The role of the law in encouraging cooperation and resolving conflict in regard to consumers

Regulatory framework helps to lessen the number of contracts which arise, encourages consumers to resolve disputes with businesses before legal action.

• Competition and Consumer Act 2010 (Cth) now known as Australian Consumer Law provides the major protection for consumers and is enforced by the Australian Competition and Consumer Commission (ACCC).

• Fair Trading Act 1987 (NSW)

The law allows for consumers to seek redress in the form of repair, replacement of refund.

• Self-help is the first point of call for most consumers. Most businesses are happy to replace or refund a product or service as they are aware of the statutory guidelines which protect consumers.

Contract law ensures that agreements between consumers and manufactures are legally binding in order to prevent possible conflicts by encouraging cooperation.

• Requires four elements, intention to create legal relations, offer, acceptance and consideration.

• Contracts Review Act 1980 (NSW) exists to give relief from unjust contracts if it found to be unconscionable to one party.

• Bloomley v Ryan (1956)

A number of legal remedies at both state and federal level are available if a conflict cannot be resolved between consumer and business.

• ACCC has investigative and enforcement powers under the Competition and Consumer Act 2010 (Cth), ACCC v Cabcharge had to pay up 15 million, High Court Delivers bank fees Class Action Milestone, 7.30 Report. ACCC brought class action on behalf of 170 000 consumers on 8 major banks. Limited in resources, so smaller complaints often get referred to Ombudsman.

• Australian Securities and Investment Commission (ASIC) for enforcing laws regarding financial services.

• Australian Communications and Media Authority (ACMA) works with self-regulatory industry to ensure industry compliance.

• NSW Office of Fair Trading to investigate complaints about unfair/dishonest commercial practices but can only negotiate/mediate.

• NSW Legal Aid is an independent statutory body to both provide legal aid to disadvantaged and to educate/promote consumer rights.

• Consumer, Trade and Tenancy Tribunal (CTTT) under the Consumer, Trade and Tenancy Tribunal Act 2001 (NSW)

• Class Action or individual litigation through the state or federal court hierarchy (eg. Under the Contracts Review Act 1980)

• 7.30 Report September 2012, “High Court delivers bank fees class action milestone”, cleared the way for 170 000 consumers to challenge 8 major banks for price fixing, to be heard in the Federal Court. ACL allows ACCC to bring a class action on behalf of consumers due to “Price gouging” for consumers who have been mislead.

There are a number of non-legal measures to seek redress through before court based litigation including: Industry Organisations, NGO’s, The media.

• Industry Organisation: Financial Ombudsman Service (FOS) consolidated previous organisations to one service, dealing with a credit, banking, insurance, investment.

• Telecommunications Industry Ombudsman

• Include mediation and then arbitration if necessary, can hand down awards.

• NGOs: Unlikely to provide any real means of redress however Choice and the NRMA are able to provide advice and assistance.

• Not Good Enough (Website which allows consumers to voice conflict and facilitates reply from businesses).

• Media: Able to expose possible malpractice or unscrupulous conduct by businesses, aiding in avoiding conflict. May also publicise consumer conflict, leading to a swift resolution due to public awareness.

The law allows for an alternative consumer claim (other than breach of contract) which is an action of negligence.

• CCA and Fair Trading Act 1987 both allow for the resolution of conflict by aiming to ensure that faulty products are not put on the market, and if so that they are effectively and timely removed. Also includes sanctions and damages for any injury or breach of care by the consumer.

• 2009 Recall of Old Gold Cadbury Dark Chocolate after failing to declare milk-solids, resulting in lactose intolerant reactions.

• 2012 – BOSE home theatre speakers due to fire hazard.

Issues of Compliance and Non-compliance

The primary objective of consumer law is to protect the welfare of consumers. There are a number of statutes which enforce compliance to consumer protection legislation.

• Contract Review Act 1980 allows for the court to grant relief from unjust contracts.

• Competition and Consumer Act 2010 mandated that all contracts had an implied warranty and that goods supplied would be fit for their purpose as well as outlining “standard form contracts”.

• In line with the UN Guidelines for Consumer Protection 1985

There is generally widespread commitment to consumer law due to commitment to customer service, effective advice and mediation services and effective enforcement mechanisms.

• Society of Consumer Affairs Professionals (SOCAP) released statistics which showed that 90% of consumers who believed their complaint to a business wasn’t held again, would not return there, therefore it is in the businesses’ best interest to comply with legislation.

• ACCC, ASIC, CTTT all provide effective means of redress which are costly for businesses, increasing likelihood of compliance, “Keep it Real, Watchdog tells agents” SMH 2009, warning against property developers, agents who falsely advertise using images (ACCC).

• ASIC Bank of Western Australia (Bankwest) case which advertised “Cheapest Credit Cards in Australia”. Investigation led to Bankwest having to fully explain claim.

Regulation of market and advertising improves compliance by ensuring monitoring of all areas of consumer law.

• False or misleading advertising, unconscionable conduct, bait advertising, coercion and pyramid selling are all outlawed under ACCC and Fair Trading Act 1987 (NSW).

Media scrutiny and the influence of NGOs increases compliance with consumer law.

• Media provides society with more information, forces suppliers to comply in order to avoid criticism or the publicising of cases of non-compliance. Pressure to uphold their reputation.

• Choice magazine is very effective in encouraging compliance by highlighting exploitations and malpractice.

Non-statutory controls on advertising in Australia consist of a highly effective, accessible self-regulatory framework.

• Administered by the Australian Standards Bureau provides a free complaint resolution service to the public.

• Utilises alternative dispute resolution to solve issues.

• Also highlights education a prominent role in making consumers aware in order to avoid issues of non-compliance.

Occupational licensing aids in ensuring compliance by ensuring businesses and individuals are fully accredited.

• Self-regulation works closely with legal requirements to ensure the ethics, work standards and academic qualifications. Australian Medical Association (AMA) and (NSW Law Society).

• State regulation is more commonly used to license most trades, professions and businesses. Motor Dealers Act 1974 (NSW) outlines that all firms buying or selling cars do so under license.

• NSW Office of Fair Trading is the main body in charge of licensing and also hears complaints, can invoke licenses for malpractice or refuse to license due to lack of education, inability to meet standards, concern regarding character.

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 notion of caveat emptor no longer replies, and this fact in itself, is a representation of changing values and ethical standards.

• Move away from the laissez-faire economy to better protect consumer rights as a result in a shift in the power balance

• Consumer law is now much more complex and requires a robust framework to protect consumers, particularly with the emergence of e-commerce and the prevalence of advertising.

• ACCC and CTTT enforce and protect the values and promote ethical standards by protecting consumers.

There is some perception in society that consumer protection laws have gone too far and that traders no longer have enough rights or freedoms. A move to self-regulation is a result of this.

• Self-Regulation rather than regulation under NSW Office of Fair Trading.

• Gives a specific code of conduct which employees or members of the organisation are required to follow.

• Internal process decreases transparency but is often more efficient, may allow more freedoms, reflects ethical ideas of freedom to run their own business.

Law reform is an integral part of consumer law as it allows for the ongoing reflection of changing values and ethics.

• Competition and Consumer Act 2010, known as Australian Consumer Law was a massive reform to replace the Trade Practices Act. This allowed for greater protection, a reflection of changing values, contemporary issues such as credit and the e-marketplace and gave a unified and transparent cohesive framework.

• Prompted by failure of existing laws, and changing values in society.

• Covers contract law, product safety and certification, new penalties, redress options and bodies of enforcement.

Law reform is essential in maintaining the protection of consumers as the marketplace continually evolves.

• Transition of power from states to federal in 2009 gave rise to the Uniform Credit Code enacted under the National Consumer Credit Protection Act 2009 (Cth) (NCCP) which allowed increased stability, accessibility and uniformity.

• National Consumer Credit Protection Act (2009) 2012 Amendments replaced UCC with National Credit Code outlining new strict laws on fact sheets for credit cards, “Cards on the Table”, SMH 2012

• Spam Act 2003 was introduced to legislate against computer crimes.

• Peter Smythe v Vincent Thomas ebay case raises questions of e-marketplace regulation which may lead to future reforms.

• Do not Call Register Act 2006

Effectiveness of legal and non-legal responses in achieving justice for Consumers

Major non-legal responses initiate awareness and provide self-help.

• ACCC “Money smart” education campaign to build awareness of consumer rights.

• The Media publicises consumer issues and remedies available to them, “Dob in your supermarket ACCC tells consumers”, SMH 2012

• NGOs such as Choice Magazine provide an opportunity for consumers to receive independent testing and scientific advice on product quality with a monthly magazine and annual CHOICE “Shonky Awards”.

• Technological advancements allow consumers to access self-help websites such as “Not Good Enough”

• Legal Aid NSW can provide free legal advice to disadvantaged consumers.

Established government departments and tribunals offer effective remedies for consumer issues by providing an alternative to court based litigation. Increases enforcement, streamlines resources, balances rights and compatible with moral values, accessible.

• ACCC certifies that businesses and individuals comply with ACL and are capable of bringing cases on the behalf of consumers if a resolution cannot be reached. Allows for class action, 2012 Bank fees on price Gouging, 7.30 report September 2012.

• Australian Securities and Investments Commission under the Australian Securities Investments Commission Act (Cth) monitors financial services, provides businesses with advice to fulfill their obligations and ensures markets are fair and transparent. Can also hand down civil penalties, take administrative action or criminal prosecution. Limited by 1.1million dollar limit for corporations.

• NSW Office of Fair Trading provides advice, licensing information for new businesses, information for people buying second hand vehicles, and dispute resolution between consumers and traders. (Also provides regulatory “cooling off periods” for high pressure sales under the Fair Trading Act 1987 (NSW) 5 days for door to door sales).

• Consumer Trader and Tenancy Tribunal offers conciliation and alternative dispute resolution - then is able to have informal hearings to resolve the matter.

The contemporary issue of credit provides the law with new challenges which it must adapt to

• Uniform Consumer Credit Code was implemented by the National Consumer Credit Protection Act 2009 (Cth), in which power was transferred from the states to the federal government. Increases consistency, uniformity allowed better enforceability, accessibility, streamlining of resources.

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• Enforced by ASIC Bankwest (Bank of Western Australia) which advertised its credit cards as the “cheapest credit cards in Australia” was investigated, had to fully explain the claim but limited in penalty of 1.1million.

• AGM Group, debt collectors, ASIC found that they harassed and coerced individuals, October 2012.

• Reforms from July 1st 2012 introduced a National Credit Code. “Cards on the Table”, SMH 2012. Outlines new information sheets, each bank statement must have debt and time taken to repay on minimum repayments. Effectiveness hard to judge but likely to increase protection.

• Financial Ombudsman Service provides free dispute resolution for credit issues and the Consumer Credit Legal Centre (NSW) also provides free telephone financial counseling advice.

The contemporary issue of product certification ensures that there is documented assurance that goods or services have passed quality testing before they are marketed.

• The global marketplace has revolutionised the marketplace with trade knowing not boundaries. As a result, products produced in China are sold in Australia and may not have the same quality assurance.

• ACCC enforces mandatory product safety standards and information standards for products.

• Product certification act as an assurance that these standards have been met. The greater the chance of injury to consumers, the more stringent the certification process.

• CE Certification as specified by the European Union, had to comply with a technical file report.

• “Five Ticks” StandardsMark used nationally and internationally, providing safety and quality insurance by SAI Global provides standardising.

• ACCC has the power to conduct random surveys, recalls, initiate proceedings. Wide marketplace with 1000s of imports, recalls are necessary but overall effective in ensuring these products do not reach the marketplace. Bindeez Beads Recall 2007, BOSE Home Theatre Speakers 2012, fire hazard.

The contemporary issue of marketing innovations provides an ever-evolving challenge for consumer law with the development of E-Commerce.

• Phishing attacks, overseas pyramid selling schemes, spam. Spam Act 2003 (Cth) has been somewhat effective in providing legislative framework, however increasing avoidance technology has seen spam on the rise.

• Illegal under ACL and Fair Trading Act 1987 (NSW) however there is often little they can do, rely on consumers to report major issues.

• Australian Communications and Media Authority is a government agency which takes consumer complaints on fraudulent or deceptive marketing.

• ScamWatch offers a website run by the ACCC to provide consumers with information on how to protect themselves against marketing innovations and scams.

• Cybercrime is transnational, not limited by geographical borders, as a result an international approach is needed to combat. International Consumer Protection Enforcement (ICPEN) is an international organisation which facilitates this cross-border information sharing, however lack of enforceability limits its effectiveness.

Technology has resulted in an online market which is much more difficult to regulate as it has an international jurisdiction.

• International Consumer Protection Enforcement (ICPEN) is an international body consisting of 40 different countries which share information cross border to encourage global cooperation. Lack of enforceability limits its effectiveness however works with law enforcement agencies to provide information about cross border transactions.

• Telecommunications Act 1997 (Cth) gives the ACCC the ability to monitor the code of conduct outlined in the act. Yet wide reaching area of consumer law makes it hard for the ACCC to properly enforce.

• Australia Communications and Media Authority and ASIC are both able to deal with disputes and regulating this industry.