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 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
false or misleading representations
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 ‘miracle cures’ 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 online scams 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 gifts, prizes 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 ‘work from home’ scams or ‘business opportunity’ 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
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 (false billing).
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.
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 SCAMwatch 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:
impose monetary penalties
grant injunctions to prevent the prohibited conduct continuing or being repeated or to require that some action be taken
make other orders of various kinds in favour of persons who have suffered loss or damage because of the conduct (eg. cancellation and variation of contracts, damages, provision of repairs and spare parts, probation orders, community service orders and corrective advertising orders).
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.