As part of the Australian Consumer Law amendments to the Trade Practices Act (TPA) passed earlier in the year, the Australian Competition and Consumer Commission (ACCC) has been given the power to issue substantiation notices that require a corporation to deliver up information and/or documents that substantiate claims or representations that have been made about products or services within 21 days (or later if an extension can be negotiated). The notices are intended to be used as a preliminary investigation tool to assist the ACCC in working out whether further inquiries are necessary into possible breaches of the TPA.

Prior to the amendments to the TPA, the ACCC could only issue section 155 notices in relation to a matter that constituted or may constitute a contravention of the TPA. Now the ACCC can issue a notice if a person has simply made a claim or representation promoting:

  • a supply or possible supply, of goods or services
  • a sale or grant, or possible sale or grant, of an interest in land, or
  • employment.

Further, now the ACCC need to specify the information sought with any level of particularity and can make broad requests for:

  • information and documents that “could be capable of substantiating or supporting the claim or representation”
  • if the claim or representation relates to the supply or possible supply of goods or services, information and documents that “could be capable of substantiating” the quantities and period in which the corporation is able to make a supply of the goods or services
  • any information and documents the ACCC is satisfied are relevant to substantiating or supporting the claim or representation in question or the quantities or period in which the corporation is able to make a supply.

Some examples of the types of claims that could possibly be the subject of a substantiation notice are:

  • “was/now”, “markdown” and comparative pricing claims
  • claims about financial benefits, business opportunities and projected earnings
  • origin and health claims about products
  • claims about environmental impacts e.g. “green products, and
  • product safety claims.

Obviously care must be taken in answering a substantiation notice as providing false or misleading information is a contravention of the TPA which entitles the ACCC to issue an infringement notices or take court action, exposing corporations to pecuniary penalties of up to $16,500 and individuals to $3,300.

Further, the ACCC can also issue public warning notices if someone does not respond to a substantiation notice if it is satisfied that at least one person is likely to suffer detriment as a result of the conduct and it is in the public interest.

If the ACCC’s investigations result in breaches of the TPA being uncovered, civil penalty proceedings may be taken, or court enforceable undertakings sought which can require corporations publishing corrective advertising in newspapers, industry magazines and websites, informing past customers about the conduct and setting up trade practices compliance programs.

Naturally, all businesses should take care in ensuring that any claims made about products or services are accurate to avoid any question being raised by the ACCC. We also recommend that if claims are made about products or services, that clients keep all substantiating materials in a readily accessible location so that substantiation notices are easily responded to, in light of the 21 day time period. Should your business receive a substantiation notice we recommend that you immediately seek legal advice.