Wiggle Limited (Wiggle), an online sporting goods retailer operating out of the United Kingdom, has paid a $12, 600 penalty and given a section 87B undertaking after wrongfully representing to Australian consumers that the company was not liable for its faulty products under Australian law because it was based overseas. Following an ACCC investigation, Wiggle admitted that its conduct was likely be misleading to Australian consumers.
Wiggle’s Conduct
Between at least January and August 2018, Wiggle received complaints from Australian consumers who wished to rely upon their rights under the Australian Consumer Law that Wiggle made representations such as:
- Wiggle is not subject to the ACL,
- The consumer needed to contact the manufacturer rather than Wiggle in relation to a request for a refund or replacement of goods; and
- Wiggle would not consider a requested refund if the product had been used.
In addition, between at least 29 June and 9 July 2018, Wiggle advertised on their website that customers were entitled to returns in accordance with UK Consumer Law and that ‘Wiggle Terms and Conditions shall be governed by and construed with these in accordance with English Law. Disputes arising in connection with these Terms shall be subject to the exclusive jurisdiction of the English courts.’ [1]
In response to an ACCC investigation, Wiggle acknowledged that despite being a UK based company its conduct was likely to have contravened sections 18 and 29(1) of the ACL which prohibit companies from engaging in conduct or making representations which are false, misleading or deceptive. Wiggle also acknowledged that, in view of section 67(b) of the ACL, it was incorrect for Wiggle to claim that only UK Consumer Law applied to Australian customers and that terms and conditions would be construed in accordance with English Law. In fact, this section provides that the ACL will still be applied to the supply of goods to consumers in Australia despite consumer guarantees that purport to substitute the ACL with a foreign law.
Previous Application of the ACL to Overseas Providers
This is not the first time that an overseas supplier has been the subject of enforcement action under the ACL in respect of consumer guarantees. In 2016, a US-based video game retailer, Valve, was found to have misled Australian consumers as to their rights under the ACL. As discussed in our blog (available here), choice of law clauses purporting to cover contracts with the law of a foreign country will not be sufficient to exclude the application of the ACL. Earlier this year, Valve unsuccessfully appealed to the Full Federal Court of Australia, contesting the findings and $3 million penalty. The Full Court’s decision has reinforced that there is no wiggle room for overseas providers to avoid the application of the ACL when carrying on business in Australia. More detail on the Valve appeal can be found here.
Going forward, these decisions will undoubtedly shape the way overseas providers conduct their business in Australia.
Wiggle’s Undertaking to the ACCC
Somewhat unusually, Wiggle agreed both to pay a penalty pursuant to an infringement notice and give a section 87B undertaking: most investigations leading to a negotiated result have tended to use one or the other.[2]
Section 87B undertakings are employed as an alternative to costly and lengthy court processes and generally need to:
- acknowledge the wrong doing;
- include a commitment to cease the conduct which has lead to the alleged breaches and not to recommence it;
- provide redress for parties adversely affected by the conduct. Common forms of redress include corrective advertising, refunds, and education programs;
- help prevent future breaches through the implementation of compliance measures, and
- increase public awareness through general education and deterrence.
Wiggle’s willingness to concede that its conduct was likely to have contravened the ACL was no doubt influenced by the Valve decisions. Wiggle has agreed to pay the infringement notice and has publicly committed to take measures to prevent similar contraventions in the future through a section 87B undertaking.
Wiggle has given an undertaking to:
- not make false or misleading representation to Australian consumers regarding their Consumer Guarantee rights under the ACL;
- establish, implement and maintain a Competition and Consumer Compliance Program, designed to raise awareness of the obligations under the ACL and minimise the risk of future breaches of the ACL; and
- undertake an annual review of its program.
What Now?
The number of overseas providers of consumer products is ever expanding in Australia and they remain on notice about trying to skirt around the boundaries of the strict ACL.
Blog readers and consumers alike should watch this blog closely for any further overseas provider sagas that may unfold.
[1] Wiggle Limited – Section 87B Undertaking – signed 11 December 2018.
[2] The other known exception to this is the Australian Hearing Services (September 2018).