Add Category
Posted
Consumer affairs ministers should consider imposing tougher financial penalties on companies that breach the law, a review of the Australian Consumer Law (ACL) suggests.
Key points:
- Report recommends higher fines for consumer law breaches
- ACCC welcomes proposed changes
- Report also suggests changes to rules around faulty goods
The review, which was conducted by Consumer Affairs Australia and New Zealand (CAANZ), proposed 19 legislative changes to better protect consumers.
As part of its recommendations, CAANZ suggested increasing the maximum penalty a court could impose from $1.1 million per contravention to the greater of:
- $10,000,000; or
- if the court can determine the value, three times the value of the benefit the company obtained from the act or omission; or
- if the court cannot determine the value, 10 per cent of annual turnover during the period of 12 months (ending at the end of the month in which the act or omission occurred)
The competition watchdog welcomed the proposal, noting it had strongly advocated for an increase to the maximum penalties available for breaches of the ACL.
"If these changes go through, when companies breach the law there will be serious penalties rather than the rather low penalties we see at the moment," Australian Competition and Consumer Commission chairman Rod Sims told the ABC.
For individuals, the review suggested lifting the maximum penalty from $220,000 to $500,000.
The review marks five years since the consumer law took effect. It aimed to consider how the law was performing and whether it was able to address new and emerging issues.
"Fortunately the review found the consumer law is travelling very well but also that there is some fundamental changes that can be made, which I think are tremendous news for consumers," Mr Sims said.
Recommendations would address ACCC complaints
The final report also suggested introducing a general safety law and making it easier for consumers to get a refund for a faulty product.
The safety law would make it illegal for companies to sell unsafe goods, tightening current laws which only state that companies must recall them.
"This is a profound change and it would, I think, cause companies to make sure that the goods they're selling are safe," Mr Sims said.
The report's third key recommendation is related to consumer guarantees and clarifies some faulty product refund entitlements.
"The two changes here that are important is that if your good comes with a fault within a certain period of time, you would be entitled to a refund or replacement without having to demonstrate that the failure was a major one," Mr Sims said.
The proposal also seeks to clarify cases where there are multiple non-major failures in a product, suggesting that this would constitute a major failure.
"For example, with your car, you could have something wrong with the clutch so you keep taking it back," Mr Sims said.
"This law would say if you keep having to take it back a number of times, then it would be deemed a major fault and you would be deemed to have the choice of a full refund or a replacement vehicle.
"That would address a lot of complaints we get at the ACCC."
Topics: consumer-protection, business-economics-and-finance, fraud-and-corporate-crime, laws, australia