Consumer protection laws are normally designed to make sure that fair competition exists and that truthful information is available in the marketplace. They are formed by the government to guarantee the rights of consumers. Such laws are always established to prevent businesses from engaging in fraud and other specified unfair practices which allows them to gain advantage over competitors in the market (Boya 1987, 279).
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They are also designed to protect the weak and who are not able to take care of themselves (Department of Trade and Industry 2006, 3).
The Australian Consumer Law is mostly derived from the provisions that had been previously provided in the Trade Practices Act of 1974 (Australasian Legal Information Institute2011). The Commonwealth Competition and Consumer Act of 2010 which became operational in January 2011 replaced the 20 different consumer laws which had existed in the various territories and states within Australia.
The Australian government aims to ensure fair trading legislation and consumer protection across all the jurisdictions in the country (Kelly 2010). The Australian Competition and Consumer Commission (ACCC) as well as the Australian Securities and Investment Commission (ASIC) are charged with the responsibility of enforcing the Australian Consumer Law (Consumer Affairs Victoria, 2007(a)).
They are considered to be a sovereign power in Australia. When considering whether o not to begin enforcement action against a trader the provisions of the Trade Practices Act of 1974, the enforcement body has to consider instances of unfair trade practices or contract terms as provided for in the Act (Consumer Affairs Victoria 2007(b), 3).
Defining goods and services
The enforcement body which may be the national or the local enforcement body has to consider whether or not the good or service in question is covered under the regulated goods and services in line with the Australian Consumer Law.
According to the Commonwealth Competition and Consumer Act of 2010, a person is accorded the right to file for a complaint if he or she had obtained service(s) or good(s) as a consumer provided that the sum paid (payable) for the service(s) or good(s) is below $40,000 or as laid down in the agreement (Brody 2010).
One is also taken to be a consumer if the good(s) or service(s) obtained are generally for consumption, personal or domestic use. Finally, one is considered to be a consumer if the good(s) comprise a vehicle or trailer that had been obtained primarily for use in the transportation of goods on public roads.
Establishing whether the person is a consumer
A consumer in this case is a person who obtains a good or service for the purpose of ownership or direct consumption, but not for other reasons such as resale, further manufacturing or production. On the other hand, according to the Act, a person is not considered to be a consumer if he or she obtained in order to re-supply.
In addition, any person who acquires good(s) for the purpose of transforming it/them or for use in trade is not considered as a consumer (Averitt & Lande 1997, 713). Transformation may mean production or manufacture process. Transforming could also mean repairing or treating some other good(s) or fixture on land.
Thus, the Australian Competition and Consumer Commission has to establish that the person is a consumer before it enforces any proceeding. It has to determine whether according to the terms of the contract, the good(s) or service acquired was for direct consumption, was below $ 40,000 or if it is a vehicle, then its purpose was for doing transportation along public roads.
This helps to determine whether the person is a consumer or not. However, the commission cannot enforce any proceedings in case the contract in question was an insurance cover or policy (Gans 2005, 40). According to Brody (2011) insurance contracts are exempted from the relief under the Australian Consumer laws.
The Australian Commission Laws part 3, section 2 exempts some gas, electricity and telecommunication services from coverage (Brody 2010). These are covered by the Electricity Act of 2000 Gas Industry Act of 2001.
Determining deceptive and misleading conducts
The Australian Competition and Consumer Commission also has to establish whether or not the trader was engaged in misleading or deceptive conduct. Section 18 of the Australian Consumer Laws prohibits a business person or company involved in trade or commerce from engaging in any misleading or deceptive act (Consumer Action Law Centre 2008, 18).
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Although misleading and deceptive acts have not been defined in this Act or in other Acts that apply the same provisions, the general meaning is any conduct or act that comprises misrepresentation of any kind.
The commission not only establishes that the business person, corporation or organization had set to deceive or mislead the consumer/buyer, but also investigates whether the person, business or corporation could have engaged in deceptive or misleading acts despite having acted reasonably or honestly (O’Shea & Rickett 2006, 139).
Since the deceptive and misleading conducts have not been defined by the courts, an objective test has to be conducted by the court or tribunal. This is done to come to a decision on whether the act was deceptive or misleading. This court or tribunal has to decide whether the action or behavior was likely to deceive or mislead the general public or a specific group of people whom the conduct was targeted at.
The commission and the tribunal/court may consider silence as act of deceit or misleading conduct in certain circumstances. For example, the tribunal or court may hold that failure to disclose information to the general public or certain demographic population was misleading if it was deliberately withheld for the benefit of the trader or corporation.
The Competition and Consumer Commission may also open up a case against a person or trader who makes unfounded claims about the future. The Commonwealth Competition and Consumer Act of 2010 prohibit any act of misrepresentation regarding future matters (Brody 2010).
According to the Fair Trading Act of 1999, any person who makes claims regarding the future must provide reasonable basis for doing so; otherwise, it is considered as misleading (Victoria Consolidated Legislation 2011). This means that before the commission institutes a legal action against such a person or organization, it has to inquire the validity of the source of the claim.
It can only commence a legal action against the individual, organization or institution if the information or projection is not likely to mislead or deceive the general public or a section of the public.
Before the commission institutes a legal proceeding against a person, organization or corporation accused of deceptive and misleading act based on exclusion clause, the commission, tribunal or court has to investigate and find out whether the allegations made express disclaimer, and exclude liability on the person or organization for making deceptive and misleading statements in the particular advertisement.
If an advertisement which contains the disclaimer is found not to have originated from the trader or company, then the person or organization is not liable for the misleading information found in the advertisement.
However, if claims are made against a person or organization concerning disclaimers which do not prevent the act from being deceptive or misleading, then legal proceedings are instituted for communicating misleading information to prospective customers (Brody 2010).
The Australian Competition and Consumer Commission does not initiate an enforcement action against a trader if it is found out that the trader had engaged in puffery.
Puffery is defined in the Australian Consumer Laws as claims which could be exaggerated or are enthusiastically expressed in advertisement made by a trader, organization or corporation to promote their products and services, even though it is obvious that what is claimed in the advertisement cannot be taken seriously. The courts have often held that puffery cannot be considered as deceptive or misleading act.
A statement is taken as mere puffery if any logical or sound person would not take the message seriously or even consider acting upon it. Brody (2010) presents an example of “best ever” as among the advertisement sentences which are considered as puffery. This means that the commission has to establish whether the statement used by the trader to make the advertisement constitutes puffery or was misleading and deceptive.
It is assumed that consumers have the common sense to judge statements which have been exaggerated and does not represent the reality. As such, the commission does not enforce any action against a trader who applies such tactics in an advertisement; unless there is other instances in the advertisement which constitute deceptive or misleading conduct (Jenkin& Sylvan 2007).
The Australian Competition and Consumer Commission has to consider whether the provisions of section 29 of the Act have been abused by the person, trader, organization or corporation before instituting a legal proceeding against the accused. Section 29 of the Act prohibits any individual, person or corporation from making false representation concerning various aspects of goods and services (Brody 2010).
It is illegal according to the law to make any false representation as regards price, need, quality, standard, value, and desirability (Katy 2002, 277). It is also unlawful to provide false information regarding approval or affiliation of the product, service or company. False assurance on warranty, guarantee and the right to remedy or availability also constitute misrepresentation as defined in section 29 of the Act.
The person, organization or corporation making the sales or production is prohibited from lying on the sponsorship details of the product, services or company, performance characteristics as well as uses of benefits that potential customers are to gain from the good(s) or service(s) (Consumer Action Law Centre 2008).
Finally, a company or trader is not allowed to provide false information concerning the place of origin, history or the age of the product or that of the company manufacturing the product or providing the service.
Section 30 of this Act further prohibits any misrepresentation concerning the sale or award of an interest in land. According to the provisions in the Australian Competition and Consumer Act, a person, organization or company should not make representation about a sponsorship or affiliation to a land that he/she does not own.
The section further states that a person, organization or company is not allowed to make misleading or false representation as regards the location, price, and the details of interest in land, its characteristics and potential use, as well as, availability of facilities on it.
Thus, the commission has to determine whether the allegations made constitute misrepresentation as defined in the Act or not, before instituting legal proceedings against the person or organization.
Establishing unconscionable conducts
The Australian Competition and Consumer Commission has to determine whether the transaction constituted what is defined in the Act or interpreted by the courts as unconscionable conduct. The Act defines two types of acts which are considered as unconscionable. The first type is the unconscionable conduct as provided for in the “unwritten law” (Brody 2010).
The Act prohibits a person, organization or company involved in trade or commerce from engaging in unconscionable conduct as described in the unwritten law. Such dealing may occur when unfair transaction or contract is made with a person with special disability.
In that case therefore, the party that takes charge of the transaction or contract is not allowed to take unfair advantage of the disability of the person due to his or her disability or assume the disability situation (Consumer Action Law Centre 2004, 4). The commission institutes a legal proceeding against the trader or company if it is found that transaction or contract is very disadvantageous to the person with the disability.
Unconscionable conduct consists of taking advantage of a person because of his or her age, sex, illiteracy, sickness as well as infirmity of mind (Australian Competition and Consumer Commission 2005, 2). Failure to provide explanation or assistance where necessary while making the transaction or contract also constitutes unconscionable conduct as is defined in the unwritten law.
The commission also has to determine whether the contract or transaction process violates statutory unconscionability. Section 21 of the Act bars anybody or company involved in trade or commerce by supplying of goods or services from providing products or services to person in circumstances which constitute unconscionable conduct (Brody 2010).
The commission or court has to establish the bargaining strength of each party involved and find out whether the consumer was made to fully understand the terms of contract or details of the transaction (Australian Competition and Consumer Commission 2009, 17).
For the commission or court to begin a legal proceeding against the trader or company, the body also has to find out whether any unfair tactics or unwarranted influence were applied on the consumer (Consumer Affairs Victoria 2006, 15). In some instances, the consumer may be required to comply with the conditions stated by the supplier or trader, but it may not disadvantage the consumer.
Thus, the commission or court has to analyze the instance to be able to conclude whether the process is unconscionable under statutory law or not. In some cases, the product or service could have been acquired from a third party provider meaning that the trader or company may not be responsible for the terms of the dealing. It has to investigate matters leading to the formalization of the contract or transaction.
Establishing unfair contract terms
Finally, the Australian Competition and Consumer Commission has to consider whether the terms of the contract or transaction constituted unfair contract terms as defined in the constitution.
A contract term is taken to be unfair if it leads to considerable imbalance in the rights of the parties involved in the contract or causes financial or non-financial disadvantage to the consumer involved in the contract (Consumer Affairs Victoria, 2008, 3; & Hugh 1999, 73).
It may not necessarily protect the legal interests of the company or supplier. Therefore, the commission must establish the transparency of the terms of the contract before instituting a legal proceeding against the trader, supplier or company (Geraint 1997, 257).
Generally, the Australian Competition and Consumer Commission has to consider various factors which include whether the person (complainant) is a consumer or not, whether the good(s) or service(s) in question are covered and the consumer laws or not.
After ascertaining that, it can then establish conducts in the contract or transaction process which violate consumer laws before instituting legal proceeding against the trader or company.
False or misleading representations about goods or services
When selling or advertising products, businesses should not provide misleading or false information that the good in question is of a given value, grade, standard, model, or style.
For example, in 1975, Sharp Corporation made the false claim that the Standards of Australia had tested and approved every sharp microwave. According to the court’s decision, this was a false representation and as a result, a fine of $ 100,000 was imposed on Sharp (Australian Consumer Law 2011).
A business is said to take part in bait advertising when it rues consumer to buy a certain product by offering an attractive price in full knowledge that the product in question has the likelihood of running out of stock (Australian Consumer Law 2011). In 2005, an investigation of Repco by ACCC revealed that the company had been involved in bait advertising for some products that had run out of stock.
Wrongly accepting payment
Businesses are prohibited from receiving payment from buyers if they have no intention of supplying them with the products within the specified time.
For example, in 1981, World Travel Headquarters received a tour booking to Singapore from a client in the full knowledge that the tour had been changed form a 2-day trip to an overnight trip (Australian Consumer Law 2011). According to the decision made by the court, WTH had disobeyed the ban by accepting payment with the intention of supplying the service.
Inertia selling involves spontaneously sending goods to an individual after which one coerces the individual to make payment for the goods. Businesses are prohibited from engaging in Inertia selling (Australian Consumer Law 2011). In addition, a person does not have to pay for an unsolicited good.
This is a form of product distribution scheme in which participants earn a commission or profit once they have sold a product to a buyer. In addition, participants are encouraged to recruit other participants and for their efforts, they earn a commission as well. The more participants one introduces, the larger the commission.
Contingent referral selling
It involves giving buyers a commission, rebate or other benefits by a business so that the buyer can give the business constant details for other buyers. The ACL does not prohibit referral selling (Australian Consumer Law 2011). However, businesses are forbidden from participating in continent referral for later events, like referral for the purchase of products.
ACL intimately controls unwelcome consumer agreements, implying certain guarantee, and enforces certain minimum requirements with regard to the established agreements.
The ACL endeavors to protect consumers by implying certain guarantees. In the case the consumer is being supplied with goods, the guarantees entails the ownership of the goods shall be passed on to consumers, that the consumer shall posses the goods wholly, and that the quality of such goods is acceptable (Australian Consumer Law 2011).
In addition, the consumer should be guaranteed of goods that are in line with their descriptions.
Unsolicited consumer agreements
This agreement entails the supply of services or goods of approximately $ 100. Such an agreement is unsolicited conducted over the phone outside the business premises and over (Australian Consumer Law 2011). The consumer has also not received any invitation from the seller to negotiate over the supply of the goods or services.
Evidence of transactions
When a consumer orders for goods or service, he/she is at liberty to obtain evidence of the ensuing transaction. This is mandatory for transactions exceeding $ 75. The consumer can also request for proof of transaction for goods and services below this amount.
Safety of consumer goods
ACL Part 3-3 is charged with the responsibility of controlling consumer products.
Product safety standards
The ACL support the establishment of product safety standards. As a result of these standards, businesses are supposed to fulfill certain requirements regarding composition, contents, performance, design, and packaging (Australian Consumer Law 2011). The requirements also take into account testing of consumer goods, as well as the content and form of warning instructions, and markings on consumer goods.
The ACL issues interim bans products and services that may cause injury to consumers. Interim bans should end after 60 days but can be extended (Australian Consumer Law 2011). The ACL prohibits businesses from selling products and services capable of injuring consumers, and which have received a permanent or interim ban.
The ACL can recall goods failing to comply with the established product safety standard and which are capable of causing injury (Australian Consumer Law 2011). Once issues with a notice, businesses are required to recall products at once, and at the same time, inform the public of the defect and potential risk associated with the use of such products and services.
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