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The ACCC Guide to doing business online

The ACCC has a new webpage: Your rights & responsibilities as a business online for small businesses when doing business online.

The ACCC webpage covers four topics:

  1. Advertising (social media and website content)
  2. Reviews and testimonials online
  3. Consumer guarantees
  4. Terms and Conditions

The ACCC’s message is that the same legal obligations apply under the Australian Consumer Law to doing business online as apply to doing business from bricks-and-mortar premises.

‘ACCC’ means the Australian Competition & Consumer Commission.

‘Online’ means using social media, a website or other online platform to advertise and sell goods or services.

The legal obligations apply to ‘consumers’ – who are persons or businesses if they purchase a good or service that costs less than $100,000.

This is an outline, with additional case studies and examples.

1. Advertising (social media and website content)

The ACCC describes it as: False and misleading advertising apply to online content

The ACCC’s message is that information posted online about products, services or business must be truthful and accurate. The information can consist of prices, images and descriptions, shipping options and delivery times.

False or misleading claims and misleading or deceptive conduct are breaches of the Australian Consumer Law. Even conduct likely to mislead or deceive is caught.

The ACCC provides this case study:

‘unlimited’ phone plans were advertised on social media by two providers of sim-only mobile phone plans, when in fact the plans had a maximum data allowance. The advertising was misleading. The ACCC issued two infringement notices, one to Amaysin to pay $126,000, the other to Lycamobile to pay $12,600. Amaysin received a larger penalty because it is a public company.

Here are more case studies:

protection against viruses An activewear retailer, Lorna Jane, advertised on its website, on Instagram and in emails to its customers that its “LJ Shield Activewear” range “eliminated viruses including COVID-19”, when in fact it had no scientific testing results to demonstrate the truth of these claims. The ACCC took Lorna Jane to court and the Court imposed a penalty of $5 million for the false claims.

origin A table grape trader, Grape Co, stated on its website that ‘Every single one of our grapes is personally hand-selected from the finest fruit on our family’s estate in Sunraysia Australia’, when in fact some of its grapes were grown on other growers’ properties. The ACCC issued three infringement notices, one for this breach of the Australian Consumer Law and two for contraventions of the Horticulture Code of Conduct for failing to provide its terms of trade to buyers, totalling $34,920.

storewide sales A retailer of electronic goods, digiDirect, advertised on its website, social media and in emails to its subscribers “X% off storewide”, when in fact a number of popular digital cameras, camera lenses and accessories were excluded from the promotion. The ACCC took the view that small print - “terms and conditions apply” did not ‘cure’ the misleading representation and issued three infringement notices for $39,240.

2. Reviews and testimonials online

The ACCC’s message is that online reviews and testimonials should be independent, reflect a genuinely held opinion and only be written by those who have actually experienced the product or service. Reviews must disclose any personal connection or commercial relationship, and incentives to write reviews.

If a fake review is posted on a review platform, the business request its removal immediately. It should not selectively edit or remove genuine reviews. If a review platform will not remove a review, respond to it professionally.

Posting false or misleading reviews online is a breach of the Australian Consumer Law.

The ACCC provides this case study:

online tasking platform Service Seeking operates a website platform where customers obtain quotes for jobs, such as gardening, building or cleaning services. Businesses on its platform are allowed to use a template to draft their own reviews and give themselves their own star ratings of jobs. 21,000 reviews were created by businesses, 17,000 without customer input. This gave the false impression they were favourable customer reviews. The ACCC took Service Seeking to court and the Court imposed a penalty of $600,000 million for misleading conduct.
Another case study is:

accommodation reviews Meriton Accommodation provided TripAdvisor (an accommodation rating platform) with email addresses of departing guests to prompt reviews. Under its ‘Review Express campaign’, TripAdvisor sends a professional-looking email to guests to encourage reviews. Meriton ‘gamed’ the system by making sure that the email addresses of guests likely to write negative reviews were either corrupted with additional letters or were not provided. By reducing negative reviews, Meriton created the misleading impression that its accommodation was of a higher standard than otherwise may have been the case. The ACCC took Meriton to court and the Court imposed a penalty of $3 million for misleading conduct.

3. Consumer guarantees

The ACCC describes the responsibilities as: Responsibilities to your customers continue after they make a purchase. The responsibilities are found in the consumer guarantees under the Australian Consumer Law.

Products supplied must be of acceptable quality, that is, are safe, lasting, free from defects, look acceptable and do all the things someone would normally expect them to do.

Services supplied must be provided with due care and skill or technical knowledge, be fit for purpose and be provided by an agreed date or within a reasonable time.

Businesses must repair, replace or refund if they supply a product, or provide compensation if they supply services. The consumer guarantees override any terms and conditions of a business which restrict a consumer’s rights.

Case studies:

defective caravans A caravan seller, Jayco, told a customer that under their terms and conditions, they were only entitled to have their caravan repaired, and not replaced or the price refunded, despite major defects such as water leaks when it rained and multiple roof collapses. The ACCC took Jayco to court and the Court imposed a penalty of $70,000 for a ‘major failure’ to comply with a consumer guarantee.

safety standards A retailer of sporting products, Decathlon, sold basketball rings and backboards, basketball systems, and the portable swimming pools products without the safety labelling, consumer warnings or installation and use instructions required by the Australian mandatory safety standards. The ACCC took Decathlon to court and the Court imposed a penalty of $1.5 million for breaching consumer goods safety standards.

4. Terms and Conditions

Small businesses have rights under the unfair contract terms provisions of the Australian Consumer Law when they enter into small business contracts.

A business is a small business if it employs fewer than 20 people at the time the contract is signed (including casual employees employed on a regular or systematic basis), and the contract is a small business contract if the upfront price payable under the contract does not exceed $300,000 (or, if the contract is for more than 12 months, $1 million).

To qualify, the contract must be a standard form contract for the supply of a financial product or goods or services.

Some examples of unfair contract terms / terms and conditions are:

  • Excessive default fees
  • Obligation to pay for defective goods and services
  • The supplier has the right to unilaterally vary or terminate the contract without cause
  • Automatic rollover / renewal of the contract
  • No right to refund of the deposit if the business terminates
  • Excessive penalties for early termination by the business
  • The supplier’s liability is excluded for any loss to the business even if the supplier is at fault
  • Excessive penalties for loss or damage of equipment leased

If a contract term is unfair it is void. That is, the term cannot be enforced.

The ACCC is acting upon complaints from businesses and is requesting suppliers to remove unfair contract terms and/or taking them to Court to have the terms declared void.

For example, the ACCC has taken court proceedings against Fuji Xerox to ask the Court to declare void “Some of the unilateral variation terms which allow Fuji to modify contracts by creating new rights and obligations, including increasing prices, without notifying its customers and without giving them any corresponding right to negotiate or reject.” The case is ongoing.

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