The Federal Government’s proposed reforms to the Australian Consumer Law (ACL) would prohibit a wide range of unfair trading practices, which are not adequately caught by existing consumer and competition law provisions, particularly for consumers engaging with online businesses.
The proposal seeks to target a range of practices including:
The proposed prohibition on unfair trading practices would bring Australia in line with other jurisdictions, which have adopted a range of similar prohibitions and reforms directed towards most of the above practices.
In May 2024, the UK Parliament enacted the Digital Markets, Competition and Consumers Act 2024 (DMCC Act), which introduced significant amendments to strengthen the enforcement of UK consumer protection laws by the UK Competition and Markets Authority. These include:
Under the DMCC Act, the legal test to determine whether a commercial practice is unfair is the ‘transactional decision’ test, under which the CMA assesses whether a commercial practice is unfair if the practice is likely to cause the average consumer to take a transactional decision that they would not have otherwise taken because of any one or more of the following:
The DMCC Act also includes a list of practices which are considered to be per se unfair practices, and which do not require the CMA to conduct the transactional decision test, including:
The European Union has had a directive in place since 2005 which deals with a range of unfair business-to-consumer commercial practices, including those practices to be addressed by the proposed unfair trading practices ban in Australia.
The European Commission has recently announced an inquiry into dynamic pricing conduct by ticket sellers following consumer complaints about dynamic pricing for Oasis’ upcoming reunion tour. While dynamic pricing is not prohibited in the EU, a ticket seller engaging in dynamic pricing conduct may breach EU directives if the price of tickets is increased after a consumer has placed a ticket into an online basket for checkout, or if the ticket seller’s website does not provide ‘necessary material information’ about the tickets to enable the consumer to make an informed transactional decision.
In April 2023 the US Congress introduced the Junk Fee Prevention Bill (which is yet to be legislated), which requires covered merchants to ‘clearly and conspicuously display’ the actual total price of a product or service at the point in time where the price is first displayed to consumers.
The Bill also prohibits mandatory fees that are excessive or deceptive and grants the Federal Trade Commission (FTC) powers to investigate and enforce the provisions.
Additionally, on 16 October 2024 the FTC introduced a ‘click to cancel’ rule for businesses to simplify the process for consumers looking to cancel a recurring subscription. This rule requires that:
There are also additional provisions requiring businesses to keep records of consumers’ affirmative consent for a minimum of three years, provide reminders to consumers about the timing and charge associated with a recurring charge under a subscription (unless the consumer cancels the subscription), and a general ban on businesses making misrepresentations in relation to recurring subscription products or services.
On 1 July 2024 amendments to the Consumer Legal Remedies Act (CLRA Act) came into effect in California.
The main purpose of these amendments was to prevent businesses from engaging in drip pricing conduct, but they are silent on the issue of surge pricing and dynamic pricing. The amendments also make an exception for any relevant sales tax, which does not have to be included in the advertised price, and for restaurants, which may exclude mandatory fees from their advertised prices, provided that the fee is ‘clearly and conspicuously’ visible with an accompanying explanation on any advertisement, menu or display containing prices. What constitutes a ‘clear and conspicuous’ disclaimer is yet to be tested as the restaurant exemption will not take effect until 1 July 2025.
Consumers can claim actual damages of $1,000 for a breach of the CLRA Act (or $5,000 for elderly or disabled consumers), and may also be entitled to restitution, punitive damages, injunctive relief and recovery of legal fees. This may be accompanied by government enforcement of up to $2,500 per contravention.
The Federal Government has not yet released proposed draft legislation, but has indicated that a final reform proposal will be published in early 2025.
The measures adopted overseas may provide some helpful guidance for developing the Australian provisions. It will be worth watching this space to see if and how Australia goes forth with a specific ban on dynamic pricing, which has not yet been implemented overseas (and is otherwise dealt with under existing prohibitions). This issue is high on the Government’s radar and may pose novel challenges for businesses to ensure that they comply with any new dynamic pricing prohibition.
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