The Treasury Laws Amendment (2018 Measures No. 3) Act 2018 (Cth) has introduced new tougher penalties for companies and individuals who breach certain provisions of the Australian Consumer Law (ACL).
What are the new penalties for companies?
The new maximum penalty for companies is the greater of:
- $10 million; or
- 3 times the value of the benefit directly or indirectly obtained by the company (and any related companies) which is reasonably attributable to the offence; or
- if the value of the benefit cannot be determined, 10% of the annual turnover of the company (and any related companies) for the 12 month period leading up to the commission of the offence.
Previously, the maximum penalty for companies was $1.1 million.
What are the new penalties for individuals?
The new maximum penalty for individuals is $500,000 (up from the previous maximum of $220,000).
Multiple Penalties
The maximum penalties will apply to each contravention, so companies and individuals could potentially face massive fines if they commit multiple contraventions of the ACL.
When do the changes commence?
The changes came into effect on 1 September 2018 but do not apply retrospectively.
Which aspects of the ACL do the new penalties apply to?
The new penalties apply to breaches of certain provisions of the ACL including:
- unconscionable conduct
- false or misleading representations about goods or services or the sale of land
- misleading conduct relating to employment
- misleading conduct as to the nature, characteristics and suitability of goods or services
- bait advertising
- misleading representations about certain business activities
- pyramid schemes
- supplies of goods or services that fail to meet safety standards
- supplies of banned goods or services
- non-compliance with product recalls
- supplies of goods or services that do not comply with information standards
What is the rationale for the changes?
The penalties were increased to bring them into line with penalties for breaches of competition law. ACCC Chairman Rod Sims stated in a press release that the new penalties were designed to:
- “hit the bottom line so they are not simply seen as the cost of doing business”
- “be high enough to be noticed by boards and senior managers so that compliance with the law is a high priority”
- “deter large companies from breaching consumer laws”
Given the current climate and community outrage over revelations from the Banking Royal Commission, it is likely there will be an increased focus by the ACCC on protecting the rights of consumers across many industries.
Takeaways
In summary:
- businesses should be mindful of the heavy fines that apply to breaches of the ACL
- businesses should expect the ACCC to more aggressively pursue breaches of consumer law
- large companies could potentially face fines in the billions of dollars if they are fined at the rate of 10% of the annual turnover of their corporate group
More Information
Please contact our commercial law team at Matthews Folbigg Lawyers on 9635 7966 if you require legal advice on the ACL or any other commercial issue relating to your business.
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