Westpac v ASIC: replacement unsolicited debit cards permitted
In Westpac Banking Corporation v Australian Securities & Investments Commission  FCA 1506 the Federal Court decided that by sending a Westpac Debit MasterCard card to 424,000 of its existing Handycard holders, Westpac had sent such cardholders the Debit MasterCard card in renewal or replacement of, or in substitution for, a card of the same kind previously sent to him or her, being the person’s Handycard, as permitted by section 12DL of the Australian Securities and Investments Commission Act 2001 (Cth).
Interestingly NAB recently agreed with ASIC to deactivate American Express credit cards sent unsolicited as ‘companion’ cards to NAB Qantas Gold account customers.
Westpac decided to substitute its Westpac Debit MasterCard for customers’ Handycards. The new card allows the customer to do what he or she did with their Handycard. However, the new card also has additional functions and can be used to access the customer’s account in different ways to those with a Handycard.
ASIC argued that these differences mean that the new card is not “a card of the same kind” as the Handycard and that Westpac had breached section 12DL. Over 424,000 Handycard holders had received the new card by late May 2009.
Judge Rares decided that:
The expression “of the same kind” does not require that the previous and later cards are absolutely identical...
Here, each of the Handycard and the new card (the debit MasterCard card) is a debit card within the meaning of s 12DL(5). Each card is intended for use by a person to obtain access to an account he or she (or the person who nominated him or her to receive the card) holds for the purpose of withdrawing cash or obtaining goods or services. A person who has received a new card from Westpac will be able to use it at least for all the purposes he or she used the earlier Handycard.
I am of opinion that the extra functionality permitting use by mail, telephone and on the internet and the wider range of places at which the new card may be used, whether considered individually or together, do not change or deny the nature of the new card as a debit card. The new card is, in the natural and ordinary meaning of s 12DL(2)(b), a card of the same kind as the Handycard. And, it offers contractual protection of the customer from misuse of the card by others of the same kind as the Handycard. This is because the terms of the product disclosure statements so provide.
There is no lessening of the protection of consumers intended by the Parliament provided by this construction. The Parliament sought to guard against them being sent a credit card or a debit that they had never sought. But, it was not the intention of the Act to constrain the relationship between an issuer of a card and its customer by preventing the issuer updating the particular kind of card (i.e. a credit or debit card) with the latest version of that kind of card. The more is this likely given the context in which s 12DL has taken its present form of a period of rapid technological growth and the continuing evolution of financial systems.
Australian Consumer Law stage 2
The Ministerial Council on Consumer Affairs (MCCA) has agreed to the final form of the Australian Consumer Law which will take full effect on 1 January 2011. It will introduce a single, national law for fair trading and consumer protection, which applies equally in all Australian jurisdictions, to all sectors of the economy and to all Australian consumers and businesses. The Commonwealth Government intends to introduce a Bill in early 2010.
The Australian Consumer Law will be based on the existing consumer provisions of the Trade Practices Act 1974, but will include:
- a new national unfair contract terms law, which is currently being considered by the Australian Parliament;
- a new national product safety legislative and regulatory framework;
- a new national consumer guarantees law, which will replace the provisions in 15 existing national, state and territory laws about implied warranties and conditions in consumer contracts for goods and services; and
- reforms drawing on best practice in state and territory laws.
MCCA agreed that the new national product safety law will:
- include a reporting requirement for suppliers to notify the appropriate product safety regulator when it becomes aware of consumer goods it has supplied that have been associated with a serious injury or death;
- apply the national product safety requirements to services related to the supply, installation or maintenance of consumer products;
- apply a threshold for product bans and product recalls to include goods which, through reasonably foreseeable use, will or may cause injury to any person; and
- allow product safety regulators to undertake a product recall where no supplier can be found to conduct the recall.
There will be a single national law guaranteeing consumer rights in relation to their acquisition of goods and services. They will be based on existing implied conditions and warranties, which will be simplified and streamlined.
Other changes include:
- a single national law covering unsolicited sales practices, including door-to-door selling, telephone sales (to the extent not already covered by the Do Not Call Register Act 2006) and other forms of direct selling which do not take place in a retail context.
- fundamental rules for lay-by sales transactions.
- when a business promises to give a consumer a gift or a prize, they should be supplied to the consumer as described and within a reasonable time of the promise being made.
- goods with multiple prices displayed should be sold at the lowest displayed price unless the seller chooses to withdraw them from sale.
- false or misleading testimonials about goods and services are specifically prohibited.
- demanding payment for unsolicited advertisements is prohibited and, in this regard, any document seeking payment for unsolicited goods, services, advertisements or directory entries shall include a statement that it is not a bill payable by the consumer. The Australian Consumer Law will also clarify that a consumer is not liable for unsolicited services.
- Under the Australian Consumer Law, there will be a single national power for the making of information standards about goods or services.
- The Australian Consumer Law will entitle consumers to receive a receipt for goods or services supplied above a certain value where businesses are not already required to give a tax invoice to a consumer under the GST law. The requirements will be consistent with those already in place in the GST law.
- The Australian Consumer Law will also entitle consumers to request an itemised bill for services.
Reforming statutory warranties
Treasury has released the Commonwealth Consumer Affairs Advisory Council (CCAAC) report Consumer rights: Reforming statutory implied conditions and warranties.
It is part of the Australian Consumer Law review.
Unconscionable conduct regulation
Treasury has prepared an issues paper concerning various options for clarifying the scope of the unconscionable conduct provisions of the Trade Practices Act 1974 (TPA).
The issues paper is part of a process which will examine two options for clarifying the application of the TPA’s unconscionable conduct provisions:
- The first option is the introduction in the TPA of a list of examples of conduct that is universally agreed to be unconscionable.
- The second is the introduction of a statement of principles of unconscionable conduct.
If the panel is satisfied that either or both of these options would make the provisions more effective, it is then to consider the content of a list of examples or statement of principles.
The panel has also been asked to consider issues associated with conduct in franchising relationships and, in particular, whether specific inappropriate conduct can be identified and — if the panel considers it necessary — whether measures can be introduced into the Franchising Code of Conduct to prevent them. The panel will conduct its work on possible amendments to the Franchising Code of Conduct as a separate process.
Submissions close on 18 December 2009.
ACCC guide to protecting commercially sensitive information in exclusive dealing notifications
The ACCC has published a guide providing specific information on the ACCC's approach to requests to exclude information from the public register in the context of exclusive dealing notifications.
Althouigh the notice itself cannot be excluded from the public register, the ACCC has indicated that If a notifying party wishes to provide confidential information relating to an exclusive dealing notification, this information should be placed in a covering letter or separate document titled, for example, ‘Confidential submission’. This document should not be referred to in the notification form as an answer, or part of an answer, to any question on the form. A request for exclusion of information from the public register should be accompanied by reasons stating, in as much detail as possible, why the exclusion is sought.
Australian Consumer Law: regulatory impact
The Standing Committee of Officials of Consumer Affairs has released a consultation regulatory impact statement (RIS) on reforms based on best practice in state and territory consumer protection laws, and a new national product safety regime.
These reforms are being considered as part of the development of the Australian Consumer Law. The consumer protection proposals focus on:
- Unsolicited selling
- Asserting a right to payment for
- Information standards
- Liability of recipient of unsolicited services
- Standards of disclosure for information under the Australian Consumer Law
- Bills and receipts
- Lay-by sales
- Dual pricing
- Offering gifts and prizes
- Accepting payment without intending to supply
- False or misleading representations
The proposals are due to be presented to the Ministerial Council on Consumer Affairs for consideration on 4 December 2009. Submissions may be made until 27 November 2009.
Government proposes changes to Franchising Code of Conduct
The Government has responded to reports of the Joint Committee on Corporations and Financial Services and the Senate Standing Committee on Economics by announcing that it will strengthen the Franchising Code of Conduct and the unconscionable conduct provisions of the Trade Practices Act to give small businesses greater protection from anti-competitive behaviour by more powerful businesses.
Amendments to the Trade Practices Act will make it clear that protection from unconscionable conduct relates not only to the process of settling a contract but to the terms and conditions of the contract and the ongoing behaviour of the parties to the contract.
Penalties of up to $1.1 million for corporations and $220,000 for individuals will apply to anyone engaging in unconscionable conduct or making false or misleading representations.
These penalties will apply upon the commencement of the Australian Consumer Law that is now before the Parliament. The ACL will not commence before 1 July 2010.
The Government will empower the Australian Competition and Consumer Commission (ACCC) to conduct random audits under the Franchising Code and other mandatory codes and to seek redress on behalf of all franchisees who are party to an agreement.
The Government will also empower the ACCC to issue public warnings about rogue or unscrupulous franchisors.
The Franchising Code will be amended to state that nothing in the Code limits any common law requirement of good faith in relation to a franchise agreement to which the Code applies.
Amendments to the Franchising Code will also clarify obligations on the parties in respect of end-of-term arrangements and mediation.
The Government will establish an expert panel to inquire into and report on the need to introduce into the Franchising Code any further provisions to prevent specific behaviours that are inappropriate in a franchising arrangement.
The expert panel will also consider whether a list of examples of unconscionable conduct or a statement of principles of what constitutes unconscionable conduct should be incorporated into the Trade Practices Act.
The panel, to report by the end of January 2010, will consult with franchising and retail tenancy representatives, small business organisations, the ACCC and other interested parties.
Australian Consumer Law update: deferral to 1 July 2010 and other amendments
The Trade Practices Amendment (Australian Consumer Law) Bill 2009 has been introduced into the Senate.
The Government has tabled amendments proposing that the provisions concerning the national unfair contract terms law will not commence before 1 July 2010.
Other proposed amendments to the unfair contract terms provisions:
- provide that a term in a consumer contract can only be unfair if it would cause financial or non-financial detriment to a party;
- remove the consideration of whether a term would cause detriment, or a substantial likelihood thereof, from the considerations that a Court must have regard to in determining whether a term of a consumer contract is unfair;
- remove the power for the Minister to prohibit terms by regulation;
- provide that the Minister must take into account certain factors in prescribing by regulation an example of an unfair term;
- clarify that the unfair contract terms provisions apply to consumer contract terms varied on or after commencement as varied.
ACCC trade practices compliance update
ACCC Enforcement Commissioner Sarah Court's speech on compliance provides a number of reasons why compliance, especially voluntary compliance, makes good sense for any business. Highlighting a number of case studies, she provides some guidance on how the ACCC may react to certain breaches: will it litigate, accept a court enforceable undertaking or resolve the matter administratively?
ACCC supermarket competition agreement
The Australian Competition and Consumer Commission has announced that agreement had been reached with Coles Group Limited and Woolworths Limited to phase out all restrictive provisions in supermarket leases.
Both companies have agreed that they will not include restrictive provisions in any new supermarket leases, and in the case of existing supermarket leases, they will not enforce restrictive provisions five years after commencement of trading. This phasing out in the case of current leases takes account of commercial arrangements and rental contracts already in place.
During its Grocery Inquiry in 2008, the ACCC identified a practice where supermarket operators would include tenancy terms which may have prevented shopping centre managers leasing space to any competing supermarkets. This had the potential to impose restrictions on the number of supermarket outlets in centres and consequently fewer options for consumers.
The agreement is in the form of a court enforceable undertaking that has been voluntarily provided by Coles and Woolworths.