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Significant increase to financial penalties under the Australian Consumer Law

Rohan Harris

The Treasury Laws Amendment (2018 Measures No. 3) Bill 2018 (Cth), which amends the Competition and Consumer Act 2010 (Cth) (the Act), was passed by both houses of federal parliament on 23 August 2018. The amendments seek to strengthen the penalties regime under the Australian Consumer Law (ACL) in an effort to deter contraventions and reduce incentives for organisations to breach their obligations to consumers. Conduct captured by the increased penalties includes false or misleading representations, unconscionable conduct, non-compliance with safety and information provisions as well as other unfair practices.

In 2015, the Commonwealth, State and Territory Consumer Affairs Ministers asked Consumer Affairs Australia and New Zealand (CAANZ) to conduct a wide-ranging review of the ACL. CAANZ recommended increasing ACL penalties in their ACL Review Final Report (Report) released in April 2017. The Report found that the current penalties under the ACL were insufficient to discourage infringing conduct, with some companies perceiving financial penalties as simply “a cost of doing business”.

In response to the findings of the Report, the maximum penalties under the ACL will now align with those under the competition provisions of the Act — where courts are able to impose heavier penalties by considering the benefits obtained from breaches and the size of an organisation’s business.

The current maximum financial penalty under the ACL is $1.1 million for a body corporate and $220,000 for others. In light of the amendments, penalties under the ACL will increase to the greater of:

  • $10 million;
  • three times the value of a benefit obtained directly or indirectly from a contravention if a court is able to determine the benefit; or
  • if a court is unable to determine the benefit, 10 per cent of annual turnover from the 12 month period ending at the end of the month in which the commission of the contravention occurred.
    Maximum penalties under the ACL against individuals will increase to $500,000 — more than double the current maximum.

The new provisions will come into effect shortly after amending legislation receives Royal Assent. 

Key Takeaways

Companies should ensure that their consumer law compliance frameworks are accurate, detailed and consistently followed — and be mindful that any future breaches of the ACL may attract significantly increased financial penalties.

Please contact Rohan Harris from our Corporate & Commercial team should you require further information or advice in relation to consumer law penalties or other corporate advisory matters.

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