ACCC’s recent consumer law enforcement actions

The ACCC remains active in its enforcement activities under the Competition and Consumer Act 2010 and the Australian Consumer Law (ACL). 

In this bulletin we summarise some recent cases and provide some updates since our bulletin ‘A recap of the ACCC’s recent consumer law enforcement actions’.

ACCC v Booktopia Pty Ltd [2023] FCA 194

In March 2023, the Court declared that Booktopia contravened the ACL by engaging in misleading or deceptive conduct and by making false or misleading representations about consumer guarantee rights on its website and through its customer service staff. The false or misleading representations included that consumers had to notify Booktopia of a faulty, damaged or incorrect product within 2 days of delivery to have a right to a refund or other remedy and that refunds were not possible on certain products, including digital content and eBooks. These representations were false or misleading because products purchased by consumers in Australia come with consumer guarantee rights that cannot be excluded. 

The Court ordered Booktopia to pay $6m in penalties. It was also ordered to publish corrective advertising and to establish a consumer law compliance program.

ACCC v Employsure Pty Ltd [2023] FCAFC 5

Employsure is a private company that offers employment relations and workplace health and safety advisory services to business owners. In 2021 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 Government agencies. The Court ordered Employsure to pay $1m in penalties. 

The ACCC recently successfully appealed the penalty. The Court found that the $1m penalty was manifestly inadequate and found that misrepresenting that one has Government sponsorship or approval is very serious and must be deterred. Further, that the penalty did not achieve the necessary level of general deterrence.

The Court took into account factors such as the size and revenue of the business, the lengthy period over which the advertisements were running and penalties in similar cases. The penalty was increased to $3m and Employsure was also ordered to pay the ACCC’s costs.

Australian Competition and Consumer Commission v Mercedes-Benz Australia/Pacific Pty Ltd [2022] FCA 1059

The ACCC brought proceedings against Mercedes-Benz for failing to use ‘attention-capturing, high-impact language’ when contacting customers to inform them about a compulsory recall notice for faulty Takata airbags.

The Court found that when Mercedes-Benz issued their recall notices, they effectively told some customers that the recall notices were just a precaution or that the airbags in other manufacturer’s vehicles had not had any faults or caused any accidents, injuries or death. These representations were not accurate given that defective Takata airbags had been associated with a number of deaths and injuries globally.

The Court found that Mercedes Benz had contravened s 127(1) of the ACL for failing to comply with a mandatory recall notice. This is the first time a company has been penalised for this type of conduct. Mercedes-Benz was ordered to pay penalties of $12.5m and contribute $100,000 to the ACCC’s costs. In addition, Mercedes-Benz gave a Court enforceable undertaking that it would implement compliance steps in relation to recall obligations.

Australian Competition and Consumer Commission v Uber B.V. [2022] FCA 1466

The ACCC instituted proceedings against Uber in relation to alleged misleading representations about their fares and cancellation fees. At the relevant time Uber services had a free cancellation period of 5 minutes after accepting a booking. However, if a customer tried to cancel during this free cancellation period, a pop-up window would appear stating that the customer may be charged a small fee because the driver is already on the way. Uber admitted that this was misleading. 

At the time Uber also supplied an ‘Uber Taxi’ service in Sydney (which has since been discontinued). However, the published fare estimates were alleged by the ACCC to be more than the actual cost of the taxis and this misled or was likely to mislead consumers and potentially discourage them from ordering Uber taxis over other Uber services. Uber also admitted this conduct.

The Court ordered Uber to pay $21m in penalties and $200,000 of the ACCC’s costs. 

United Florists Pty Ltd and Elysium Marketing Pty Ltd

The ACCC issued a warning to the online florist industry following reports of false or misleading representations about the location of online florists. The ACCC was concerned that some online florists were giving the impression that they were bricks and mortar florists, when in fact they were operating through a network of independent third party florists or from centralised warehouses.

United Florists Pty Ltd and Elysium Marketing Pty Ltd each provided the ACCC with a Court enforceable undertaking in relation to misleading representations that ‘Lily’s Florist’ which they had advertised online, was a local florist when in fact this was not the case. The undertaking requires those parties not to not make any further misleading representations, and to implement and maintain a compliance training program, including ACL training for their directors.

ACCC priorities for the year ahead

The ACCC’s published enforcement and compliance priorities for 2023-2024 in the consumer space include:

• environmental claims and sustainability

• manipulative or deceptive advertising in the digital economy

• unfair contract terms in consumer and small business contracts

• consumer issues arising from pricing and selling of essential services with a focus on energy and telecommunications

• consumer guarantees including in relation to motor vehicles and caravans.

We can therefore expect to see continued activity in these areas over the coming months.  

Authors: Jennifer Shaw & Irene Higgins