Introduction

Each year the Australian Competition and Consumer Commission (the ACCC) releases a Compliance and Enforcement Policy, which sets out the priority areas for the year and the key factors that the ACCC will consider when determining whether to take enforcement action.

On 21 February 2014, the ACCC published its Compliance and Enforcement Policy for 2014 (the 2014 Policy). The 2014 Policy provides insight into the ACCC’s focus areas for 2014, particularly those areas that the ACCC will be considering when exercising their investigative and enforcement powers.

The 2014 Priorities

A number of the priorities announced in the 2014 Policy are new, while others extend the priorities set out in the ACCC’s 2013 Compliance and Enforcement Policy.  

In the area of consumer protection, the ACCC has identified nine priorities for 2014.   

The key priority areas for direct selling organisations are:

  1. Emerging consumer issues in the online marketplace  

    The ACCC is concerned at the lack of transparency on drip-pricing and comparator websites. Drip pricing occurs where consumers who purchase products or services online are quoted one price at the beginning of the booking or ordering process, but are given details of further fees and charges as they progress through to the payment phase. Comparator websites allow consumers to compare online prices between a number of retailers, for example when booking hotels or other travel activities. The ACCC has expressed its concern that the presentation of the information on these websites can be misleading.

  2. Complexity and unfairness in consumer or small business contracts The ACCC will be looking to enforce the provisions of the Australian Consumer Law (the ACL) which deal with unfair consumer contract terms.  
  3. Credence claims Credence claims exist through the use of a statement that makes a qualitative claim about the goods or services to which they refer. This is an issue of ongoing interest to the ACCC.  

    For example, in 2013, the ACCC focused on credence claims in the food industry, for example “free range” egg claims and “free to roam” chicken claims. For more information about the ACCC’s enforcement action in respect of the food industry, please see our Focus Paper, “Foodies Beware! – ACCC Cracks Down on Misleading and Deceptive Credence Claims”.

    In 2014, the ACCC will be looking to continue its enforcement action in respect of unsubstantiated credence claims.  

  4. Consumer guarantees regime The ACCC continues to be concerned about misrepresentations being made in respect of the supply of goods with extended warranties, and particularly the possibility that consumers are misled into paying for consumer guarantees to which they already have a right under the ACL.  
  5. Sales Activities in the telecommunications and energy sectors The ACCC is concerned about the extent of door to door selling and telemarketing activities in these sectors, as well as misleading representations made by energy retailers about savings representations;  
  6. Competition and consumer issues in highly concentrated sectors The ACCC will monitor closely the supermarket and fuel sectors. Action has already been taken in these areas.  
  7. Scams  

    There have been reports of scams which cause severe and widespread consumer or small business detriment.  

    This is a new priority area for the ACCC and is in response to the large number of complaints (80,000) about scams reviewed by the ACCC over the past two years.

 The other ACCC priority areas for 2014 are:

  1. Misleading carbon pricing representations.
  2. Consumer protection issues impacting on indigenous consumers.

What does this mean for the Direct Selling Sector?  

The first four enforcement priority areas (above) are of particular relevance to direct selling businesses, especially those that operate online businesses.  

It is therefore important for direct selling businesses to evaluate their compliance procedures and processes. This review should be undertaken as soon as possible to minimise the risk that your business will targeted by any ACCC enforcement action. In particular, direct selling businesses should carefully review:

  • the pricing of products and/or services online and the necessity to ensure that clear information is given to consumers upfront about additional fees and charges ;
  • the terms and conditions of consumer contracts to ensure that they are not unduly harsh;
  • if made, credence claims or representations made in respect of products and/or services  must be accurate and there must be sufficient evidence to substantiate any claims or representations made about the products and/or services; and
  • warranties provided and the information provided to consumers about these warranties, to ensure that consumers are fully aware of their statutory right to certain guarantees under the ACL.