable consumers.
- Unfair contracts
- Unsafe goods and services.
CONTRACTS – TYPES, ELEMENTS, TERMS, EXCLUSION CLAUSES
A contract is an agreement between two or more parties in which legal obligations are created that are legally binding.
- Legally binding agreement.
- Do not always have to be in writing.
- Some must be in writing for them to have legal recognition.
TYPES OF CONTRACTS
- Simple Contracts
- May be oral.
- Require consideration.
- Contracts under Seal
- Must be written and signed, sealed and delivered.
- Do not require a consideration.
- Express Contracts
- When the parties intention is stated explicitly (written or oral)
- Implied Contracts
- For example: enter a tax – implying that you will pay them and they are agreeing to take you.
- Bilateral Contracts
- ‘Promise for a promise’
- Unilateral Contracts
- Offer is made inviting acceptance by a performance rather than promise.
ELEMENTS OF A CONTRACT
- OFFER: Initial suggestion/proposal to another party.
- ACCEPTANCE: Both parties agree unconditionally to all parts of the contract.
- CONSIDERATION: Paying some sort of price on both sides.
- INTENTION: Both parties have to willingly enter into a legal relationship.
- CAPACITY: Both parties have to be capable of entering a contract e.g. not under 18, disabilities, intoxication etc.
- Unless there is genuine consent, there can be no agreement and a court will strike down where consent is not given.
- Courts will not enforce illegal agreements e.g. a court will not enforce a contract to do with drug dealing.
|Written into a contract, or clearly stated in an oral contract.||Difficult to identify, may not be written into a contract but would automatically happen.|
|Fundamental or essential terms of the contract. Breach of the conditions allows the other party to cancel the contract or sue for damages.||A term not so important to the contract, so if it is breached it just means that the other person can be entitled to damages.|
An exclusion clause is a term that tries to limit (or completely remove) any liability/responsibility for one of the parties if the situation goes bad.
- Businesses cannot exclude themselves from their legal responsibilities under the law.
- EXAMPLE: Wet N Wild - “We will not be liable for any personal injury or loss where negligence cannot be attributed to the owners and operators of Wet N Wild Sydney.”
STANDARDS IMPLIED BY STATUTES
There are five standards implied into consumer contracts which cannot be excluded.
- The person supplying the good has the right to do so.
- The person selling the good either owns it or has been given permission from the owner to sell it.
- The good fits its description.
- If a consumer buys goods on the basis of a description given by supplier, then the goods must answer to that description.
- The good is of merchantable quality.
- This means goods are a standard fit for purpose for which they are sold, taking into consideration the price and description of the good.
- Exceptions - Defects the buyer should have seen, defects the buyer was aware of.
- The good is fit for purpose.
- The good must be able to carry out its function.
- The good must conform to sample.
- If a consumer buys a good with reference to a sample, then the item must conform to that sample.
VOLUNTARY & MANDATORY STANDARDS
- As well as the implied terms of a contract, published standards operate which set criteria necessary to ensure that a material or method will consistently do the job it is intended to do.
|Voluntary Standards||Mandatory Standards|
|Developed by Standards Australia, as a body whose function is to write standards. Companies and manufactures are not required to follow these standards, but many do so they can assure consumers of the good nature of their product or service.||These are made compulsory by legislations such as the Competition and Consumer Act 2010 (Cth) and the Fair Trading Act 1987 (NSW). These are typically more common in potentially hazardous goods, such as food items or childrens toys.|
- Refers to a product being removed from availability for sale and an announcement being made for the return of any of the products that have already been sold.
Example: Salmonella was identified in lettuce sold by Coles and Woolworths. Both stores issued recalls, telling purchasers to either throw out the lettuce, or return it to the store.
THE ROLE OF NEGLIGENCE IN CONSUMER PROTECTION
Negligence is concerned with protection of the individual, their property and economic interests from damage caused by another person’s failure to take care.
- Consumers are owed a duty of care by sellers and manufacturers.
- Duty of care was established through Donoghue v. Stevenson (1932), in which a decomposing snail was found in a bottle of ginger beer.
- To establish negligence in a court action, the claimant must prove:
- A duty of care - automatically accepted by the courts when there is a relationship between a buyer and a seller in an everyday commercial transaction.
- The duty of care was breached and that the care shown by the seller was insufficient.
- Actual damage/injury was caused to the person to whom a duty of care was owed.
- The Trade Practices Act 1974 (Cth) prohibits conduct that is misleading or deceptive.
- In Australia, governments seek to keep unsafe products from the market and inform consumers about product safety by ensuring:
- Safety warning notices issued regularly.
- Products comply with a mandatory safety standard.
- Suppliers notify minister if a consumer has been injured in association with their product.
- Unsafe products are detected and reported.
- Effective and timely removal of unsafe products from the market.
- Compulsory product recall if required.
- Compensation is available to consumers who suffer injury.
REGULATION OF MARKETING & ADVERTISING
- Advertising offers a valuable service to consumers because it informs them of the range and price of available products, thereby giving them information and freedom of choice.
- Businesses are free to advertise their goods and services but are not free to deceive, mislead or harass customers - customers are protected from exploitation.
- Provisions protecting customers from deceptive advertising and marketing practices are found in ACL, most notably the Competition and Consumer Act 2010 (Cth).
- Deceptive or Misleading Conduct
- Section 18 of ACL contains provisions providing protection against deceptive or misleading conduct.
- Misleading or deceptive conduct includes exaggerated statements about a product, failure to disclose all relevant information, broken promises, incorrect predictions and in some circumstances silence.
- Makes no difference whether the company intended to mislead or deceive consumers.
- Under ACL, the consumer can recover damages from the loss suffered by the conduct of another which contravenes provisions in the ACL.
- False or Misleading Representations
- A false claim about the quality or value of a product e.g. a product is worth $50 but customers are told it is worth $100.
- A claim that goods are new when in fact they are second-hand.
- A claim that a product is sponsored by or used by a celebrity when in fact it is not.
- A false or misleading claim about the existence, exclusion or effect of any condition, warranty or guarantee.
- A false claim about the place of origin of a product.
- Offering Gifts and Prizes
- Suppliers who entice consumers to buy their goods or services by offering gifts, prizes or other free items with the intention of not providing the gift contravene section 32 of ACL.
- Suppliers engaging in such conduct are considered to have been engaging in deceptive practice.
- Bait Advertising
- The practice of advertising something at a price with the knowledge that it will not be possible to offer it at that price for a reasonable time and in reasonable quantities.
- Sales staff then inform customers they were ‘out of the product’ and then attempt to convince the customer to purchase a more expensive model.
- Pyramid Selling
- A scheme in which prospective participants are promised payment or other benefits for introducing others to the scheme.
- The practice is fraudulent because what is really being sold is the right to distribute, not the actual product or service actually being marketed.
- Unsolicited and Unordered Goods
- Unordered goods received by consumers do not need to be paid for and become property of the consumer after 3 months.
- A consumer is also not responsible for any accidental damage to such goods.
- Under section 50 of ACL, a person must not use physical force, undue harassment or coercion in connection with the supply or possible supply of goods or services, or for payment for goods or services.
COOLING OFF PERIOD
- Legislative provisions permit cooling-off periods in relation to certain contracts because the law acknowledges the existence of high-pressure sales tactics that can influence consumers to make purchases they otherwise would not.
- ACL – allows for a 10day cooling off period and the right to terminate a contract after the cooling off period where the contact is an unsolicited consumer contract.
- Motor Dealers Act 1974 (NSW) – 5 day cooling off period.
- Conveyancing Act 1919 (NSW) – 5 day cooling off period.
- Much of the advertising industry is subject to non-statutory controls through industry self-regulation, as well as government imposed regulations mentioned above.
- The Advertising Standards Bureau (ASB) administers a national system of advertising self-regulation. It can investigate complaints through the Advertising Claims Board.
- The self-regulation system is based on the idea that advertisers benefit from ensuring that advertisements meet community standards, because are more likely to be influence by the advertisements if they trust the integrity of the advertising industry.
- Consumers can also complain to the above bodies, as well as industries such as the Australian Communications and Media Authority (ACMA) who can withdraw advertisements and, in some cases, implement financial penalties such.
- An occupational license is a permit to practice in a particular profession or occupation. They are required in jobs that need specialised knowledge, with the consumer knowing little about the work being performed.
- Licensing protects the consumer from incompetent and faulty works.
- Occupational licensing occurs through either state regulation or self-regulation.
- Self-regulation occurs when a particular trade or occupation imposes its own licensing restrictions on people in that occupation.
- Some professions, e.g. Accounts are members of certified practising groups.
- It requires the people to abide to a code of conduct.
- If they do not they can be fined or forfeit their membership.
- The effectiveness of self-regulation is called into question by the findings by the industry funded Advertising Standards Bureau that advertisement were found acceptable, and then unacceptable.
- In some industries and occupations, permission to practice is regulated by the state; this means the government through legislation, gives people in that particular occupation permission to practise. i.e.:
- Car dealers and repairers under the Motor Dealers Act 1974 (NSW)
- Some professions or occupations have a combination of self-regulation and state regulation. This is called co-regulation i.e.
- Lawyers. – Legal Profession Act 1987 (NSW)
- The legislation which provides for occupational licensing also provides for review of decisions by the licensing authority.
CONSUMER REDRESS & REMEDIES
AWARENESS & SELF HELP
AWARENESS: Consumers are aware of their rights, being aware of faulty products e.g. Samsung Dryers.
SELF HELP: Going to the business that wronged the consumer and getting the remedy from them.
- An advantage of consumer law is that usually the problem associated with the purchase of goods and services can be resolved by the individual consumers.
- The key to resolving the problem is to know how to access information in order to help themselves.
- When returning a product, a consumer should:
- Provide a sales docket where possible, as suppliers are reluctant to exchange goods without it.
- Give details of the fault with the product.
- Indicate at which store it was bought and on what day.
- Preferably make sure it has been promptly returned as soon as the fault or problem is identified.
- Check the warranties and guarantees that are associated with the purchase of goods.
- The Competition and Consumer Act 2010 (Cth) states that manufacturers must fulfil their express warranties and implied guarantees.
- Express Warranties - Stated in written form.
- Implied Guarantees - Implied in statute e.g. that the product works.
STATE GOVERNMENT ORGANISATIONS
- There are various bodies within or authorised by the NSW state governments that deal with consumer complaints,
- These agencies act as a mediator or a conciliator, listening to the two parties and making suggestions in an effort to bring the parties to an agreement.
NSW FAIR TRADING
- Can supply free written information about consumer rights, and will answer particular enquires over the phone, by email or in person.
- It is primarily responsible for investigating complaints about unfair commercial practices and for taking action for those at fault.
- They can only negotiate with the business, but not tell them what to do.
COMMUNITY SERVICES COMMISSION
- Statutory ‘watchdog’ body overseeing community serviced in NSW.
- Its primary function is dealing with complaints relating to the NSW Department of Community Services, the aged, disabled and home care.
NSW LEGAL AID
- Established under the Legal Aid Commission Act 1979 (NSW) and is an independent statutory body.
- It provides legal advice and assistance to socially and economically disadvantaged people including court representation for unsuccessful applications for a grant of legal aid.
- It also gives talks in an attempt to educate the public about their consumer rights.
Other NSW State government bodies which provide redress for consumers include:
- The Legal Services Commissioner
- Health care Complaints Commission
- NSW Food Authority
FEDERAL GOVERNMENT ORGANISATIONS
- There are several Commonwealth agencies that deal with the regulation of industries and protect consumer rights.
AUSTRALIAN COMPETITION & CONSUMER COMMISSION (ACCC)
- Independent statutory body that administers the federal consumer legislation.
- Its role is to promote competition and fair trade in the marketplace.
- It ensures the marketplace stays regulated to ensure no unfair conduct on the part of the suppliers is made, and prices stay as cheap as possible.
- It compliments State consumer affair agencies, proving education to consumers and business about the relevant law, and also regulates the national infrastructure industries, which include communications, energy, water, post and transport.
AUSTRALIAN COMMUNICATIONS & MEDIA AUTHORITY (ACMA)
- Responsible for the regulation of broadcasting, the internet and telecommunications.
- It works closely with industry self-regulatory regimes and ensures industry compliance with condition codes and standards.
AUSTRALIAN SECURITIES & INVESTEMENTS COMMISSION (ASIC)
- Is responsible for enforcing laws regarding financial services.
- It can provide information and advice to consumers about how to resolve difficulties they have with financial services, such as a sharebroker, an insurance provider or a superannuation provider.
- There are many industry organisations that deal with consumer complaints and assist with remedies. They are classified as either:
- Industry-based dispute resolution – Some industry groups have developed complaint handling and dispute resolution schemes designed to provide consumer remedies and enhance business reputation.
- Customer-focused on cooperate compliance programs – internal self-regulated programs that ensure a business meets is legal obligations.
- Industry based ombudsman – takes complaints from consumers about agencies, departments or providers and investigates in order to reach a just conclusion. i.e.
- The financial Ombudsman Service (FOS) – hears complaints about a wide range of financial services including banking, credit, insurance and investment.
- These organisations all assist and give advice surrounding the relevant trade, profession or industry body.
- They put pressure on members who don’t deal with consumer complaints adequately.
- Some have made up their own dispute settling mechanisms. I.e. mediation or arbitration.
THE ROLE OF TRIBUNALS AND COURTS
- If self-help and approaching government, non –government and industry organisation prove ineffective, then the consumer can have the matter determined by a tribunal or court.
CONSUMER, TRADER AND TENANCY TRIBUNAL (CTTT)
- The Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) governs the operation of this tribunal.
- It aims to resolve to disputes between tenants, landlords, traders and consumers in a timely and effective manner.
- It conducts hearings throughout NSW and deals with matters under the following:
- Social housing
- Strata and community schemes
- Retirement villages
- Residential parks
- Motor vehicles
- After the parties have had a chance to conciliate and if an agreement is not reached, an application will be heard by the Tribunal.
- Hearings are generally informal but can be established on request.
- “Scratching the Surface” –case study.
- The NSW and Federal court systems can hear a wide range of civil cases including those with consumer transactions arising out of the law about contracts and torts.
- Court based remedies are very costly and slow.
- As the courts are expensive, class actions (several people who have been harmed by the activities of someone else take the case to court jointly) are often implemented.
- They can also be called representative action.
- Before only individuals could take cases to court but now under the CCA (2010), class actions have been made available meaning more people will be likely to take smaller cases to court as the expensive is divided.
- Carnie v Esanda Finance Co (1995)
THE ROLE OF NON-GOVERNMENT ORGANISATIONS
- Non-government organisations are very important to consumers as they provide valuable advice and assistance. Two widely known organisations are:
- Choice – which is a large private consumers organisations which publishes Choice magazine. It is monthly and provides members with an analysis of numerous products and their positives and negatives.
- The NRMA- advices members about their rights against vehicle sellers and manufacturers and asses cars on sale.
- Not good enough – website dedicate to resolve disputes with suppliers of goods and services.
THE ROLE OF THE MEDIA
- Both print and electronic media provide information about failure of products and unfair practices conducted by some businesses.
- It also can conduct a publicity campaign on behalf of disadvantaged consumers.
- The media plays an enormous role in consumer affairs through advertisement.
- It however can be bias in favour of sponsors.
- Remedies can be gained by consumers themselves or be ordered by statutory bodies, such as tribunals, or by the courts.
- Consumers have rights to a refund if product is defective even if a sign suggests otherwise.
- Courts and tribunals can also offer refunds
- The word damage refers to money paid by one party involved in a transaction to the other party, in order to compensate for loss suffered by that party. Various types can be ordered by the court these include:
- Restitution damages – plaintiff is given value for benefits he or she had provided to the defendant.
- Reliance damages – plaintiff is compensated so they are in the same position they were in before the contract was issued.
- Expectation damage- position if contract happened.
- Injured feelings – damages awarded to compensate for mental trauma.
RECISSION & MODIFICATION OF CONTRACT
- A contract can be broken if it is unfair or has been breached.
- A contract can also be modified by a court to achieve justice.
- Under the CCA (2010) and the FTA (1987) and other legislations, courts and tribunals can make a wide variety of special orders such as:
- Vary or void a contract
- Perform specific work
- Pay money owed
- Refund or replace goods.
- Order to publish corrective advertising.
INJUNCTIONS & SPECIFIC PERFORMANCE
- An injunction is an order for someone to do or to refrain from doing something.
- Courts and tribunals can order them.
- Specific performance is an order that requires the parties to do those things which their contract requires, in order to settle and define parties’ rights.
- Both the ACCC and the NSW Office of Fair Trading can initiate criminal prosecutions against persons who contravene consumer’s protection statutes.
REMEDIES FOR SOCIETY
- Criminal prosecutions represent a remedy for society rather than for individual consumers as all of society benefits from the punishment of an offender.
CONTEMPORARY ISSUES CONCERNING CONSUMERS
- A credit transaction is one in which a consumer acquires an item for use immediately but does not pay for it immediately.
- Consumers pay extra for the convenience of using credit, this is called interest and it is calculated as a percentage of the price of the goods or service, or money borrowed, over a certain period of time.
- Many people are lured into credit transactions without the money to pay for it. This means that both consumers and providers need to be protected.
- Credit is of great use to the economy, as more goods are bought due to it.
- A meeting of the Council of Australian Governments in 2008 determined that credit powers would be dealt with under the commonwealth via the Trade Practices Amendment (Australian Consumer Law) Act 2009 (Cth) which embodies a separate legislative framework for the regulation of financial services.
- This resulted in a single national law for the regulation of consumer credit, and thus enhanced protection for consumers and stability for the consumer credit sector.
- One of the aims of the act was to ensure consistency between generic consumer protections and the specifically apply to financial services.
- The Consumers Credit Code covers almost all consumer credit transactions. It presents much larger coverage than the Credit Act 1984 (NSW). It is adopted under the Consumer Credit (NSW) Act 1995
- Consumers also have obligations under credit contracts. If they fail to meet these obligations credit providers have various remedies available to them. Consumers are obliged to supply correct information to credit providers and to make the agreed repayments. If the consumer fails to do this, thereby misleading the credit provider, the consumer has committed an offense.
- If a borrower fails to make repayments, the credit provider can either repossess the mortgaged property or sue the borrower for money owing.
- A borrower cannot sell mortgaged property without the consent of the credit provider.
- If the credit provider wishes to sue the borrower they need to provide the debtor with one month notice.
- The Consumer, trader, and tenancy tribunal needs make a determination before they can sue.
- The credit provider must also first issue a default notice.
The Uniform Consumer Credit Code (UCCC)
- The amendments to the Australian Securities and Investment Commission Act 2001 (Cth) strengthen the national consumer credit code across Australia.
- It aims to provide laws which apply equally to all forms of consumer lending and to all credit providers which take place in all areas of Australia.
- It guarantees standardisation and presents credit information in a clear and easy to understand format. It makes it so banks, building societies, credit unions, finance companies and business are required to:
- Inform consumers of the rights and obligations.
- Truthfully disclose all relevant information about the credit arrangement
- Furthermore, credit provides must not enter into contractual agreements with consumers who may find it difficult to make repayments. Courts can rescind these unconscionable credit contracts.
RIGHTS AND REMEDIES: BORROWERS
- Borrower are protected n consumer credit transactions in a number of ways including the areas of:
- Fees and charges
- Variations of contracts
- Unjust contracts
- Overcommitted borrowers
- Linked credit providers
- There are a number of useful non-legal avenues available for consumers experience credit concerns. Some examples are:
- NSW Office of Fair Trading – provides free advice regarding the consumer credit code.
- Community Justice Centres (CJC’s) – provides free mediation and conflict management services throughout NSW.
- Financial Ombudsman Service (FOS) – Provides free mediation service especially for resolving credit disputes between consumers and financial institutions.
- Consumer Credit Legal Centre NSW- provides free telephone and financial counselling advice, especially for low income consumers.
- Redfern Legal Centre (RLC) – offers free legal advice, referral and case work to disadvantage people and groups in the Botany.
- These all have advantages of being free and thus accessible.
- The uniform laws outlined above are designed to protect consumers entering credit agreements, and also regulate credit providers.
- A national response to this issue is appropriate, ensuring all consumers are protected to the same extent.
- The UCCC guarantees standardisation of credit contracts across Australia and ensures that credit information is presented in a clear and easy to understand format.
- Credit providers are now required to inform consumers of their rights and obligations in any credit arrangements, and to truthfully disclose all relevant information.
- Civil remedies for consumers against credit providers who breach the code, the state can initiate a criminal prosecution. However the effectiveness of this statutory remains to be seen in.
- While legislation can be forced, the civil and criminal penalties still may not be sufficient enough to deter some corporation from licensee misconduct.
- Historically, there appears to have been reluctance by courts to impose criminal sanctions on the board members of corporations and reliance instead on fines that hardly put a dent in annual profit figures.
- Consumers can enjoy the use of an item long before they can afford o pay for it in full
- The availability of credit is good for the economy because more goods are purchased and consumption is increased.
- Most types of consumer credit transactions are well protected under the Consumer Credit (NSW) Act 1995
- The notion of security protects credit providers from consumers who fail to repay their debt
- The rules regarding mortgages and guarantors help ensure that consumers are unlikely to place themselves in positions in which they lose their property because of a debt,
- The Register of Encumbered Vehicles (REVS) helps ensure that consumers do not buy a second-hand car that is subject to repossession,
- The CTTT can vary an unjust credit contract including, in some circumstances, the situation of a borrower who is overcommitted.
- Borrowers are obliged to give correct information to a credit provider and to make the agreed repayments, so the credit provider is also protected.
- The law regarding repossession protects the lender against defaulting borrowers and also borrower’s time to rectify the matter before repossession takes place.
- Credit providers who break the Consumer Credit Code can be penalised.
- Some consumers overcommitted themselves and find that they are unable to pay the money they owe- though credit providers should not lend money if this is likely to occur.
- Credit providers can vary fees and charges with thirty days notice. The fees and charges may be substantially higher than those first agreed to by the borrower.
- Product certification is the process of providing documented assurance that goods or serviced have passed performance and quality tests before they are marketed.
- As we live in a globalised world, products made in other countries can be sold in Australia and they often do not have the same level of quality assurance as Australia. Consequently. It is vital that all products meet certain minimum safety and performance standards before they can be sold to Australia.
- An area in which product certification has caused concern in recent years in the area of ‘green; certification, an independent ‘green; certification can be obtained from Good Environmental Choice Australia (GECA) which uses the highest international standard for eco-labelling. Many consumers do not know about this label.
- The ACCC enforces mandatory product safety and information standards and bans unsafe goods under the TPA (1974). The NSW Office of Fair Trading via the FTA (1987) also monitors product safety.
- Action can be taken by the NSW food authority against companies who make claims about foodstuff which are not met
- Action can be taken by the ACCC against companies who misrepresent their products.
- Under Australian law, product suppliers and manufactures have an obligation to ensure that safe products are marketed. This is done by:
- Providing clear instructions for use.
- Being aware of and meeting industry and mandatory standards.
- Developing product recall plans and procedures.
- Incorporating safety into product design.
- Raising the level of safety standards through product improvement.
- Implementing a quality assurance program which includes consumer feedback.
- Responding quickly to safety concerns.
- A standard can be made mandatory by a statutory regulation or a noticed published in the Commonwealth Gazette.
- There is a legal requirement that supplies must refer to both the gazette notice and its ‘standards Australia’ benchmarks.
- There are two types of mandatory product standards in our country:
- Safety standards – legal requirements regarding safety
- Information standards – legal requirements regarding information.
- If a product passes the set of regulations it proves quality and sustainability for their specific purpose to our minimum performance standards.
- The certification process has varying levels of stringency depending on the risk to the consumers.
- Once a good is certified, it may be endorsed with a certification mark or logo.
- This certification is also a powerful marketing tool.
- In Australia, consumers are protected from unsafe or substandard goods and serviced by a number of legal mechanisms:
- Trade Practices Act 1974 – contains provisions specifically addressing unsafe products, though mandatory safety standards and information standards, banning of unsafe goods, compulsory product recalls, and warning notices to the public. It is policed by the ACCC. It has the power to conduct random national surveys of retail outlets to detect non- complying products and investigate. The ACC also has an educative function, proving information and advice to suppliers.
- The Australian Securities and Investment Commission Act 2001 – enforced by ASIC who protect consumers by ensuring that market participant act with integrity.
- All of the above play a central role in educating businesses and consumers about product safety, whilst also publishing publication on safety and standards.
- The legal system also conducts ongoing marketplace surveys to ensure that products continue to meet acceptable standards
- It can also prosecute suppliers who ignore their statutory obligations.
- They can also remove unsafe goods from sale.
- Individuals may take action through one of the independent consumer groups such as:
- Advocate groups
- Lobby parliaments
- The process of certification is usually undertaken by non-government organisations
- The effectiveness of product certification relied on the awareness of the consumer.
- Reputational damage can be suffered by businesses who fail to certify their products or who fail to do so properly.
- It is obvious that the Australian legal system seeks to ensure that all products that consumers buy are sae and meet internationally recognise quality standards. This is achieved via product certification, which demonstrates that a product or service satisfies specific requirements.
- Without product certification there would be huge risk to the health and safety of Australian consumers.
- Product certification assists consumers to know that the product they are purchasing meets the standards claimed for it.
- Businesses which certify that their products meet certain standards or requirements can increase sales because consumers are more willing to buy a certified product than an uncertified one.
- It is illegal for companies to make product certification claims that are false; consumers have various remedies available to them if companies do this. It also damages their company.
- Australia is one of the most open markets in the world, making it very difficult to ensure that unsafe products will not enter out markets.
- Whilst we do have laws in place to help this we also must rely upon consumer watchdogs such as the ACCC, the media and other bodies to bring unsafe products to the attention of the public.
- This usually occurs only after a consumer is injured.
- Bindeez Beads – case study
- The effectiveness of product certification relies on consumers being aware of what the certification stands for.
- There has been a sharp rise in the number of complaints about exaggerated ‘greens’ claims by companies, indicating that some businesses are unscrupulous in this area.
- The ACCC had limited power to deal with false product claims and has called on the federal government to give it more power in this area and to allow for the imposition of heavy fines.
- Marketing is a process by which a business creates a ‘consumer interest’ in its products.
- As businesses websites are marketed to not only Australia but he rest of the world, consumer protection becomes problematic.
- Governments have to develop appropriate legislative responses to ensure we facilitate a fair marketplace.
- Refers to practices where goods are advertise and brought by a consumer from his/her own home.
- It is growing enormously in Australia, especially in phone calls.
- This is good as it is convenient for consumers as well as offering a wide range of goods and services.
- It is subject to the same advertising and consumer laws as all other forms of selling goods and services.
- Marketing innovations can be utilised for bogus purposes, posing new challenges to Australian law. E.g.
- Fraudulent overseas offers via the internet
- Internet fraud
- As a consequence from these developments, consumer protection agencies such as the ACCC and the NSW Office of Fair Trading regularly scan the internet, radio and TV for illegal offers designed to exploit consumers.
- They also rely on consumers reporting deceptive marketing schemes.
- Deceptive advertising and marketing practices are addressed in the
- Fair Trading Act 1987
- Trade Practices Act 1974 – prohibits such practices
- Some key provisions that relate to marketing are:
- Section 52 – outlaws the deliberate misleading of consumers.
- Section 53- illegal to make false or misleading representation.
- Section 54- makes it illegal for supplier or merchant to offer gifts and prizes which the intention of not giving them.
- Section 56- makes it illegal to use bait advertising
- Section 57 – outlaws referral selling
- Section 60 – illegal to use coerce on consumers
COOLING OFF PERIODS
- A cooling off period is the time during which a party to a contract can decide not to go ahead with the purchase without penalty.
- The consumer can cancel the contract, but must do so in writing.
- The supplier then has 28 days to collect the goods.
- Refers to the placement of a sponsored product or brand into the content of entertainment.
- It is illegal in many European countries, as it is seen as a covert and deceptive and cannot be filtered out from the entertainment contact.
- In Australia, however, it is subject to only a few controls.
- Prohibited in tobacco and alcohol.
- Permitted if it’s disclosed – the consumers must know that the product is being promoted as he person or program promoting the product is being paid to do so.
- There are a number of ‘consumer watchdogs’ whose objective is identifying fraudulent marketing practices and scams these include:
- Choice – publishes magazine
- SCAM watch – website operated by the ACCC, providing information to consumers and small businesses regarding the recognition, avoidance and reporting of scams.
- The Australian Communications and Media Authority (ACMA) – government agency responsible for the regulation of broadcasting, the radio, internet and telecommunications. Consumers can also make complaints regarding advertising.
- The print and electronic media – who report on questionable marketing activity to provide the consumer with a greater awareness of the nature and prevalence of scams,
- The legal system responds very well to domestic marketing issues.
- Australian consumers buying products in Australia are clearly protected.
- The emerging problem however related to marketing that originates from foreign countries via the internet.
- Advances in electronic marketing allow fraudulent marketers to communicate easily with their victims and to transfer illegal goods across borders.
- The transnational nature of scams makes it very difficult for Australian authorities to catch the perpetrator.
- Furthermore, there are complicated and problematic questions of jurisdiction and foreign laws.
- There will continue to be consumer protection issues raised by marketing in the information society.
- Domestic law it very effective, but may be powerless when it comes to online purchases from foreign markets.
- Direct commerce, including telemarketing is subject to the same advertising and consumers laws as all other forms and is regulated by many laws.
- The cooling off period, under the Fair Trading Act applies to many direct commerce transactions.
- Product placement of cigarettes and tobacco products is prohibited in nearly all forms of media
- Product placement advertising for products is permitted if it’s disclosed.
- Technology is creating a new world of fraud that we cannot keep up with.
- Attempts to solve these problems at the national or regional levels are not sufficient.
- As cyber-criminals are not bound to geographical locations laws and technological measures can no longer be limited to national or regional boundaries.
- The effectiveness of laws which protect consumers against unfair or unwanted practice by direct marketers relies on consumers being aware of the protection the laws offers and upon their willingness to make complaints.
- Enforcement of product placement disclosure laws relied on compliance by broadcasters. Consumers can also not even be aware that it’s happening.
- The use of new technology in the areas of computers and global communication is constantly changing the level and complexity of interaction between consumers and sellers.
- Technology has infiltrated all levels of consumer transaction serviced.
- The problem facing consumer law is that various services now available over the internet operate in a less regulated environment.
- As global marketing and virtual shopping becomes the norm, Australia and International law will have to work hard to protect consumers regardless of whether a product is purchased domestically or internationally.
- The use of technology in the global marketplace makes it very difficult for Australian law as it has no international jurisdiction, and legislation strategies for meeting these challenges are still developing.
- However, some effective legal responses can be utilised in achieving justice for consumers such as:
- The assists of a foreign online marketer can be frozen. The absence of international treaties and foreign bank privacy laws may make it difficult to recover a consumer’s money.
- When online marketer’s assets are within Australia and their location is known a court can impose a freezing order for compensation purposes.
- It is possible for ‘government monitors’ to seek out and remove fraudulent telemarketing sites from the internet.
- The Telecommunications Act 1997 (Cth) gives the ACCC the authority to administer the rules of conduct governing dealing with international telecommunications operators.
- Problems associated with the use of technology are not confined to international transactions.
- Issues that arise from online transactions whether local or internationally are:
- There is a need to ensure fair dealings between suppliers and consumers regarding terms and conditions of the sales contract. Where consumers could speak with someone over a counter they are forced to interact via technology and many people are not technologically advanced for this.
- Computer-generated responses to consumer’s complaints act as barriers to self-help strategies.
- The increasing trend towards; remote purchasing’ can potentially compromise things such as quality, installation, demonstration and advice.
- There is a need to ensure identify, as well as important information (such as address and card numbers) are kept private.
- This information can be used inappropriately by suppliers for ‘consumer profiling.’
- It is crucial that biometric data collected for consumer identification (voice recognition) is not transmitted digital too other organisations without the persons consent.
- Under the Trade Practice Act 1974 (Cth) the ACCC is empowered to enforce the prohibitions contained in that Act, and as noted above, it has enforced the telecommunications act.
- The extension of trade and commerce into the online environment poses interesting challenges for the law.
- A number of organisations have a role in ensuring technology is not misused. These include:
- The Australian Communications and Media Authority (ACMA) – which is a statutory body within federal department of Broadband, Communications and the Digital Economy? It is responsible for the regulation of broadcasting radio and television communications and the internet.
- The Australian Direct Marketing Association (ADMA) – is an industry body for direct marketing companies. It is strongly committed to self-regulation. Alongside other industry and consumer representatives it formulated the ‘e-Marketing codes of practice’ to supplement the Spam Act 2003 (Cth) which regulates commercial electronic messages and outlaws spam.
- The Internet Industry Association (IIA) – Is a similar organisation for internet services providers. It has developed several codes of practices to supplement the spam act.
- The Australian Securities and Investments Commission (ASIC) – Has the mission of regulating and enforcing laws relating to fairness and honesty in financial services, marketing and companies. It oversees the regulatory issues posed by developments in electronic communications. It is also responsible for approving codes of practice in the financial service industry.
- Generally, the Australian legal system affords consumers adequate protection against the misuse of technology provided that e-marketing are located within Australian borders.
- The Trade Practices Act 1974 and the Telecommunications Act 1997 allows the ACCC to police the consumer law domestically, within an arsenal of criminal and civil sanctions at its disposal.
- However, cross border, e-marketing raises complex jurisdictional questions, and the laws evolution in order to adapt is ongoing.
- To ensure consumer remedies in the future we may need to depend upon the existence of multilateral international treaties.
- Free trade agreements with other nation states
- It is in the internet of e-commerce traders to follow guidelines that protect consumers, because this enhances the reputation of their business which led to expansion of the business.
- Consumers are protected through their own vigilance and awareness.
- There is a legislative framework in place to protect the privacy of individuals in their dealing with government authorities and bug businesses
- There are provisions for internal reviews and investigation by state and federal Privacy Commissioners for breaches of legislation.
- The legal systems will always trail behind technological innovations. It is clear that lawmakers will encounter significant problems into the future as they attempt to ensure that the use of technology for sales, advertising and marketing doesn’t weaken consumer protection in the domestic and global marketplace.
- E-commerce and e-marketing will continue to evolve and new technologies will challenges law enforces by creating new opportunities for fraud.
- Effective consumer protection will require not only government enforcement, but also private self-regulatory initiative on the part of industry and the combined efforts of governments, businesses and consumer groups to equip consumers with the tools to protect themselves.
- It is difficult for consumers to access quick and inexpensive forms of redress if they engaging in e-commerce with a firm or another country.
- Many small business are exempt from the national privacy principles