A recap of the ACCC’s recent consumer law enforcement actions

Notwithstanding the ongoing lockdowns, business interruption and economic issues caused by COVID-19 during the last few years, the ACCC has remained active particularly in its enforcement activities under the Competition and Consumer Act 2010 and the Australian Consumer Law (ACL).

In our two part series, we take a look at some of the key cases commenced or determined involving the ACCC in both the areas of Competition and Consumer law. In part one we focus on Consumer law.

ACCC v Smart Corporation Pty Ltd (in liq) (No 3) [2021] FCA 347

Smart Corporation Pty Ltd, previously trading as ‘Australian 4WD Hire’ (Australian 4WD Hire), operated as the name suggests a 4WD hire business. The Federal Court found that:

  • Australian 4WD Hire had engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s18 of the ACL and made a false or misleading representation in breach of s29(1)(g) of the ACL by making representations to consumers on its website and in emails that all of its 4WD rental vehicles were insured for off road use under the company’s insurance policies when in fact in not all instances would consumers have the benefit of the insurance and in some cases the consumer would at the company’s sole discretion be liable under the company’s standard form contract for damage.

  • Some of the terms of Australian 4WD Hire’s standard form contracts with consumers were unfair terms within the meaning of s24 of the ACL and were declared void pursuant to s23 of the ACL. The unfair terms allowed Australian 4WD Hire to charge customers up to $500 each time a customer drove in a way prohibited by the contract, such as driving in fog or heavy rain.

  • Australian 4WD Hire had engaged in unconscionable conduct, by sending threatening and intimidating emails to customers and by engaging in conduct that involved bad faith, deception, unfair pressure and sharp practice.

The Court ordered consumer redress, penalties of $870,000, as well as making disqualification orders against the directors and ordering them to personally pay penalties of $179,000 and $174,000 respectively.

ACCC v Sumo Power Pty Ltd [2021] FCA 712

Sumo Power is an Australian owned energy retailer. Sumo offered cheap rates and high ‘pay on time’ discounts to entice consumers to sign up to certain electricity plans.

The Federal Court declared that Sumo contravened the ACL by making false representations that:

  • rates would not materially increase for 12 months

  • consumers would have the benefit of the discounts for about 12 months

  • its marketing agents were from an independent company

  • the price increases were solely attributable to generation costs caused by climate change, closure of power station, network upgrades and distributor fees.

The Federal Court ordered that Sumo pay $1.2m in penalties, pay consumer redress to affected consumers and establish and maintain a compliance program.

ACCC v Employsure Pty Ltd [2021] FCAFC 142

Employsure is a private company that offers employment relations and workplace health and safety advisory services to business owners. The Full Federal Court unanimously upheld an appeal by the ACCC, finding that Employsure made false or misleading representations through various Google Ads that it was, or was affiliated with, three Government agencies.

The Google Ads containing these representations appeared in response to search terms such as ‘fair work ombudsman’ and were published between August 2016 and August 2018, with headlines such as ‘Fair Work Ombudsman Help – Free 24/7 Employer Advice’ and ‘Fair Work Commission Advice – Free Employer Advice’.

The Court ordered Employsure to pay $1m in penalties.

ACCC v Phoenix Institute of Australia Pty Ltd [2021] FCA 956

Phoenix Institute of Australia Pty Ltd (Phoenix) is a former training college and Community Training Initiatives Pty Ltd (CTI) was its marketing arm. The Federal Court found that Phoenix and CTI had misled consumers and acted unconscionably when marketing to students and enrolling them into online diploma courses in 2015 under the VET FEE-HELP loan program. The Court held that Phoenix and CTI had misled consumers into thinking their courses were free and offered them “free” laptops for enrolling. Phoenix and CTI failed to properly assess the students’ suitability for the courses, and enrolled students into courses which they had no reasonable prospect of completing.

The Court will decide on penalties and other orders at a later date.

ACCC v Mazda Australia Pty Ltd [2021] FCA 1493

This case centered on consumers that had requested a refund or a replacement vehicle, after experiencing serious and recurring faults with their new Mazda vehicles within 1 – 2 years of purchase.

The Federal Court found that Mazda engaged in misleading and deceptive conduct and made false or misleading representations to nine consumers about their consumer guarantee rights by representing that they were only entitled to have their vehicles repaired, when in fact they had other remedies available to them under the ACL including a refund or replacement when there is a major failure.

The Court will decide on penalties and other orders at a later date.

Conclusion

The ACCC has continued to be busy with its enforcement activities as can be seen from the cases summarised in this article. The ACCC has published that its compliance and enforcement priorities for 2022/2023 in the consumer space include manipulative or deceptive advertising in the digital economy, environmental claims and sustainability, and the pricing and selling of essential services with a focus on energy and telecommunications. We can therefore expect to see more activity in this area over the coming months.

Authors: Jennifer Shaw & Scott Homan

See also: A recap of the ACCC’s recent competition law enforcement actions