COMPETITION AND CONSUMER LAW UPDATE – OCTOBER 2019 EDITION
This is the latest in a monthly series detailing developments in competition and consumer law in Australia, including the activities of Australia’s competition and consumer regulator, the Australian Competition and Consumer Commission (ACCC), published judgments, recently issued proceedings and any relevant changes in the law.
This article covers events which occurred in October 2019. The previous September 2019 update is available here.
ACCC’s case against TPG dismissed by the Federal Court
The Federal Court has dismissed the ACCC’s claims that a term in TPG’s plans offered for various mobile, internet and home telephone services was misleading or deceptive and unfair. The term required customers to make a $20 ‘prepayment’ to cover usage not provided for in the plans, automatically ‘topping up’ this amount if it ever fell below $10. It also allowed TPG to keep the balance of those prepaid funds if the plan was cancelled. Justice O’Callaghan found that this was not an unfair contract term because the contract as a whole was fair and the term was necessary to protect TPG’s legitimate interests in (amongst other things) minimising the serious effects that bad debts could have on TPG. His Honour also found that the word ‘prepayment’ was not misleading, as an ordinary consumer would read the word in the context of the contract as a whole, which made the nature of the payments clear. The ACCC media release can be viewed here.
The ACCC has appealed the decision. The ACCC media release on the appeal can be viewed here.
Unique college ordered to pay millions in penalties
Unique International College Pty Ltd – a Granville training college which operated out of a single room and sold diploma courses for up to $22,000 – has been ordered to pay $4.165 million in penalties for engaging in unconscionable conduct, making false or misleading representations and breaching the unsolicited consumer agreements provisions of the Australian Consumer Law (ACL). The Federal Court found that Unique lured consumers with free laptops and targeted vulnerable people, including those with poor English skills. As a result, many students were unlikely to complete their course and were left with significant student debts, while Unique pocketed significant – about $57 million in 2014-2015 – Commonwealth educational funding. The ACCC media release can be viewed here.
Ashley & Martin ordered to refund customers
Following the Federal Court’s finding that Ashley & Martin had used unfair terms in certain standard form customer contracts (covered in the September 2019 update), Justice Banks-Smith has ordered the hair regrowth company to refund the 25,000 affected customers and pay the ACCC’s legal costs. Ashley & Martin has until 21 November to appeal against the orders. The ACCC media release can be viewed here. Under the ACL, the Court may declare that an unfair contract term is void and consequently unenforceable, and order that a refund be paid to injured persons (even those who are not parties to the proceeding). However, reliance upon an unfair contract term is not actually illegal, meaning that the ACCC cannot pursue civil pecuniary penalties. The government has indicated that it will undertake public consultation on this issue.
ACCC sues Google for misleading data collection practices
The ACCC has commenced proceedings in the Federal Court against Google, alleging that it engaged in misleading conduct and made false representations regarding the collection of Android users’ personal location data. The case concerns two alleged representations:
- The ‘collection of data representation’
Between about January 2017 until late 2018, Google collected location data from Android users even if the setting labelled ‘Location History’ was turned off. The only way for consumers to prevent this was to also turn off another setting, ‘Web & App Activity’. The ACCC alleges that this was misleading, as consumers would think that turning off ‘Location History’ alone was sufficient to prevent Google from collecting this data.
- The ‘use of data representation’
When Android users accessed the ‘Location History’ and ‘Web & App Activity’ settings, Google displayed messages that indicated that the data would only be used to provide Google services. The ACCC alleges that this was misleading, as Google used the information for other purposes, including to personalise advertisements and to produce aggregated statistics that were shared with advertisers.
The ACCC’s action against Google is consistent with the ACCC’s current priority of combatting a lack of transparency and inadequate disclosure involving digital platforms and consumer data, which was a major focus of the ACCC’s Digital Platforms Inquiry paper, published earlier this year (and which can be accessed here). The ACCC media release, including the Concise Statement used to commence the proceeding, can be viewed here.
ACCC sues Mazda for repair program
The ACCC has commenced proceedings against Mazda in relation to its repair program for new vehicles purchased between 2013 and 2017. Many of these vehicles experienced faults within a couple of years of purchase, such as randomly losing power. However, the ACCC alleges that Mazda refused to provide refunds or free replacements to consumers experiencing these faults, in breach of its obligations under the ACL. The ACCC alleges that this constituted unconscionable conduct and that the representations were false or misleading. The ACCC media release, including the Concise Statement used to commence the proceeding, can be viewed here.
LEGISLATIVE AND OTHER DEVELOPMENTS
ZeniMax agrees to refund Australians for Fallout 76
The ACCC has accepted a court-enforceable undertaking from ZeniMax in respect of a game, Fallout 76, developed by ZeniMax’s subsidiary company Bethesda, a creator and publisher of console, PC, and mobile entertainment. ZeniMax has agreed to provide refunds to Australian consumers who contacted it between 24 November 2018 and 1 June 2019 to request a refund for Fallout 76, which was notoriously unstable and bug-ridden on launch. ZeniMax refused these requests and told the consumers that they were not entitled to a refund. ZeniMax has now agreed that this was likely to have been a breach of the ACL, under which consumers may be entitled to refunds for faulty products (including digital products such as games). This serves as a reminder of Australia’s comparatively strong consumer protection laws, as consumers in other jurisdictions have resorted to class action lawsuits regarding the refund policy for the game. ZeniMax’s undertaking can be viewed here.
Big W and Target provide undertakings regarding faulty products
Big W has agreed to court-enforceable undertakings regarding representations that purchasers of faulty Dyson products had to deal with Dyson directly if the complaint was made more than 14 days after the date of purchase. This was misleading because, under the ACL, consumers may have the right to a refund, repair or replacement from the seller more than 14 days after the purchase. Big W has invited affected consumers – including consumers who believe they have purchased any faulty item, not just a Dyson-branded product– to come forward and has undertaken to review all consumer queries about faulty products. The undertaking can be viewed here.
Target has provided similar court-enforceable undertakings regarding representations that purchasers of faulty PlayStations had to contact Sony directly for a remedy if the fault occurred more than 30 days from the date of purchase. The undertaking can be viewed here.
Flight Centre pays penalties for misleading advertisements
Flight Centre has paid $252,000 in penalties regarding advertisements which promised a $250 voucher for customers who booked a travel package worth more than $1,500 with the company. The advertisements were misleading as they did not mention that the voucher could only be redeemed in a limited timeframe and on a subsequent booking worth more than $5,000. Following infringement notices issued by the ACCC, Flight Centre agreed to pay the penalties, waive the minimum spend requirement and extend the redemption period until the end of the year. The ACCC media release can be viewed here.