A Call For Legislative Reform of Australia’s Consumer Laws

So you’re suffering from a migraine. You head to your nearest chemist and come across a large selection of painkillers. Voila! You reach for a box. Plastered on the front cover are the words ‘Migraine Pain’ in black bold font. Perfect. This medicine will specifically target your symptoms, and give you ‘rapid relief’. The price isn’t ideal compared to alternative brands but hey it states it’s for migraines. You get home and eagerly test it out. Actually, you don’t feel much different. You look more carefully at the packaging and to your disappointment the medicine contains the same ingredients as cheaper alternative brands. You feel ripped off.

Background

The Australian Competition and Consumer Commission (ACCC) has reprimanded the pharmaceutical giant Reckitt Benckiser for misleading consumers when selling its range of popular Nurofen tablets. The British-based multinational claimed its specific pain relief products, such as Nurofen Migraine Pain and Nurofen Tension Headache, were formulated to treat a specific type of pain, which is why they come at a high price. However, the tablets all contained identical ingredients and typically are the same tablets. For a company that earns around $15 billion in sales each year, it was issued a $6 million dollar fine. Yet this is not the first time Reckitt Benckiser was engaging in misconduct. In fact, it had breached the law six times.

The conduct of businesses like Reckitt Benckiser has caught the attention of Consumer Affairs Australia and New Zealand (CAANZ) who proposed in a recent Final Report for tougher fines, stronger consumer refund rights and safer products, which are only three of 19 legislative reforms CAANZ recommends.

What Are Some Of The Recommendations?

1. Consumers can get a refund or replacement where goods fail to meet the consumer guarantees in a short period of time without having to prove a ‘major failure’;
2. Recognition that multiple non-major failures can amount to a major failure;
3. Enhance disclosure in relation to extended warranties and introduce a cooling-off period;
4. Clarify scope of exemption from consumer guarantees for transport or storage of goods damaged or lost in transit;
5. Examine whether current consumer guarantees are fit-for-purpose for digital products, market practices and emerging technologies;
6. Introduce a general safety law to ensure a product is safe before it enters the market;
7. Introduce a statutory definition of ‘voluntary recall’ and increase penalties for failure or refusal to notify a voluntary recall;
8. Strengthen ACCC’s powers to obtain information about product safety;
9. Make clearer traders’ mandatory reporting obligations;
10. Extend the ACL (and ASIC Act) unconscionable conduct protections to publicly-listed companies;
11. Extend unfair contract terms to insurance contracts;
12. Enhance price transparency in online shopping by requiring any additional fees or charges are included in the headline price;
13. Apply consumer guarantees to online auctions.

For more information on CAANZ’s recommendations and amendments, check out their final report here.

What Does This Mean For Consumers and Businesses?

There are two major changes that will have a significant impact on consumers and businesses. If accepted, there will be greater consumer protections, and the threshold for the definition of a “consumer” will be increased from $40,000 to $100,000. However, the biggest reform is a new right to reject a good. Consumers may have 30 days to reject an unacceptable product without having to prove it has a major flaw. This means goods, excluding perishable foods and consumable goods (such as makeup products), that do not meet the consumer guarantees within a short time after purchase or delivery could be refunded, replaced or repaired.

For businesses, the penalties for breaching consumer law may be increased as much as 10 times. CAANZ has suggested the maximum financial penalty a court could impose should be $10 million (per contravention) rather than $1.1 million for companies, and $500,000 instead of $220,000 for individuals.

Final Thoughts

Whether or not CAANZ’s recommendations succeed depends on the Consumer Affairs Ministers who will vote in August 2017. In order for legislative changes to come into effect, they must be passed by the federal parliament. Hopefully the outcome results in the strengthening of the ACL as it continues to be responsive to new and emerging consumer law issues.

If you own a business and would like to know more about how to get on top of your obligations, LawPath recommends getting in touch with a business lawyer.

What are your thoughts on CAANZ’s recommendations? Do you think making these changes will improve Australian consumer laws? Let us know by tagging us #lawpath or @lawpath.