The ACCC continues its crackdown on online terms and conditions

In October of last year, the ACCC launched a concerted offensive against deceptive conditions in online terms and conditions. The ACCC has since set its sights on online traders whose terms and conditions incorporate misleading clauses about the statutory rights and implied warranties which apply to all consumer contracts.

Amongst the ACCC’s first scalps was DealsDirect, who was forced into a court-enforceable undertaking not to offer unreasonable warranty terms for online purchases. DealsDirect raised the ire of the ACCC by offering a maximum 30-day warranty and compelling its customers to pay postage costs on returned items, even where the goods were proven to be defective.

In March of this year, the ACCC successfully pursued a site known as mwave.com.au (“Mwave”). The ACCC deemed that certain statements on Mwave’s website were likely to mislead consumers as to their statutory protections under the Trade Practices Act 1974 (Cth) (“the Act”), including the following:

• Mwave does not provide any warranty and consumers must deal directly with the manufacturer
• Warranties arising under statute do not apply
• The consumer is required to pay shipping costs incurred in returning faulty goods

The ACCC forced Mwave to review its warranties and return policies to ensure they comply with the consumer protection provisions under the Act.

In April of this year, the ACCC’s campaign continued to reap rewards, with Nokia Care Centre agreeing to withdraw its unacceptable terms and conditions. Their online terms attempted to limit statutory warranty rights and incorrectly asserted that any statutory warranty claims must be lodged within 14 days of the purchase. All parties involved entered legally enforceable undertakings not to repeat this behaviour in the future.

Whilst the ACCC has not resorted to legal action in this area, they have certainly sent a warning to all online traders that their terms and conditions must not misrepresent a consumer’s rights under the Act. ACCC Chairman Graeme Samuel recently said that “the ACCC reviews sites regularly and will consider action where remedial work is not quickly undertaken.”

The current crackdown means it is critical to ensure that your website terms and conditions are compliant with the Act. If you are unsure whether your online terms could be open to scrutiny by the ACCC, please contact one of our Corporate Advisory lawyers.

Author: Nick Rimington