ACCC to scrap unfair contract terms following industry reviews

Unfair contract terms used in standard form consumer contracts have been changed or removed following an industry specific review by the Australian Competition and Consumer Commission.

The changes to contracts in the airline, telecommunications, fitness and vehicle rental industries, as well as some contracts used by online traders and travel agents, were announced by ACCC chairman Rob Sims at a Consumer Congress in Sydney yesterday.

The comments come as the Coalition recently promised to extend unfair contract provisions to small business if it wins the upcoming election.

Hall and Wilcox Lawyers partner Ben Hamilton told SmartCompany while Australian Consumer Law changes in 2010 made some provisions for unfair contract terms, the comments indicate the ACCC is considering enforcement.

“The ACCC have engaged with industries where unfair terms and standard term contracts may be more common than in other industries. What it indicates is the ACCC is saying it’s finished the engagement phase and is now looking at enforcement,” he says.

As part of the review, the ACCC identified eight types of contract terms used in standard form contracts which required significant changes:

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

In his speech, Sims said the aim of the industry review was to evaluate compliance and work with businesses to achieve “positive changes”.

“The ACCC found that, in most cases, the businesses under review chose to make changes to their standard form contracts. Problematic terms were identified and either amended or deleted,” he says.

Sims says the industries reviewed were chosen because of relatively high levels of consumer complaints, feedback from consumer stakeholders and potential for widespread consumer detriment.