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7 August 2013

Toughen up

The Consumer Law Reform Bill now wending its way through Parliament contains many wins for consumers.

The Consumer Law Reform Bill now wending its way through Parliament contains many wins for consumers. But it could have been stronger – particularly when it comes to enforcing consumers' rights.

The Bill doesn't give the Commerce Commission Australian-style powers to issue infringement notices and fines for misleading conduct by businesses. These notices will only be able to be issued for very minor offences.

In contrast, the Australian Competition and Consumer Commission can levy set fines where it considers there's a clear-cut example of misleading conduct without having to take these cases through the courts. And it has been exercising these powers against major retailers where it has evidence they have misled consumers. Recent cases have included infringement notices totalling AUD$61,200 issued to Coles Supermarkets for alleged misleading country of origin claims; an AUD$102,000 penalty to a broadband provider for ads which failed to prominently display minimum prices; and an AUD$19,800 fine to a telco for misrepresentations made by its telemarketers.

Back here, the commission would have to pursue financial penalties for these offences through the courts. To conserve its resources, the commission restricts court actions to the more major cases of misleading conduct – some of the cases that do go through the courts often date back years. In the meantime more common but less major examples of misleading conduct go unpunished.

The types of misleading behaviour that we think could be covered by infringement notices and fines are those identified in our mystery shops of retail chains in 2007 and 2012. Both times, sales staff misled our shoppers about their rights under the Consumer Guarantees Act (CGA).

Our mystery shop of telcos is another example of where misleading advice was given by retail staff to our shoppers over what happens if your mobile phone is faulty. The CGA has been law for 20 years but major corporates still can't train their staff to understand its provisions. A few fines might sharpen up the training programme.

Businesses which take consumer rights and customer service seriously would have nothing to fear from a stronger enforcement regime. In fact, it would strengthen competition because it would reward better businesses. We hope Parliament changes its mind and gives the commission stronger enforcement powers.

About the author:

David Naulls is Consumer's deputy CEO and the editor of Consumer magazine.

David works closely with the research and testing team to ensure the quality of all articles published by Consumer NZ. He has previously been a research writer and contract books writer at Consumer. Before returning as Content Editor, he was a freelance writer and editor for 25 years. David has post-graduate qualifications in journalism and political philosophy.

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