Increases to financial penalties under the Australian Consumer Law

On 23 August 2018, changes increasing penalties under the Australian Consumer Law (ACL) were passed by the Federal Parliament.

The Treasury Laws Amendment (2018 Measures No. 3) Bill 2018 (Cth) amends the Competition and Consumer Act 2010 (Cth) (Act) to increase the maximum civil pecuniary penalties that a court may impose for breaches of the ACL.

For a body corporate, the maximum penalty will increase from $1.1 million to the greater of:

• $10 million
• three times the value of the benefit obtained from the offence, if that benefit can be determined
• 10% of the annual turnover, if the value of the benefit cannot be determined in that instance.

For persons other than body corporates, the maximum penalty will increase from $220,000 to $500,000.

The changes follow recommendations by Consumer Affairs Australian and New Zealand in its final report on the ACL Review, and brings the maximum penalties for consumer law breaches into line with existing penalties for competition law breaches.

The increases are designed to deter large companies from breaching consumer laws in circumstances where, prior to the changes, the potential benefits of the breach might outweigh the penalties. The changes were welcomed by the Chair of the Australian Competition & Consumer Commission, noting "[w]e have strongly advocated for higher maximum penalties to enable courts to impose more substantial penalties...penalties need to be high enough to be noticed by boards and senior managers so that compliance with the law is a higher priority."

To date, the highest penalty for a consumer breach under the ACL was $10 million, awarded by the Federal Court against Coles and Ford in actions brought by the ACCC. This can be compared to the highest penalty for breaches of competition law, being $46 million in an ACCC action against Yazaki.

Which provisions of the ACL are affected by the increased maximum penalties?

• Unconscionable conduct (Pt 2-2)
• Unfair practices (Pt 3-1, other than s 47(1))
• Supplying etc. consumer goods that do not comply with safety standards (s 106(1), (2), (3) or (5))
• Supplying etc. product related services that do not comply with safety standards (s 107(1) or (2))
• Supplying etc. consumer goods covered by a ban (s 118(1), (2), (3) or (5))
• Supplying etc. product related services covered by a ban (s 119(1) or (2))
• False or misleading representations about goods or services (s 151)
• False or misleading representations about sale etc. of land (s 152)
• Misleading conduct relating to employment (s 153)
• Offering rebates, gifts, prizes etc. (s 154)
• Misleading conduct as to the nature etc. of goods (s 155)
• Misleading conduct as to the nature etc. of services (s 156)
• Bait advertising (s 157)
• Wrongly accepting payment (s 158)
• Misleading representations about certain business activities (s 159)
• Unsolicited cards etc. (s 161)
• Assertion of right to payment for unsolicited goods or services (s 162)
• Assertion of right to payment for unauthorised entries or advertisements (s 163)
• Participation in pyramid schemes (s 164)
• Single price to be specified in certain circumstances (s 166)
• Referral selling (s 167)
• Harassment and coercion (s 168)
• Supplying etc. consumer goods that do not comply with safety standards (s 194)
• Supplying etc. product related services that do not comply with safety standards (s 195)
• Supplying etc. consumer goods covered by a ban (s 197)
• Supplying etc. product related services covered by a ban (s 198)
• Compliance with recall orders (s 199)
• Supplying etc. goods that do not comply with information standards (s 203)
• Supplying etc. services that do not comply with information standards (s 204).

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.