In October last year, the federal government vowed to ban unfair business practices
Earlier this month, Assistant Minister Andrew Leigh announced that putting an end to subscription traps and drip pricing was the first order of business
The government has also committed to introducing penalties for businesses that flout the Australian Consumer Law
The days of being mistreated by businesses nearly every time we transact online may finally be coming to an end. In October last year, the federal government vowed to ban unfair business practices (also known as unfair trading) in the digital realm and beyond.
These include what have become everyday annoyances in the consumer marketplace, such as:
finding it impossible to unsubscribe from something
having new charges thrown in right before you鈥檙e prompted to pay (drip pricing)
being pressured to hurry up and commit to a purchase
not being able to contact a business you鈥檝e paid money to no matter how hard you try
having a free trial turn into a paid one without your consent.
Astonishingly, none of the above tactics or others like them are illegal, but we and our consumer allies across Australia have long believed that they should be.
Even more troubling are the limits of the Australian Consumer Law, which, among other things, gives consumers the choice of a refund, replacement or repair if a product has a major fault. But if a retailer chooses to ignore these rights, they currently face no penalty.
鈥楬otel California situation鈥�
Earlier this month, Assistant Minister Andrew Leigh 鈥� whose portfolio includes productivity, competition, charities and Treasury 鈥� gave a press conference at Parliament House in which he committed to moving forward with the unfair trading ban.
鈥淪pecifically, we’re going to be getting rid of two practices that have been a scourge for Aussie consumers: subscription traps and drip pricing,鈥� Leigh said, adding that subscription traps 鈥渁re a problem for three out of four Australians who have subscriptions鈥�.
A simple rule for businesses is that if you can’t cancel a subscription through the same process that you started the subscription, then perhaps there’s a subscription trap going on
Assistant Minister Andrew Leigh
He cited examples of consumers subscribing to something online but being forced to try to call the business to unsubscribe. Or services that allow you to subscribe immediately but make you wait a month to unsubscribe. The Consumer Policy Research Centre (CPRC) has estimated that subscription traps are costing Australians $46 million a year, and 糖心Vlog has heard from plenty of consumers who have been caught in one.
鈥淎 simple rule for businesses is that if you can’t cancel a subscription through the same process that you started the subscription, then perhaps there’s a subscription trap going on,鈥� Leigh said, likening subscription traps to a 鈥淗otel California situation鈥�, referring to the Eagles song which famously intones 鈥測ou can check out any time you want, but you can never leave鈥�.
Being pressured to make a purchase with a false sense of urgency is just one of the many forms of unfair trading.
Surcharges that double the price
Leigh also pointed to cases of drip pricing where a concert ticket that was advertised for $89 ended up costing $129 by the end of the transaction, and a low-cost internet plan that included a $79.99 fee sneakily added in during the sign-up process.
鈥淚t’s a matter of firms being honest with consumers. If there are unavoidable charges, they need to be advertised upfront. You can’t pretend that you’re offering a low price and then charge consumers a high price,鈥� Leigh said.
Under the proposed reforms, businesses will be required to notify customers before a free trial ends, remove unreasonable barriers to cancellation, and show all transaction fees upfront.
These reforms will shift the balance back towards fairness. This is the biggest uplift to the ACL in more than a decade
Consumer Policy Research Centre CEO Erin Turner
As for making violations of the ACL a punishable offence, Leigh said 鈥渂usinesses that don鈥檛 comply will face tough civil penalties, and regulators will have expanded powers to enforce the laws. Manufacturers will be required to indemnify suppliers for the cost of providing remedies, so small businesses aren鈥檛 left out of pocket for doing the right thing.鈥�
鈥淎 general prohibition on unfair trading will finally empower regulators to stop harmful conduct, and enforceable consumer guarantees will make it easier for people to get basic remedies without navigating complex, drawn-out complaints processes,鈥� says CPRC CEO Erin Turner.
鈥淎ustralians are being harmed every day by business models designed to manipulate. These reforms will shift the balance back towards fairness. This is the biggest uplift to the ACL in more than a decade.鈥�
Consumer Action Law Centre CEO Stephanie Tonkin says: 鈥淲e hear from people every day who are trapped in dodgy deals and unfair sales models, struggling to enforce their rights. Once implemented and enforced, we are certain the reforms will drive better business behaviour that helps all consumers and especially people experiencing vulnerability.鈥�
A timeline for the introduction of these overdue measures has yet to be announced.
Andy Kollmorgen is the Investigations Editor at 糖心Vlog. He reports on a wide range of issues in the consumer marketplace, with a focus on financial harm to vulnerable people at the hands of corporations and businesses. Prior to 糖心Vlog, Andy worked at the Australian Securities and Investments Commission (ASIC) and at the Australian Financial Review along with a number of other news organisations. Andy is a former member of the NSW Fair Trading Advisory Council. He has a Bachelor of Arts in English from New York University.
Andy Kollmorgen is the Investigations Editor at 糖心Vlog. He reports on a wide range of issues in the consumer marketplace, with a focus on financial harm to vulnerable people at the hands of corporations and businesses. Prior to 糖心Vlog, Andy worked at the Australian Securities and Investments Commission (ASIC) and at the Australian Financial Review along with a number of other news organisations. Andy is a former member of the NSW Fair Trading Advisory Council. He has a Bachelor of Arts in English from New York University.
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