SMEs not up to speed with consumer laws, industry warns

The Australian Competition and Consumer Commission has revealed more than $3.6 million in penalties have been handed down under new beefed-up consumer laws, prompting warnings from industry for SMEs to educate themselves on their obligations.

Consumer advocacy group Choice says too many businesses are unaware of their obligations under year-old laws, which replaced state laws and gave the ACCC new powers to hand out infringement notices and fines. The new laws cover a variety of areas, including unfair contracts and misleading advertising.

Graeme Samuel, the outgoing chairman of the ACCC, says a number of small businesses, including computer electronics company MSY and petrol stations, have been hit with infringement notices.

“The type of businesses which have received infringement notices include cafés and restaurants, fashion retailers, car dealers, garage door sellers, petrol stations and most notably against a telecommunications company,” Samuel said yesterday at the Consumers 2011 conference.

Samuel mentioned a number of specific infringements, specifically against clothing chain Dimmeys for supplying clothing which failed to comply with consumer safety standards, while in another case Fantastic Furniture was fined for selling bean bags without certain safety warnings.

MSY was taken to court over issues with warranties not given out properly. The company was fined $203,500 and the Federal Court found its actions were an “unacceptable form of commercial conduct and illegal”.

Perhaps the most well-known of the infringement notices were 27 sent to Optus over its “Max Cap” plans. The telco has paid $178,200 in files related to these advertisements, which the ACCC said most likely made false and misleading representations.

“So, at both the lower and higher ends of the penalty regime the ACCC has made extensive use of the new powers and sanctions under the ACL in the short time these have been available to us,” Samuel says.

Consumer advocacy group Choice welcomed the chairman’s comments yesterday, with spokesperson Ingrid Just saying the group is “pleased” to hear the ACCC is following through on its powers.

“We encourage the ACCC to continue to be diligent and clamp down on retailers and organisations that aren’t following the new consumer laws. By giving out these notices we are seeing companies respecting the new laws.

But Just also says businesses aren’t knowledgeable about all of their obligations under the laws.

“There was a presentation yesterday that showed there was still a large number of retailers in particular, and other small businesses, that aren’t as familiar with the laws as they should be.”

“This is why information about penalties and communication and education programs is good, because it shows why businesses need to know what’s going on and why it’s important for the consumer to be protecting them.”

Samue also warned yesterday that “while it is still early days”, the courts have shown they are willing to serve penalties under the new laws, and that early cases have shown courts will order corrective notices to be published on social media and other websites.

“This outcome shows that companies using social media and other popular websites to make misleading and deceptive claims can be expected to use those same channels to correct the misapprehensions they have.”

Just says the ACCC must “continue to be diligent”, but noted “businesses must also understand their obligations under the law.”