SME complaints to ACCC drop, but misleading conduct still the number one concern

Small and medium businesses made fewer complaints and enquiries to the competition watchdog in the second half of 2016, compared to the previous six months, however misleading conduct by other business remains top of the list of concerns.

The Australian Competition and Consumer Commission received just under 7000 complaints and enquiries from SMEs in the six months between July and December 2016, according to the commission’s latest six-monthly small business report. Of that figure, more than 5200 complaints were lodged and approximately 1750 enquiries were made.

This compares to the 7,700 complaints and enquiries received by the ACCC in the first six months of 2016, and the 7,355 enquiries and complaints received by the regulator in the six months between July and December 2015.

More than 60% of the complaints and enquiries came from micro businesses with up to four employees, however, the ACCC said this is not surprising given micro businesses make up the biggest group of businesses across the country.

Around a third of complaints and enquiries (28%) came from businesses with between five and 19 employees, with 11% of complaints and enquiries coming from medium and large businesses.

Misleading conduct and false representations are by far the most complained about issue for the SMEs that contact the ACCC, with 735 complaints about these issues lodged between July and December 2016. Concerns about consumer guarantees accounted for 329 complaints, while 95 complaints were made about misuse of market power concerns.

Dr Michael Schaper, acting chair of the ACCC, told SmartCompany this morning misleading conduct by other businesses has been an “enduring” issue for SMEs that contact the ACCC. However, he notes the categories used by the ACCC are broad.

“It can cover so many different things, from [a business owner saying] ‘a competitor is saying something about me’ to claims about goods and services not doing what they are supposed to,” he says.

The number of complaints and enquiries about franchising has continued a downward trend, with the ACCC receiving 192 complaints and 93 enquiries about franchising in the second half of 2016. This compares to 236 complaints and 124 enquiries about franchising between January and June 2016.

While Schaper says it is difficult to pinpoint exactly why the number of franchising complaints has declined, he says this downward trend has been evident since early 2015. The introduction of the new Franchising Code of Conduct has likely affected the number of complaints and enquiries, says Schaper, while businesses also now have the ability to seek out information from the Australian Small Business and Family Enterprise Ombudsman or state-based small business commissioners.

Meanwhile, the number of complaints from businesses in the agriculture sector has increased, with 185 complaints lodged between July and December 2016, compared to 137 lodged in the six months before. The number of agriculture enquiries has declined from 75 in the first six months of 2016 to 64 in the second half of the year.

Agriculture has been a particular focus for the ACCC over recent months, and Schaper says this increased activity has “no doubt” led to an increase in the number of complaints received by the ACCC. During the six-month period, the ACCC released an interim report for its cattle and beef market study; published its report into the horticulture and viticulture sectors; commenced an inquiry into the dairy industry; and conducted the first round of audits of the signatories to the Food and Grocery Code.

“Hopefully farmers, who are small business owners, feel a little bit more comfortable to come to us,” Schaper says.

Schaper believes the ACCC has also been able to demonstrate to small business owners that their identity can be protected if they come forward with a complaint, and this is also important in sectors where small businesses may be concerned about the ramifications of speaking up.

“It’s also about how accessible you try to make yourself and I think we’re doing a better job than we once may have done,” he says.

The introduction of unfair contract protections for small businesses was a key development during the second half of 2016 and Schaper says the ACCC was contacted about the new provisions 81 times during the six-month period, with about 60% of those occasions involving a complaint. He expects this number to rise throughout 2017 as more businesses assess existing contracts or sign new ones.

Schaper has also identified the forthcoming ban on excessive credit card surcharges as one issue the ACCC expects to hear from small businesses about this year, along with further developments in the ACCC’s inquiry into the new car retail sector.

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