Australian Consumer

Law Review 2016

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SubmissionStructure

ExecutiveSummary&RecommendationsSection1Section2Section3Section4

AustralianConsumerLawandtheretail,service,repair,recyclingandassociatedindustriesoftheAustralianautomotivesector

- AutomotiveSectorOverview- RoleofMTAAandMembers- ConsultationoutcomesontheACLIssuesPaper

AustralianConsumerPolicyandtheAustralianConsumerLaw

- ObjectivesandStructure- TheLegalFramework- ConsumerGuarantees

EmergingPolicyIssues

- Personalimportedvehicles- LemonLaws- Othermatters

Conclusion

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ExecutiveSummaryandRecommendationsExecutiveSummary

TheMotorTradesAssociationofAustraliaLimited(MTAA)andMemberswelcometheopportunitytomakeasubmissiononthedistributedIssuesPaperforthefirstscheduledreviewoftheAustralianConsumerLaw(ACL).ThisSubmissionshouldbeconsideredwiththoseoftheAssociation’sMembersmostofwhomhavemadeindividualsubmissionsinsupportofthereformsbeingsought.

Legislationand/orregulationthathavewithinitthejudgementanddeterminationofcriticalthresholdswithoutcleardefinitionandguidance,placesasignificantburdenonthosewhoarerequiredtointerpretthosethresholds.

Criticalthresholdssuchas‘minor’or‘major’faultsorfailuresinahighlycomplexgoodsuchasamotorvehicle,hasplaceddisproportionatecapabilityinthehandsofanunqualifiedconsumerorconsumerrepresentative.ThiscapabilityhasamplifiedwithademonstratedpredispositionofsometoplacegreateremphasisorinterpretationofACLobjectivesonconsumerprotectionoverotherequalkeyobjectivesofeffectivecompetitionandfair-trading.IntheopinionofMTAAanditsMembers,thesefactorshavecreatedanimbalanceinthedeliveryofACLobjectives.OverthepastfouryearsMTAAandMembershavehadnumerouscasesbroughttotheirattentionofmattersproceedingtoCourtsasaresultofunqualifiedconsumersorconsumerrepresentativesmakingjudgementcallson‘majorfaultsorfailures’inmotorvehicles,whilesimultaneouslyadoptingadogmaticand‘blackletterlaw’approachtotherelevantprovisionsoftheACL.OntheonehanditcanbearguedthatprecedentsdeterminedbyactionintheCourts,suchasthecircumstancesalludedtoabove,wouldprovidewelcomeclarityonaspectsoftheACL’sinterpretation.Ontheotherhand,however,itcould,andarguablymayhavealreadyled,totheestablishmentofprecedentsthatossifyinlawunforeseenandunintendedoutcomes.

TheneedtoaddresstheoriginalconcernsoftheMTAAtobetterdefinethresholdsinregardstocomplexproductsandnowarguablyincreasinglycomplexservices,remainandisnowcriticalwiththedevelopmentanddeliverytomarketofevenmorecomplexautomotiveproductswithfargreaterintegrationandinteroperabilityofsystemsandsub-systems,moretechnology,andincreasingawarenessandrelianceontheACL.

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Recommendations

AustralianConsumerLawObjectivesandStructureTheMTAArecommendsthat:

1. NochangeisrequiredtotheoverarchingandenablingobjectivesorstructureoftheACL.2. Nochangeisrequiredtotheagencieschargedwitheducating,administeringorenforcingtheACL.3. ImprovedbalanceinthedeliveryofobjectivesoftheACLbyreducingtheriskofmis-interpretationor

incorrectemphasisthroughimproveddefinition,andclarityinthresholdsandprovisions.LegalFrameworkTheMTAArecommendsthat:

4. AmendthedefinitionofconsumerinSchedule2,Chapter1,Section3oftheACLtoincludetraderswhohave‘purchasedGoodsand/orServicesforresale’

5. TheReviewconsiderthefeasibility,developmentandapplicationofaseparatescheduleorsimilardeviceormechanismwithintheACL,specifictotheautomotivesectorincluding:

a. TheremovalofexistingACLprovisionswithproximityorspecificitytotheautomotivesector,andtheirinclusion,whereappropriate,tothesuggestedscheduleoralternativemechanism;

b. Thedevelopmentofcleardefinitionsandthresholdstobeincorporatedasprovisionsincluding:i. Defineamajorfault;ii. Defineaminorfault;iii. Definewhatconstitutes‘reasonabletime’;iv. Define‘fit-for-purpose’v. Define‘acceptablequality’vi. Define‘expectedlifespan’ofsecondhandvehicles(age,kilometresetc.)vii. Clarifytimelengthofconsumerguaranteesforparticulartypesofvehiclesviii. Includebusinessesthatpurchasegoodsandservicesinthecourseoftrading,including

wheretheyareheldliableforthefaultofaproductsuppliedbyamanufacturer,inthedefinitionofconsumers;

ix. Definetheterms‘unconscionableconduct’and‘misleading’and‘deceptive’conduct,and‘reasonableperson’,andensureconsistencywiththeCCAandrecommendationsandchangesoccurringasaresultoftheHarperReview.

x. Withoutaddingtotheoveralladministrativeburden.

c. Amendorprovideadditionalprovisions(whereappropriate)insuchascheduleoralternativemechanismtoinclude:

i. Existingprovisionsthatnegatetheneedforotherjurisdictionlawsorregulationincluding‘LemonLaws’and‘CoolingOff’periods(existingprovisionsareregardedasadequate).

ii. Definetheresponsibilityforconsumerguaranteesbetweenvehiclemanufacturersandvehicleretailers,particularlyforusedvehiclesandforvehiclessoldthroughindependentandnon-manufactureraligneddealershipsandrecourseactionsavailable;

iii. SubjectGovernmentauctionhousestothesameACLobligationsaslicensedvehicledealersiv. IncorporatecommonstatutorywarrantyascontainedinvariousjurisdictionsMotorCar

Traders/DealersActs,withintheACLastherelevantconsumerguaranteeinrelationtosecondhandmotorvehicles;

v. DefinetheapplicationoftheACL,ifatall,to‘endoflife’secondhandmotorvehicles;vi. Enablefairaccessoftechnicalserviceandrepairinformationbyindependentautomotive

businessesandconsumers;

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vii. EnsureclaimsmadeundertheACLarenotresipsaloquiturevidencethatafaultexistsandthattheretailerorwholesalerisatfault.Businessesshouldalsobeprotectedasconsumerswheretheyarepurchasingfromthirdpartiesinordertosupplytothepublicandwheretheyareunabletoreasonablydeterminewhetherafaultexistsatthetimeofpurchase;

viii. ExcludepersonallyimportedmotorvehiclesastheyareincompatiblewiththeACL;ix. Providebroadguidelines,suchasthosecontainedwithinthestatutorywarrantysystem

withintheWesternAustralianMotorVehicleDealersAct1973,andotherjurisdictions,toestablishtheparametersunderwhichaclaimcanbelodged.

x. EnsureconsumermustgivethetraderareasonableopportunitytomeetanyobligationsundertheconsumerguaranteesorstatutorywarrantywithgreateremphasistobeplacedbytheCourtsonthedeterminationsofStateConsumerAffairsagencieswhenhearingcasesbroughtbeforethembyconsumers.

xi. Anindustryguidebeprepared,oncetheACLreviewhasbeencompleted,specificallyforthemotortradeindustryin‘plainEnglish’format.

6. ‘LemonLaws’and‘CoolingOffPeriods’shouldnotbeintroducedasACLprovisionsalreadyprovidesignificant

consumerprotections.Thedraftingofsuchjurisdictionbasedlegislationandregulationisanunnecessaryreturntoapotentialpatchworkofdiscretelawsandregulationsforspecificsectors,whichwillbeadministrativelyprohibitivetoimplement,andreinstateanenvironmenttheACL’screationsuccessfullyaddressed.

ConsumerGuaranteeThresholdTheMTAArecommendsthat:

7. TheConsumerGuaranteeThreshold(CGT)isinvestigatedforitsongoingrelevanceandcontinuance,butasaminimumreformrequirement,thattheCGTcurrentlysetat$40,000in1986,beindexedto2016pricesandupdatedannuallythereafter.

EmergingPolicyIssuesTheMTAArecommendsthat:

8. PersonallyimportedvehiclesareexcludedfromtheACLinaccordancewithdraftpolicydeterminationthatsuchtransactionsare‘buyer-beware’andthatnormalconsumerprotectionsdonotapply.

9. TheACLshouldbeamendedtoensureAustralianlevelsofqualityandsafetyarereflectedininternationalstandardsinlinewithourinternationaltradingpartnersandsourcemarketsandreflectrequirementtooperateinAustralianconditions.

10. Onlinereviewers,includingconsumers,areequalpartiestoatransactionunderACLandshouldbesubjecttoequalobligationsforunconscionableconductandmisleading,deceptiveandmaliciousconduct.Simplyholdingan‘genuineopinion’shouldnotconstituteadefencefromtheseactionsnorfromdefamation;

11. Intellectualpropertydevelopedfromdatacollectedbybusinessesshouldnotbemadeavailableinordertosatisfyanacademicargumentaboutconsumerempowerment,asitwouldriskprovidingAustralia’scompetitiveadvantagetooverseascompetitorsandcontradictstheCommonwealthCyberandDataSecurityStrategy.

12. Includethesameprotectionsforbusinessesfrommisleadingconductbyconsumers,asconsumersarepartiestotransactionscoveredbytheACL.

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Section1-AustralianConsumerLawandtheretail,service,repair,recyclingandassociatedindustriesoftheAustralianAutomotiveSectorAutomotiveIndustryoverviewTheAustralianAutomotiveSectorconsistsofmorethan65,000businessesnationally(AustralianBureauofStatisticsfigures,butnotallautomotivesectorrelatedbusinessesarenecessarilyincluded),thevastmajorityofwhicharesmallandfamilyownedandoperatedbusinesses.FortheyearendedJune2015,aggregateemploymentfortheindustrywasrecordedat362,000persons.Ingrossdomesticproduct(GDP),theautomotiveindustryasawholeaccountedforapproximately$38.3billionor2.5%ofAustralia’sannualGDPincurrentpricesin2014-15.TheSectorandallindustrieswithinitareverycompetitivewithusuallysmallprofitmargins.Consumerbehaviourslimitcapacityofindustriestoraisepricesandlargedominantmarketparticipants(insurancecompanies,oilindustry,supermarkets,vehiclemanufacturers)heavilyinfluenceconsumerbehavioursand/orprice.Thecostofdoingbusinessishighduetorapidvehicletechnologyadvancesrequiringchangingandhigher-levelskillsandexpensivetechnologyintherepair/serviceprocess.Modernmotorvehiclesarenowhighlycomplexproducts,integrated,interoperable,andconnected.Increasedsafety,efficiency,environmental,drivingandconnectivityoutcomesarebeingachievedwithincreasingrelianceoncomputerisationandoftenwithmultiplethirdpartyinvolvementparticularlyinadvancedsystemsandsub-systemintegration.Thenewcarmarketisnowover1.2millionperannumwiththenationalfleetfastapproaching20millionvehicles.Combinedwithotherinfluencesincluding,globalisation,industryconsolidation,theinfluenceofdominantmarketparticipantsinsomeautomotiveindustries,andalackof‘wholeofsector’policy;theprovision(andinsomecasesthetype)ofservices,theskillsandqualificationsrequiredandtraditionalbusinessmodelsareallchanging,necessitatingstructuraladjustmentofalmostallindustries.Theclosureofthedomesticvehiclemanufacturingindustrybetweennowandlate2017willseeapproximately18%ofthetotalautomotivesectordisappearwiththousandsofjobslost.Thenationwillforthefirsttimebesolelyreliantonimportedmotorvehicleproducts,althoughtherewillstillbesomecomponentmanufacturingandnichemanufacturingoperations.ThetouchpointsbetweentheautomotivesectorandAustralianConsumerLaw(ACL),aremanyandvariedandthisscheduledACLReview,startingwiththedeliveryofanIssuesPaper,providesanopportunitytoensurethatobjectivesandunderlyingprinciplesoftheACLkeepabreastofunprecedentedchangesoccurringintheautomotivesector,withhighlycomplexmotorvehicleproductsandtheimplicationofthisrelationshiponconsumersandbusinessalike.

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MotorTradesAssociationandMemberAssociationsincontext

MTAALimitedisthenationalassociationofStateandTerritoryMotorTradesAssociationsandAutomobileChambersofCommerceMembersandisthevoiceofwhatwillbemore95%oftheautomotivesector,whencarmanufacturingceases,withlargelykeyCommonwealthGovernmentstakeholdersandthecommunity.ThemajorityofMTAAMembershaveprovidedindependentsubmissionstotheACLReviewIssuesPaperreflectingspecificviewsofthousandsoftheirbusinessmembersacrossthemorethan20discreteindustrieswithintheautomotivesector.Theseinclude:newandusedvehicleretail(passenger,truck,commercial,motorcycles,recreationalandfarmmachinery);service(dealerrepairers,independentmechanicalrepairers,repairspecialisations(-i.e.brakes,airconditioning,radiators,steeringandsuspension,exhaust,windscreenandengine),vehiclewashing;repair(motorbody,vehiclepainting,upholstery);automotivedismantlersandrecyclers;andassociatedindustries(partsandcomponentwholesale/retail;enginereconditioners;distributionandaftermarketmanufacture(i.e.specialistvehicle,partsorcomponentmodificationand/ormanufacture);heavyvehiclerepairers;caravanindustry;commercialvehicleindustry;generaltrades;hirecarandchauffeurdrivenlimousines;motorbus;motorvehicleassessorsandinspectors;rentalvehicles;rustproofingspecialists;servicestations;towtruckoperators;tyredealersandretreaders.OnbehalfofitsStateandTerritoryAssociationMembers,theMTAAhasbeenattheforefrontofnationalcompetitionandconsumerpolicydevelopmentinregardtotheautomotiveindustryformorethan25yearsandhasbeeninstrumentalininfluencingmanypolicyoutcomesforthebenefitofmembersandtheirbusinessconstituentsintheautomotivesector.TheMTAA,StateandTerritoryAssociationMembersandthethousandsofdiverseretail,service,repair,recyclingandassociatedmotortradebusinessessupportstrongconsumerprotectionmeasuresandtheobjectivesandprinciplesunderpinningtheAustralianConsumerLaw(ACL)includingeffectivecompetitionandfair-trading.Retail,service,repair,recyclingandassociatedmotortradebusinessesinalloftheirvariousformsonthewholeoperatefairly.Theyalsocommonlyoperateundervariousotherlegislativeandregulatoryregimesanddonotshirktheirresponsibilitiestoupholdconsumerrights.MTAAmembersarealsocommittedtovoluntarilyupholdCodesofPracticeandethicsthathaveconsumerprotectionasthecentralfocus.InmanyinstancesMTAAandMembersandbusinessownershavebeeninstrumentalintheestablishmentoftheseCodesandethicsforthebenefitofAustralianconsumersaswellasthemanyindustriesthatmakeuptheAustralianautomotivesector.

ConsultationontheACLIssuesPaperMTAAStateandTerritoryMembersconsultedextensivelywiththeirowndiverseandgeographicallydispersedmembershipofthousandsofautomotivebusinessesacrossthenationthroughsurveys,focusgroupsandothermechanisms.Themajorobservationsfromtheseconsultations

Ø Thepolicyframework,overarchingandenablingobjectivesandstructureoftheACLremainrelevant,appropriateanddonotrequireanychange.

Ø However,thereexistsauniversalandstrongviewthatemphasisandinterpretationoftheACLisunbalancedwithapredispositiontoConsumerProtection,andlesstotheequallyweightedobjectivesofeffectivecompetitionandfair-trading.

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Ø Abetterbalancemaybeachievedthroughclarityofdefinitions,thresholds,andobligations

incumbentonbusinessesandallmarketparticipantsincludingconsumers.

Ø Protectionistiltedtoofarinfavourofconsumersandlargerbusinessessuchasinsurersattheexpenseoffair-tradingandeffectivecompetition.

Ø Lemon’lawsand‘CoolingOff’periodsarenotrequiredastherearealreadysufficientprotections

underACL.

Ø Alackofunderstandingofthedefinitions,thresholdsandobligationsincumbentonbusinesseswhenconsideringmajorfailures,major/minorfaults,andreasonabletimebybusinessesandconsumers.

Ø Acommensuratelackofconfidencefrombusinessthatregulators,consumersorcourtsof

arbitrationhadsufficientunderstanding,clarityordirectionoftermsofapplyingthatunderstandingconsistently.

Ø NumerousmembershavebeensubjectedtoanACLclaim,andwhentheywere,itwasusually

settledbeforedetermination.

Ø Viewswerelargely,butnotuniversally,infavourofensuringthatAustralianStandardswerereflectedininternationalstandards,ratherthancreatingAustralianStandardsthatwereoutofstepwithmajortradingpartners.

Ø Strongagreementthatthereshouldbestrengthenedprotectionsforbusinessesagainstfaultyand

substandardsuppliedparts,andthatmanufacturersdonotprovidesufficientsupporttoretailersandwholesalers,whentheyaresubjecttoACLclaimsthataretraceabletomanufacturingproblems.

Ø MostagreedthatgovernmentauctionhousesshouldbesubjecttothesameACLobligationsas

licensedvehicledealers,withthecostsbeingabsorbedbysellersortheauctionhouse.

Ø TherewasuniversalagreementthatonlinereviewersandconsumersshouldbesubjecttothesameACLobligationsasbusinesseswheretheypostmisleadingreviewsthatdamageabusinessorprovidethebasisforcoercivebargaining.

Ø Onlinereviewplatformsshoulddiscloseanycommercialagreements,relationshipsand

methodologiesusedtodeterminetheirreviewrankingsorcommentary.

Ø TheACListooheavilybiasedtowardstheconsumerandisinadequateinprovidingprotectionsforsmallbusinessesintheautomotiveindustry.

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Section2-AustralianConsumerPolicyandtheAustralianConsumerLaw

ObjectivesandStructureMTAAandMemberscontinuetosupportAustralia’snationalconsumerpolicyframeworkandoverarchingobjective‘Toimproveconsumerwellbeingthroughconsumerempowermentandprotection,tofostereffectivecompetitionandtoenabletheconfidentparticipationofconsumersinmarketsinwhichbothconsumersandsupplierstradefairly’.MTAAandMembersalsobelievethesixoperationalobjectives,asidentifiedbytheIntergovernmentalAgreementforAustralianConsumerLawin2009,remainrelevantandappropriateinsupportingtheoverarchingobjective.TheMTAAalsobelievesandsupportsthemechanismsandagenciesdesignedtoeducate,administerandenforcetheACLincludingtherolesofTheTreasury,theAustralianCompetitionandConsumerCommission(ACCC),thenewlyformedCommonwealthSmallBusinessandFamilyEnterprisesOmbudsman,StateandTerritorybasedSmallBusinessCommissioners(wheretheyexist)andDepartmentsofFairTrading/ConsumerAffairs(althoughtherelationshipswiththelatteraremoreofMTAAMembersthanMTAAitself)areappropriateanddonotrequirechange.TheMTAAenjoysandisappreciativeofthepositive,robustrelationshipswithTheTreasury,ACCC,agenciesandrelevantDepartments,whichcontinuetobebasedonmutualrespect,professionalismandcollaboration.TheMTAAandMembersthereforeseenoneedtochangethefoundationsofAustralianConsumerPolicyACLobjectivesoritsdelivery.ImbalanceininterpretationandemphasisHowever,theMTAAandMembersbelievethereisasignificantissuewiththeemphasisandinterpretationofobjectivesrequiringfurtherdetailedexploration.TheobjectivesofACLquitepurposefullyandrightlydonotassignspecificweightingtowhichelementsaremoreimportantthananyother.Consumerprotection,effectivecompetitionandfair-tradingareequallyimportantasanobjectiveofACL,andofequalstandingbeforethelaw.TheACLalsoestablishesthatconsumersareparticipantsinmarketsandanequalpartyinanytransactionsthatoccurinthatmarket.ThesearecrucialfoundationprinciplesunderACLthattheMTAAandMemberscontendarenotbeinginterpretedcorrectlybyregulatorybodies.

ItisthecontentionoftheMTAA,itsMembersandtheirautomotivebusinessconstituentsthatinpracticethereisapredispositionbyregulatorstotheconcernsofconsumersattheexpenseofbusinessesandthattherightsofconsumersandtherightsofbusinessesarenotbalanced.

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Itisalsoastronglyheldviewthatthesmallerthebusinessat,ornear,theendofasupplychaindonotreceiveadequateprotection,eventhoughtheyaresupposedlyequalparticipantsinmarketsandequalinanytransaction.AsMTAAMember,MTA-SouthAustraliapointsoutinitssubmission:‘Smallandmediumsizedenterpriseshavelimitedresourcestodefendthemselvesagainstmultiplefrivolousclaims.Theyarelikelytoexhaustthecashreservesofabusinessduringlitigation,inaprocessthatisperceivedtobebiasedanyway.Itiseasierandcheapertoallowaclaimtobesettledregardlessofitsmerits.ThisisanunbalancedeffectofcurrentACLinterpretation.’TheMTAAandMemberssharetheexpressedMTA-SAviewthat‘…ensuringconsumersarenotundulydisadvantagedthroughdishonestconductisanimportanteconomicstandardthathelpsdriveconfidenceintheAustralianeconomy.Equally,itisimportantthatitisrecognisedthateffectivecompetitionandfair-tradingaretwo-waystreets.Businessesexisttoprovidegoodsandservicestoconsumersanddosoinawaythatisapositivetransactionforbothparties.Theydonotexisttofleecetheircustomerbaseortodeliberatelyprovideinadequategoodsorservices.Thereforebusinessesshouldnotbeconsideredashavingastartingpositionofdoingso.

LegalFramework

TheMTAAandMembersconsidersthelegalframeworkunderpinningtheACLisbasicallysoundinitscurrentroleofsupportingonegenericAustralianConsumerLawapplicableacrossallgoodsandservicesintheeconomy.

However,theMTAAbelievesthatintheoriginalcreationofagenericAustralianConsumerLaw,anopportunitywaslosttodefineterms,criteriaandthresholds,particularlyinrelationtocomplexgoodsandanunintendedconsequencehasbeenincreasedroomforinterpretationandemphasis–particularlyintheautomotivesector.

ThisisnotacriticismoflegislationdrafterswhohadtotacklethevexedissueofestablishingagenericConsumerLawFrameworkforallgoodsandservicesandalsobalancetheinclusionofveryhighprofile,veryspecificsectorsandhighlycomplexproductsfromthosesectors.Ifyoustartdefiningspecificproductsandprescribingsolutions,wheredoyoustop?Apolicyframeworksuddenlybecomesprescriptiveandburdensometoadministerandenforce.

MTAAsuggeststhatduetorapidlychangingconsumerbehavioursdrivenbyevenfasterapplicationoftechnologyandconnectivity,thenperhapsthetimeisrightforamoredetailedframework,particularlyforsingledoutsectorssuchasautomotive.

GiventhemattersraisedinthisandMTAAMembersubmissionsMTAAsuggeststhatthecreationofanautomotivescheduleorsimilarwithintheACL.

ThefollowingexamplesinvolvingMTAAmemberbusinesseshighlightsomeoftheseissuesandtheproblemsandinappropriateandunjustoutcomesresultingfromalackofclarityinthelaw:

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CaseStudy3:

Amotorvehiclethathadtravelled300,000kilometresand,althoughroadworthy,wasapproachingits

endoflifeandissoldtoaconsumer(whohasbeeninformedthatthevehicleisapproaching/has

reachedits‘usebydate’)andshortlyafterpurchase,acomponentfailed.

Theconsumerisgenerallyencouragedbytheregulatorstoapproachthetraderforaremedy–even

thoughtheyhadagreedtopurchasethevehiclewiththeknowledgeitwasat/hadreachedits‘endof

life’.

MTAAmembershavereportedsubstantialexamplesofwhereacomponenthasfailedinsucha

vehicleandthecostofremedyisthesameorevenmorethantheoriginalpurchaseprice.

CaseStudy2:

Amotorvehiclehadexperiencedbalanceshaftfailureswithintheengine.Thecarwouldnotrun.Itwastakentoaworkshopwherethefailurewasconfirmedandworktakentorectifythefaultcarriedout.Ashorttimelatertheenginewarninglightdisplayedindicatingthepresenceoffaultcodes.Theseturnedouttorelatetoworncamphasers.Thishadnorelevancewiththeoriginalworkcarriedout.AnACLclaimwasmadeandVCATawardedfullcompensationtothecar’sownerbecausetheworkshop‘Shouldhaveknown’thatthesecomponentsweregoingtobefaultyinthefuture.

CaseStudy1:

A20044WDmotorvehiclewith324,000kilometresontheodometerdevelopedacoolantleakfourmonthsafterpurchasewhilsttowingaheavytraileronthehighway.Thetemperaturegaugewasfunctional,howeverthedriverfailedtostopandtheresultwasthattheenginewasdestroyed.Thecoolantleakwasaminordefect,howeverthetraderrefusedtorepairtheconsequentialdamage.

VictorianCivilandAdministrativeTribunal(VCAT)proceedingswereinitiatedandtheTribunalruledthatthevehiclewasnot‘Fitforpurpose’andtheconsumerawardedafullrefundalongwithassociatedcostsfordamages,despitetheconsumerhavingcontributedtothedamagethroughfailureintheirdutytostopandminimiseloss.

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TheexamplesaboveillustratetheunfairandhighlysubjectiveapplicationoftheACLbyregulatoryauthorities.Itisclearfromthesecasesandmanyotherslikethem,thattheobjectivesoftheACLwerenotserved.Thiswascausedbyalackofclarityconcerning‘fitforpurpose’and‘acceptablequality’alongwithotherkeyprovisionswithintheACL.Therewasalsoconfusionandmisinformedexpectationssurroundingthelifespanofolder,highlyusedmotorvehiclesonthepartoftheregulatoryauthoritiesinvolved.

Inalllikelihood,thelitigationandfinanciallossessufferedbythebusinessescouldhavebeenamelioratedorevenpossiblyavoidedhadtherebeenmoreexplicitinformationandbetterclaritysurroundingtheparticularprovisionsandguaranteescontainedintheACLonmotorvehiclesalesandrepairs.

TheMeaningof‘Consumer’andCurrentThresholds

Thedefinitionof‘consumer’inSchedule2,Chapter1,Section3oftheACLrequiresamendmenttoincludetraderswhohave‘purchasedGoodsand/orServicesforresale’

asthepresentdefinitionpreventssuch

tradersfromtakingappropriateactionagainstasupplierthroughtheconsumerprotectionagenciessuchasFairTradingortheCivilandAdministrativeTribunalsintheirrespectivejurisdictions.MTA-NSWsuggestsinitssubmissionthatonesolutionmaybetoinvestigatearewriteSection3,armedwiththehindsightoffouryearsofoperationoftheACL,sothatitaccuratelyreflectsallobligatoryrequirementsandentitlementsrelatingtothepurchaseofGoodsandServices.TheMTAAMember,MTA-NSWprovidesmoredetailontherequirementintheirindependentsubmissiontothereview. ConsumerGuaranteesItiscrucialtheconsumerguaranteebeextendedtobusinessesthatareconsumersaswell.OneofthemajorconcernsofMTAAMembersandtheirbusinessconstituentsisthatretailersareoftenliableforconsumerguaranteeswheretheyweresuppliedthatproductfrommanufacturersandwherethefaultoccurredduringmanufacture.Thereshouldbegreaterprotectionsforretailersandwholesalersfromthistypeofclaim;andmanufacturersshouldbeabletobemadeapartytoaclaimwhereappropriate.Forexample:Schedule2,Chapter3,Part3-2,Section54oftheACLreferstoGuaranteesastoacceptablequalityandnotesatsub-sections4,5and7thatgoodsthatarenotofacceptablequalityaretakentobeofacceptablequalityifitis‘specificallydrawntotheconsumer’sattentionbeforetheconsumeragreedtothesupply’.

CaseStudy4:

Twobrandnewidenticalmodelvehicleswerepurchasedfromametropolitandealer.Predelivery

actionswereperformedandthevehiclesdelivered.Theowneronreturntohiscountrylocationshowed

hisnewvehiclestothelocalmechanicwhoraisedconcernsabouta‘whiteresidue’overtheengineand

enginebaysofbothvehicles.Itwasexplainedtotheconsumerthattheresiduewasnotofconcernand

wastheresultofpredeliverywash.Unconvincedtheconsumersoughtadviceonabilitytohandback

thevehiclesusingprovisionsoftheACL.Thecostsofthevehicleswererefunded.

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Theterminologyusedposestheproblemthatopensthedoortodifferinginterpretation.Itcouldbeinferredfromtheterminologythatthegoodsare‘notofacceptablequality’potentiallydetractsfromthefactthatthegood/smaybenearingthe‘endoflife’cycle,butarestillquiteserviceableprovidingtheyaretreatedbytheconsumerappropriately.Dealersvs.Manufacturers

TheACLrequirestheconsumerseekaremedyfromtheretailer,regardlessofifthefaultwasasaresultofamanufacturingissueornot.Thisisareasonablepropositionandwouldworkwelliftheretailercouldrelyonthemanufacturerprovidingacceptablelevelsofsupport.AsMTA-WAreportsintheirsubmissionthecurrentstateofplayseesdealersplacedataconsiderabledisadvantage,andbeingexposedtohighlevelsofliabilityiftheyaretodealwithaconsumercomplaintinaccordanceoftheintentoftheACL.MTA-WAprovidesthefollowingexample:TheACLrequiresthattheretailer/dealer,repairstheconsumer’svehicleandthentheretailer/dealerclaimsreimbursementforcostsfromthemanufacturer.TheActrequiresthattheconsumercanclaimforoutofpocketandadditionalexpensesarisingfromthefault.Thisincludestheuseofahirecar,lossofearningsetc.Thefirstissueimpactingondealersisthatmanufacturerswilleffectivelypenalisethedealerbylimitingtheamountthatcanbeclaimedforanyrepair.Thisismostcommonlydonebyrestrictingtheamountoftimethatthedealercantaketorepairthevehicleanditisnotuncommonformanufacturerstoallowforhalfoftheactualtimethatittakestoaffectarepair.Thesecondissuefordealersisthatmanufacturerswilleithernotacceptclaimsforoutofpocketexpensesorplacelimitationsonthese.Anexampleofthiscanbeseenwiththeprovisionofloancars,whichcostthedealerbutwhichthemanufacturerwillnotcompensatefor.

MTAAandmembersthereforebelievethereviewoftheACLthereforemustplacefargreaterandstringentcompliancerequirementsonmanufacturerstofullycoverclaimsmadeagainsttheirproduct.Ifthisweretobedonethetimetakentosuccessfullyresolveconsumercomplaintwouldbereducedasthedealerwillhavegreaterconfidencethattheywillreceivefaircompensationfortheirtimefromthemanufacturer.

Secondhandvehicles

Forsecondhandvehicleswheretheoriginalmanufacturer’swarrantyperiodhasexpired,theACLprovisionstransfertheonusofresponsibilitytotheusedcardealerwithregardstoconsumer’sclaimsformajorfaults.Thisisdespitethefactthatthesemajorfaultsareessentiallymanufacturingfaultsratherthanthefaultofthedealer.Amanufacturer’sculpabilityoverthemajorfaultisfurtherdistancedbythefactthatindependentusedcardealershavenorelationshipwithavehicle’smanufacturerduetothenatureofsecondhandgoods.Thisresultsinusedcardealersbearingthefullfinancialriskassociatedwiththesellingoftheusedvehicle.

MTAAMember,VACC,reportsinitssubmissionthatitsusedcardealermembershavesufferedaspateofgrosslyunfairordersforcompensationbyconsumersrelyingupontheACLinrespectofcarsthathavebeenpurchasedverycheaplyandwhichfalloutsidethestatutorywarrantyprovisionscontainedintheVictorianMotorCarTradersAct1986(MCTA).TheMCTAcontainsadequateandwell-definedlimitsupontheobligationslicensedmotorcartradershavetoconsumers.

ThisissimilarinotherjurisdictionswherebetterdefinitionshavealleviatedsomeoftheproblemsassociatedwiththeACL.

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AsVACCreportsinitssubmission,Undersection54oftheMCTAVictoria,carsthatarelessthan10yearsoldandhavebeendrivenlessthan160,000kmarecoveredbythestatutorywarrantyforthefirst3monthsor5,000kmafterdelivery.Thisstatutorywarrantyalsoappliesinmoststatesandtheexposureofthemotorcartraderstoconsumersiswelldefinedandclear.Thelimitsarealsowelldefined.

TheprovisionscontainedwithintheACLhowever,haveplacedanintolerableburdenontradersinfavourofunscrupulousconsumers.

Effectively,carsdrivenover200,000kilometresandthatare20yearsoldandpricedaccordingly,giverisetoconsumerrightstohaverepairsundertakenbytradersthatequatestotheentirecostofthecarpurchasedcheaplybecauseoftheageofthevehicle.Inthisregard,theACLhasconsequentlycreatedanunfairlineofresponsibilityandadebilitatingeffectonthefinancialviabilityofusedcardealerships.

Thiscasestudy,providedbyVACC,illustratesthefactthattheprovisionsoftheACL-largelyadoptedfromtheNewZealandConsumerGuaranteesAct1993–meanthattheexistenceofthestatutorywarrantyalreadyinplaceundersection54oftheMotorCarTradersAct(Victoria),hasbecomeotiose.

Statutorywarrantiesprovideclearbenchmarksforvehicleageandkilometresdriven.Bycontrast,theACLmakesonlythefollowingvaguestatement:'asareasonableconsumerfullyacquaintedwiththestateandconditionofthegoodswouldregardasacceptablehavingregardtothenatureofthegoods,price,anystatementmadeabouttheAccesstoRepairInformationAmongtheconsumerguaranteesthatformthebasisoftheACL,onestatesthat‘manufacturersorimportersguaranteetheywilltakereasonablestepstoprovidesparepartsandrepairfacilitiesforareasonabletimeafterpurchase.’However,thisconsumerguaranteeisinsufficientinitsscopeofcoverage,asitdoesnotstipulatethefairdistributionofvehicleserviceinformationtoindependentvehiclerepairers.Assuch,vehiclemanufacturersandimportersprovidingvehiclesintotheAustralianmarkethavelimitedobligationsinensuringtheirrepairinformationismadewidelyavailabletotheautomotiveindustry.Notprovidingsuchinformationtoindependentvehiclerepairbusinessescandisadvantagevehicleownerswhoarenotabletoaccessavehicledealershipintheirregionorwhereavehiclerepairercannotfairlyaccessrepairinformation.Thisisparticularlytrueforvehicleownersthatresideinruralregionswheretheydonothavereadyaccesstoanearbydealership.Consequently,thisisdetrimentaltoregionalconsumersasitmayresultintheneedtotravellongdistancestodealershipsforvehiclerepairs.

CaseStudy:

A2004VolvoXC90thatwasmorethan10yearsoldandhadbeendriven163,040kilometresthatwaspurchasedforonly$13,875.00failedafter4monthsandhavingbeendrivenroughlyfor7,000kmafterpurchase.Theapplicantwasawarded$4,000.00atVCATforthecostofanewtransmissionalongwith$8,200.00foradditionalcostsclaimedtohavebeenincurred.VCATdidnotprovidereasonsforitsdecision.Thecarwassoldwitharoadworthycertificate.Itwasexaminedbymechanicsandconsideredtobeingoodconditionforitsageandlevelofuse.

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ThecurrentarrangementsinAustraliaregardingthefairaccesstovehiclerepairinformationarecurrentlyembodiedinanindustryagreement(AccesstoServiceandRepairInformation).ThisvoluntaryindustryagreementwasallthatcouldbemanagedfromafragmentedindustrythatfailedtoagreetoaVoluntaryCodeofConductorattractinterestofgovernmentforthemandatingofaCodeofConduct.Whileitremainsdifficulttoqualifythesizeandcharacteristicsandnumberofbusinessesimpacted,itislikelytoincreasegiventhecomplexsystemsanddiagnosticsrequiredtoidentifyfaultcause.ItiscleartheagreementinitselfisunlikelytomeettheobjectivesofAustralia’sConsumerLaw.Assuch,furtherinvestigationsmayberequiredtodevelopanewVoluntaryorMandatedCodeofConducttoensureaccesstorepairinformationandtheACLaresynergistic

SafetyRecallsdonotnecessarilyequatetoamajorfaultorfailureSafetyrecallsformotorvehiclesarealmostinvariablytheproductof,andresponseto,demonstratedfaultsarisingasaresultofon-goingproducttestinganddevelopmentconductedbyamanufacturer,orfromapatternof(potential)faultsemergingorbeingdiscoveredinthecourseofnormalvehicleservicing.Thoserecallsarealsoalmostinvariablysafetyrelatedand,thus,couldpotentiallybeconstruedasevidencingamajorvehiclefault.Inpractice,however,recallcampaigns,inthemain,resultinthepreventionofagivenfault/failureoccurringinavehicle.Inthatrespectthosecampaignsrepresenteffectbeinggiventofaultpreventionmeasures.Asafety-relatedvehiclerecall–byvirtueofthefactthatitprovidesbothanopportunityforavehicletobeeitherpreventedfromevidencingafault,ortohaveanyfaultrectified–cannotbe,ofitself,evidenceofa‘major’faultand,hence,atriggerfortherelevantproscribedremedy.That,however,isnotentirelyclearandexplicitwithintheACL.

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Section3–EmergingIssues

PersonalimportationofmotorvehiclesTheFederalGovernmenthasintroducedabillthat,ifpassed,willallowforthepersonalimportationofnewornearnewvehiclesfrom2018.TheautomotiveindustryhasraiseditsconcernswithGovernmentinrelationtothedifferingstandardsthatapplytovehiclesmanufacturedforAustraliatothosemanufacturedforothermarkets,irrespectiveofwhethertheyarerighthanddriveornot,andtherealpotentialforconsumerdetriment.Thereisaclearlackofunderstandingthatmodelsofvehiclethatlookthesame,arenotnecessarilythesameunderthehood,withthesystemsandsubsystemsdeployedorintheircapacitytooperateeffectivelyintheAustralianenvironment.SubtlebutextremelyimportantdifferencesaremadetoAustraliandeliveredvehicleseventhoughthesamemodelmaywellbeavailableinanothercomparablerighthanddrivemarket.MTAAisawareofseveralmodelsofseveralbrandsthathavesignificantchangestosuspension,fuel,electricalandcoolingsystemstomakethem‘fitforpurpose’intheAustralianenvironmentandoperatingconditions.Bothmodelsmaywellmeetharmonised‘internationalstandards’,butstillbefundamentallydifferentbecauseofAustralianoperatingenvironments.Keytotheseconcernsistheperceptionbyindividualsaccessingthisopportunity,thatbecausethevehicleIsnew,itwillautomaticallybecoveredbythemanufacturer’swarranty.Thisisnotthecase.DealerscannotbeheldaccountableforissuessuchaswarrantyworkormanufacturerrecallsandonthatbasistheMTAAandMembersstronglyrecommendsthattheACLspecificallyexcludethistypeofvehicle,shoulditproceed.MTAAandMembersarepuzzledbythecontradictionoftheGovernmentallowingthepersonalimportationofnewmotorvehiclesandtheirstatedpositionthatiswillbeundertheauspicesof‘BuyerBeware’ontheonehand,whileontheotheritappearscomfortablethatitunderminestheintentionsandpurposeoftheACL.Personalimportationofmotorvehiclesbyindividualsthatbypassestablishedlocaldealernetworksorotherregulatedprocessesareeffectivelyaffordednoconsumerprotection.Essentially,itwouldbeverydifficultorimpossibleforconsumerstobeabletoaccesstheACLtopursueclaimsagainstoverseassellers.AsGovernmentestimatesshowthatapproximately30,000vehiclesperannumwillbepersonallyimportedintoAustralia,thishasthepotentialtoseeadramaticescalationinconsumergrievances,withlittlecourseforlegalredress.Inadvertently,theburdenofundertakingrepairstothesevehicleswillfallonlocaldealershipsandrepairersthatmaynotbeabletoperformrepairsandservicingonthesevehicles,astheyarenotmodelsintendedforAustralia,andareaffectedbythelackofavailabilityofpartsandtechnicalrepairinformation(alsoatoddswiththeACLrequirements).ThelikelyconsequenceofthisdecisionwillbearefusaltoworkonorprovideadviceonthesepersonallyimportedvehiclestoconsumersbybusinessesforfearofACLclaims.Motorvehicledealershipsarealsounlikelytoacceptsuchvehiclesastrade-insduetotheinherentrisksinvolvedwithACL,therebycausingfurtherangstandgriefamongstconsumers.

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Eveniftheydoforthesakeofoverarchingbrandreputationprotection,howwillthedealerbeprotectedfromanyresultingproblemsthatmightarisedespitebestendeavorstorepairthevehicle.Regulatorsandvariouscompetitionreviewshaveadoptedinconsistentviewsonhowtobestprotectconsumerinterestsinregardtopersonalimportofnewornearnewvehicles.Initialretailpriceisnottheonlydeterminantofconsumerprotection.Physicalsafetyisatleastasimportanttoconsumerprotectionaspricingconsiderations.Thefullcostofproviding,maintainingandservicingaproduct,andaccesstoremediesunderACL,alladdtothelifetimecostofaproduct.Thesefactsneedtobeconsideredwhendetermininghowbesttodeliverconsumerprotection.Itcouldbearguedthatinthisinstancethereisaclearimbalanceofadifferentperspectivewhereconsumerprotectionhastakenabackseattoeffectivecompetition–eventhoughinamarketof67brandsand400modelvariantsofthosebrands,apparentlyconsumerchoiceisstillnotsatisfied.Inthiscontext,theMTAAandMembersrestatetotaloppositiontochangestotheMotorVehicleAct1959toallowforpersonalimportsofnewandnearlynewcarsandmotorcycles,whichseektoweakenphysicalsafetyconsiderationsaswellasincreasethefinancial,safetyandprotectionrisksforconsumer.

LemonLaws

TheMTAAandMembersstronglyopposefurtherpenaltiesandsanctionsunderACLformotorvehiclesexperiencingrepeatedfaults.

InAustralia,thereislittleempiricalevidenceinexistencethatsupportstheconclusionthatthereisaneedforalegislativeresponse.Therecent2016‘TurningLemonsintoLemonade’surveyfromconsumeradvocateChoice,andTreasury’s2016AustralianConsumerSurveyarebothunabletooffervalidsubstantiationofreportedmotorvehiclefaultsasbeingamajorconsumerproblemwarranting‘lemon’laws.Similarly,the2015Queensland‘Lemon’lawsinquiryfoundcomplaintstotheOfficeofFairTradingoverthepreviousfouryearsabout‘lemons’representedlessthan1%ofcomplaintsregardingmotorvehicles.InVictoria,whichalreadyhasstatebased‘lemon’laws,thenumberofcomplaints,priortotheintroductionofthoselaws,totalledlessthantwodozenannually?1

Doesavehiclethathasmultiple,separatefaultsconstitutealemonordoesthevehiclethathasthesamefaultfailrepeatedlyconstitutea‘lemon’?Itisentirelyunreasonabletolegislateagainsttheformer,andtheredoalreadyexistprotectionsfromStatutoryWarrantiesthataddressthelatter.

Additionally,theissueofwhetherafaultoccursbecauseofproductfailureorbecauseofpooruse;unreasonableexpectation;naturalwearandtearorinappropriatevehicleselectionforagiventaskishighlysubjectiveandhasamaterialimpactontheperformanceofavehicleandontheefficacyofanyrepairs.

TheFederalChamberofAutomotiveIndustriesundertookasurveytodeterminethesizeandextentofvehiclecomplaintsinAustralia.

1 Consumer Affairs Victoria, Inquiry into Lemon Laws, 2007.

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Thatsurveyfoundthat55%ofcasesaresettledpriortodeterminationbyatribunal,40%areresolvedinfavourofamanufacturerandonly5%areresolvedinfavourofthecomplainant.2Thissuggeststhatvehicledealersareactingresponsiblyandprovidingappropriatelevelsofconsumersupportfortheirproducts.

Theriskofintroducingbroad,illdefined,‘lemon’lawsisthattheywillactuallyincreaselitigationcostsforbothdealersandconsumers,whoreceiveminimalbenefitgiventhat95%ofcomplaintsareeitherresolvedamicablyoragainsttheconsumer.

ACLalreadyprovidessufficientremedyinthesematters.Anincreaseinthecomplianceburdenwillnotimprovethefaultrateexperiencedbypurchasers,asthemoredefinedthelegislationisthegreatertheexclusionofspecificfaults.

Themodernisationofthevehiclefleetandthehighleveloftechnologicalintegrationhavemadediagnosisofvehiclefaultsincreasinglycomplex.

Repairorreplacementofafaultcanberelativelystraightforwardoncethecomponentatissueisidentified.However,itisdiagnosisthatposesthebiggestobstacletoaddressingfaults.Asanexample,identifyingwhereanelectricalsystemismalfunctioninganddiagnosingthespecificcomponentthathasfailedismultifacetedandofteninvolvesmultiplecomponents.

Thesuccessorotherwiseoftheattemptedrepaircannotalwaysbeimmediatelydeterminedgiventhehighlyintegratednatureofmodernelectricalcomponentsandsoftware.Thistypicaldiagnosticprocessshouldnotformthebasisfor‘lemon’lawsinAustralia.

ProductSafetyStandards

MTAAandMembershaveconcernsaboutthenatureofproductsafetystandardsinAustralia.Ashighlightedabovewiththecaseofpersonalimportationofnewornearnewmotorvehicles,standardsshouldnotallowfortheimportationofproductsthatareunsafeintotheAustralianmarket.

TheMTAAandMembersareawareofseveralsituationswherecurrentACLprotectionsarenotadequate.

MTAAdrawsattentiontoexamplesprovidedinMTA-SA’ssubmissioninregardtowheelrimsasanexample.Thisexampleillustratestheproliferationofvariousvehiclecomponentsavailableonline,suppliedabsentessentialfeatures,sometimesofdubiousstandardsandrequiringalterationormodificationforfitment,posingseriousconsumersafetyrisks.

TheACLshouldbeamendedtoensureAustralianlevelsofqualityandsafetyarereflectedininternationalstandardsinlinewithourinternationaltradingpartnersandsourcemarkets.

NewBusinessModelsandACL(ExtractfromMTA-SAsubmission)TheMTAisconcernedthataspateofnewbusinessmodelsposeseriousconsumerriskandthreatentocreatestructuralimbalancesincertainmarketsthatunderminefairtradingandeffectivecompetition.

2 Federal Chamber of Automotive Industries, Response to ‘Consumer Rights: Implied Conditions and Warranties’, 2009

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Firstly,governmentsponsoredauctionhouses,particularlyformotorvehicles;floodthemarketwithparticularmodelsofvehiclesatmuchcheaperpricesthanintheretailmarket.Theyareabletodothisbecausethestandardstatutorywarrantiesandaftersalessupportprovidedbylicenseddealersarenotoffered.

Ontheotherhand,thesevehiclesareofsuchconcentrationandthethroughputofthesevehiclessohigh,licenseddealersarecompetingagainstapricefloorsetonanunevenplayingfieldbytheauctionhouses.

ACLshouldrequireauctionhousestoprovidethesamewarrantiesandguaranteesandlicensedvehicledealers,withcostsborneeitherbytheauctionhouseorrecoveredfromthesellersaspartoftheauctionhousescommissionfees.

Secondly,theincreasinguseofonlinesales,marketingandconsumerinteractionposenewrisksforbusinesses,particularinthesocialmediaspace.

TheUK’sCompetitionandMarketsAuthorityhasidentifiedthatupto£23billionofspendingisinfluencedbyonlinereviewseachyear.3

Australianresearchhasidentifiedasimilarconsumerrelianceononlinereviewswhenmakingpurchasingdecisionsandpassingjudgementsonthequalityofbusinessestheyareconsideringtransactingwith.Nielsensurveyedover5000peopleandfoundthat71%ofpeopleread,discussedorcommentedonbrandsintheprevious12months.4

Similarly,aSensissocialmediasurveyfoundaround67%ofrespondentsreportedreadingonlinereviewsorblogsbeforemakingapurchasedecision,thoseaged30to39weremostlikelytodosoandonaverage,andpeopleexpectedtoread3reviewsbeforemakingadecision.5

EvidencefromtheUnitedKingdomshowsthatmaliciousonlinereviewscost20%ofbusinessesofuptoA$60,000annually.6

SlaterandGordon7makethepointthosebusinesseswithlessthan10employees(halfthantheFederalGovernment’sdefinitionofasmallbusiness)maybeentitledtopursuedefamationactionagainstcertainonlinereviews.

Tobesuccessful,suchabusinesswouldneedtoprovethattheonlinereviewwasnotthehonestlyheldopinionofthereviewerorthereviewwasmalicious,i.e.damagingtothereputationofthebusiness.

Conversely,abusinessmaybesubjecttoACLactionifabusiness“encouragesfamilyandfriendstowritereviewsaboutyourbusinesswithoutdisclosingtheirpersonalconnectionwithyourbusinessinthatreview,writereviewswhenyouhavenotexperiencedthegoodorservicereviewedorwhichdonotreflectagenuinelyheldopinion,solicitotherstowritereviewsaboutyourbusinessoracompetitor’sbusinessifthey

3 Oli Gross, Protection needed against 'malicious' online reviews, The Publican’s Morning Advertiser, June 2015, http://www.morningadvertiser.co.uk/Running-your-pub/Marketing/Protection-needed-against-malicious-online-reviews?utm_source=copyright&utm_medium=OnSite&utm_campaign=copyright 4 The Nielsen Company, New Online activities, services and devices bringing Australians more choices and new ways of doing old things, March 2012, https://www.iabaustralia.com.au/uploads/uploads/2013-10/1382457600_c1cbecde1fbbced6e44563f0dca379e9.pdf 5 Sensis, Yellow Social Media Report: What Australian People and Businesses are doing with social media, May 2014, https://www.sensis.com.au/content/dam/sas/PDFdirectory/Yellow-Social-Media-Report-2014.pdf 6 Rebecca Burn-Callander, Bad reviews and online 'trolls' cost UK businesses up to £30,000 a year, The Telegraph, May 2015, http://www.telegraph.co.uk/finance/businessclub/11635195/Bad-reviews-and-online-trolls-cost-UK-businesses-up-to-30000-a-year.html 7 Jeremy Zimet, Do Defamation laws apply to online reviews? Slater and Gordon, March 2015, https://www.slatergordon.com.au/blog/do-defamation-laws-apply-online-reviews

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havenotexperiencedthegoodorservice.Businessesandreviewplatformsthatselectivelyremoveoreditreviews,particularlynegativereviews,forcommercialorpromotionalreasonsmaybemisleadingconsumers.Ifthetotalbodyofreviewsdoesn’treflecttheopinionsofconsumerswhohavesubmittedthereviewsconsumersmaybemisled.”8

Theissuehereisthatonceagainthereisanunderlyingassumptionthatabusinesswillseektodoharmbytheconsumerandthereforemustbeaffordedagreaterlevelofprotectionthanabusinessesorbusinessownerwhocanbesubjecttocommentarythataffectstheirlivelihoodbecauseofadisgruntledcustomerwhomayormaynothavealegitimatecomplaint.

Theconsumermakingthecomplaintcannegativelyreviewtheproduct,andsimplybecauseitistheirgenuineopinion,befreetodamagethereputationandsalesofabusiness,regardlessofwhetherthecustomerfullyunderstandsthecapabilityoftheproduct,thebusinessesobligationsunderACL,iftheyareusingitcorrectlyorsimplysufferingbuyer’sremorse.

Evenifabusinessfeltstronglyenoughaboutparticularcommentary,engaginginonlinediscussions,evenifdoneprivately,oftenperpetuatethedisputeandprivatecommunicationsareoftenpublishedassomekindofproofoftheintransigenceofthebusinessinacceptingtheconsumer’sopinion.Thisleadsmanybusinessestosimplyforgorectifyingmisleadingstatementsmadebyconsumers.

ACLshouldbeamendedtoincludethesameprotectionsforbusinessesfrommisleadingconductbyconsumers,asconsumersarepartiestotransactionscoveredbyACLandthereforeshouldhavesimilarobligationstoactwithintegrityandwithdueregardtotheimpactoftheirconductonfairtradingandeffectivecompetition.

Additionally,onlinereviewplatformscanboosttheplacementofproductsandtheinfluencethereputationofthebrand.Unlikeconventionaladvertisingorevenonlineadvertising,theseplatformspurporttobeindependentassessorsofproductsandcompaniesactingintheconsumer’sbestinterest.

Itisusuallyundisclosedthatmanyoftheratedbusinesseshavecommercialrelationshipswiththereviewplatformsandareeitheraffordedascreeningprocesspriortoreviewsbeingpublished,oracteffectivelyasbrandboosterstotheircommercialpartners,oronlyincludethosewithcommercialrelationshipsintheirreviewspectrum.

Thiscreatesobviousdistortionsintheconsumer’spreferenceforgoodsandisclearlymisleading.

Suchrelationshipsandmethodologiesshouldbedisclosedprominentlysoconsumersunderstandhowratingsareawardedforbrandandbusinesses.Equally,star-ratingsystemsshouldalsoidentifyhowmanyreviewshavebeensubmittedthatcontributetothedeterminationofthestarrating.

AccesstoPurchasingandConsumptiondataTheproposaltoincreaseaccesstoaconsumerspurchasingandconsumptiondatashouldbeconsideredextremelycarefully.Academically,amoreinformedconsumermaymakebetterchoicesbutequally,exposingintellectualpropertyrightstocompetitors’jeopardiseslegitimatepropertyrightsundercommonlawandrisksdamagingeffectivecompetitionandfairtradingunderACL.

8 Australian Competition and Consumer Commission, Managing Online Reviews, May 2016, https://www.accc.gov.au/business/advertising-promoting-your-business/managing-online-reviews

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Section4–Conclusion

TheMTAAandthroughitmembersremainavailableatanytimetoassistthereviewteamwithmoredetailedanalysis,accesstoinformationorMemberbusinessconstituentstofurtherimproveanimportantAustralianLawanditssignificantroleinthenationaleconomyandforAustralianconsumersandbusinesses.

WhiletheframeworkoftheACLisunderstood,theMTAAbelievesthetimeisrighttoincorporatefurtherexpansionofdefinitionsandthresholdstothepointofanindustryspecificschedule.

Ifthereviewteamwouldlikeanyfurtherinformationoradditionalclarity,pleasecontacttheMTAASecretariat.

MTAASecretariat

May2016