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ACCC Industry Review Outcomes on Unfair Contract Terms

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By Joanna Bairamidis, Lawyer, Mason Sier Turnbull

In early 2013, the Australian Competition and Consumer Commission (“the ACCC”) released its annual Compliance and Enforcement Policy, in which it set out its intention to prioritise the area of consumer protection and the implementation and enforcement of the Competition and Consumer Act 2010 (” CCA”) and the Australian Consumer Law (“ACL”). 

On 15 March 2013, the ACCC announced the results of its industry review of unfair contract terms (“the Review”).

The Review focused primarily on standard form contracts utilised by the airline, telecommunications, fitness, vehicle rental and online industries, however, the Review’s findings should be taken into consideration across all industries and in particular by any business which uses standard form contracts.

The ACCC identified the following 8 types of terms used in standard form consumer contracts that are particularly problematic and have been the subject of frequent consumer complaints:

  1. terms that allow the business to change the contract without consent from the consumer. 
  2. terms that cause confusion about the agency arrangements that apply and that seek to unfairly absolve the agent from liability. 
  3. terms that unfairly restrict the consumer’s right to terminate the contract. 
  4. terms that suspend or terminate the services being provided to the consumer under the contract. 
  5. terms that make the consumer liable for things that would ordinarily be outside of their control. 
  6. terms that prevent the consumer from relying on representations made by the business or its agents. 
  7. terms seeking to limit consumer guarantee rights. 
  8. terms that remove a consumer’s credit card chargeback rights when buying the service through an agent.

In addition to the laws dealing with unfair contract terms, the Review outlined general concerns regarding broader areas within the general consumer protection laws where standard form contracts could be found to be non-compliant. This included the use of personal data for a broad range of reasons not specifically linked to the supply of services, clauses that seek to limit the jurisdiction by which the contract is governed and complex and lengthy contracts which hampered transparency and accessibility. 

The ACCC has indicated that it is transitioning from a period of compliance, in which emphasis was placed upon consultation reviews with industry, to a greater emphasis on enforcement and where necessary commencing legal action against non-compliant businesses.

This is a good time for businesses to review the terms and conditions of their own standard form consumer contracts to ensure they are CCA and ACL compliant by making necessary amendments in accordance with the findings of the Review.

For further advice regarding how this update affects your business and how we can assist, please contact Mason Sier Turnbull’s Corporate Advisory and Franchising team on (03) 8540 0200.