Consumer protection and the Australian Consumer Law

From 1 January 2011, the national Australian Consumer Law (ACL) replaced previous Commonwealth, state and territory consumer protection legislation. It is contained in a schedule to the Competition and Consumer Act 2010.

Under the ACL, consumers have the same protections, and businesses have the same obligations and responsibilities, across Australia.

The ACL is jointly regulated by the ACCC and the state and territory consumer protection agencies.

The Australian Securities and Investments Commission is responsible for consumer protection at a federal level in relation to financial products and services.

What kind of conduct does the ACL prohibit?

The ACL applies to traders carrying on business in Australia. The consumer protection provisions under the ACL that are directly relevant to scams include:

Misleading or deceptive conduct

It is unlawful for traders to engaging in conduct which is misleading or deceptive, or which is likely to mislead or deceive. This covers conduct that is likely to create a misleading overall impression among the audience about, for example, the price, value or quality of goods or services.

A trader’s conduct can be misleading or deceptive even if it is not intended to.

Failing to disclose relevant information relevant information, promises, opinions and predictions can also be misleading or deceptive.
This provision is the one most likely to apply to scams in general.

False or misleading representations

It is unlawful for a trader to make false or misleading representations about goods or services when supplying, offering to supply or promoting goods or services. It is also unlawful to make or use false or misleading testimonials. This includes claims about the age, quality, sponsorship, approval, price or benefits of the goods or services. For instance, many scams trying to sell ‘ [ Article L9UT5TYBZ5RCJQVQJWIQQRO08DVOQW not found.]’ may make false representations about the benefits of their product. This is likely to breach the ACL.

There are some specific prohibitions against false or misleading representations:

• Wrongly accepting payments for goods or services Traders are prohibited from accepting payment for goods or services they do not intend to supply. Scams are likely to be captured by this provision include classifieds and [ Article 4H2YX2DFTMT6QID0Y9A0OSL7HIBMVS not found.] where scammers offer cut price goods that they have no intention to supply.

• Offering rebates, gifts, prizes and other free items When promoting goods or services, it is unlawful to offer [ Article V13BQ1CY0JRBA4P0EBQP4OKI1ROC4Y not found.] or other free items if the trader does not intend to, or does not, provide them as offered. For example, many scams start with the scammer falsely telling a consumer that they have won a prize to elicit an upfront payment or their personal information.

• Representations about business activities It is unlawful to make false or misleading representations about the availability, nature or the terms and conditions of employment or the profitability, risk or other material aspect of any business activity that requires work or investment by others. For example, work from home scams, may mislead consumers about the profits or risks of home-operated businesses. Many of the [ Article QV0EONRHQRGYQ2W3NIE1T049SCD3HK not found.] scams or ‘ [ Article 0GZCGH8DTV238EMGGFA1VZR484UV2L not found.] scams may be misleading by guaranteeing an impossible income, or by misleading you about what is involved in the ‘job’.

Misleading representations with respect to future matters

It is a breach of the ACL for traders to make a representation about a future matter with no reasonable grounds for making the representation.  This covers certain scams, such as prize or merchandise offers, online auction scams, ‘free’ offers on the internet, betting scams and some office supply scams. For instance, a betting scam that offers you guaranteed winnings may be misleading as it is not possible to accurately predict the outcome of an event that is based on chance.

Unsolicited supply of goods or services (including directory listings)

It is unlawful for businesses to request payment for goods or services that you have not ordered or for unauthorised entries or advertisements. For example, a company cannot demand payment for advertising or a directory listing that you did not request [ Article C8TG9FCH3OIEUWAMOUOZEEPOZZ0RVM not found.].

Pyramid schemes

It is illegal for a corporation to promote or participate in a [ Article TV2CIBQLP6UKYAAVJ00FV6MMB5NBNV not found.].

Unconscionable conduct

Unconscionable conduct is prohibited under the ACL. Unconscionable conduct can include serious misconduct or something clearly unfair or unreasonable, conduct which ignores conscience or conduct that is not right or reasonable. Conduct can also be unconscionable in relation to the bargaining power of the parties involved in a transaction, or if someone is clearly under a "special disadvantage" (which has included a disability, a lack of English skills, a chronic illness or poor literacy and numeracy skills).

Scams that are targeted at a particular group of consumers who may suffer a special disadvantage may breach this law (for example, some miracle cure scams). Other conduct that scammers may participate in—such as exerting unfair pressure on you to buy their product or selling products that are exorbitantly priced—might also breach this law.

Enforcement

Many scams, if tested in court, may be breaches of the above laws. However, due to the ‘fly by night’ nature of many scammers, it is extremely difficult to track them down and take action against them. Though it depends on the circumstances of each case, the ACCC may not be able to take action or enforce Australian Court orders against the many scammers that are based outside of Australia.

The purpose of WA ScamNet is to help you recognise a scam and avoid it where possible. Self-defence is the best defence.
Penalties for breaching the ACL

If a scammer is found to have breached the law, there are several courses of action that can be pursued. For instance, the court may:

Right to take private action

A consumer may be able to bring a private action in the Federal Court or in a state or territory Supreme Court. If the action is successful, the remedies sought could include damages, injunctions and other orders.

Criminal law—including laws against fraud

Some scams may also be criminal offences. Someone who commits fraud has acted dishonestly or by omission to deliberately deceive someone. Fraud is regulated under various acts, including state and territory criminal legislation and under Australia’s common law. There may be overlap between misleading and deceptive conduct under the consumer protection laws, and fraud in criminal law.