ACCC hopes to fine companies ninefold for misleading consumers

New legislation being considered by Australian Parliament would increase fines from AU$1.1 million to AU$10 million for companies that engage in misleading or deceptive conduct.
Written by Corinne Reichert, Contributor

Australian Competition and Consumer Commission (ACCC) Chair Rod Sims has flagged a possible ninefold increase to the penalties the consumer watchdog will be able to wring out from tech and telco companies, with Parliament looking to pass legislation increasing fines from AU$1.1 million to AU$10 million.

Sims said it will also include the option for three times the gain or 10 percent of turnover to serve as a deterrent for consumer protections.

"In the courts, we are getting better at arguing for and receiving, or reaching agreement on, more meaningful sanctions under the existing law," Sims said, pointing to the AU$10 million extracted from Telstra and AU$9 million from Apple in the last six months.

"This is not an aberration, but rather the new framework for penalties, and you can expect the ACCC to have very different discussions with you and your clients to resolve matters when it comes to agreed penalties."

Apple had in June been ordered by the Australian Federal Court to pay AU$9 million in penalties after it was found that it made false or misleading representations to customers on their warranty rights under Australian Consumer Law (ACL).

This followed the Federal Court ordering Telstra to pay AU$10 million in penalties for making false or misleading representations to consumers on the management of its premium direct billing services back in April, alleging that the telco had made false or misleading representations to consumers and breached the ASIC Act.

During the last six months, the ACCC also forced Telstra, Optus, TPG, iiNet, Internode, Dodo, iPrimus, and Commander to compensate tens of thousands of customers for not providing them with the National Broadband Network (NBN) speeds they were paying for, as well as fining MyRepublic AU$25,000 last month for making false or misleading representations about its NBN speeds.

The last few months has also seen the ACCC take action against Amaysim's Click Energy, as well as successfully fighting its cases against Fitbit, HP Australia, and Valve.

Also read: ACCC on keeping the data genie in check for Australian consumers

Sims also used his speech to provide an update on the ACCC's digital platforms inquiry, which is examining the effect that search engines, social media platforms, and other digital content aggregation platforms have on competition across media and advertising services markets.

"The digital platforms inquiry, or DPI, is looking at a number of important issues, including whether digital platforms have market power in their dealings with media content creators and advertisers and the implications of this for competition; to what extent consumers understand what data is being collected about them by digital platforms, and how this information is used; whether the digital platforms have an unfair competitive advantage as a result of unequal treatment of regulation; how technological change and digital platforms have changed the media and advertising services markets, including the ability to produce quality news and journalistic content for Australians; and how the use of algorithms affects the curation of news for digital platform users," Sims said.

"These are not merely issues that impact Australian media and consumers; they are also global issues. Our work here will focus on improving transparency, assessing potential breaches of the CCA [Competition and Consumer Act] and, crucially, making recommendations to government."

On the new Consumer Data Right (CDR), Sims said the ACCC is "moving quickly" to extend this from banking to energy, as well as looking into the competition and consumer issues from the use of algorithms.

"Algorithms are fundamental to getting the most out of data and play a key role in how consumers benefit from the wealth of data now available," Sims said.

"We have already made a small start at looking at the impact of algorithms on a consumer's experience, such as our past action against Google. We are now looking at comparator sites to see whether results are based on price and consumer benefit, or on commissions.

"We need to, and will, do more."

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