Tamara Hunter, Joe Saunders, Taylor Macdonald and Vicky Kuo explore the government’s final stages of consultation on unfair trading practices.
Treasury is seeking feedback on a proposal to introduce a new prohibition on unfair trading practices into the Australian Consumer Law following the release of a further consultation paper in November 2024.
This round of consultation builds on the exploratory issues paper in 2023, and is the next step in the reform process, to be followed by Treasury preparing detailed options to amend the ACL.
Feedback on the design elements of the proposed general and specific prohibitions on unfair trading practices is due by 13 December 2024, with details on how to make a submission available here.
The Federal Government in October 2024 committed to legislating a new prohibition on unfair trading practices, with an intention to settle the final form of amendments in the first half of 2025 in consultation with State and Territory governments. While the timing of the next Federal Election may impact the introduction and passage of legislation, the policy development will continue.
1. Targeted policy proposal consultation
The Consultation Paper builds on the previous unfair trading practices consultation, which sought feedback on four policy options, from retaining status quo through to the introduction of both general and specific prohibitions on unfair trading practices. Stakeholder views in the initial consultation varied, with ‘Option 4’ – a combined general and specific prohibition on unfair trading practices – receiving the most support. As a result, the Consultation Paper is focussed on this proposal and seeks feedback on the design elements of the proposed new prohibition.
The proposal to introduce a new prohibition into the Australian Consumer Law (ACL) is made in the context of concerns that there are ‘gaps’ in the ACL, where unfair trading practices which cause consumer harm, including for example ‘dark patterns’ in ecommerce, deceptive pricing strategies (such as drip pricing and dynamic pricing), and other misleading practices which Treasury considers may not necessarily be caught by the existing ACL prohibitions on misleading or deceptive conduct, false or misleading representations, and unconscionable conduct.
2. Overview of proposed prohibitions
Treasury proposes to introduce both a “principles-based general prohibition” on unfair trading practices, including a grey list, as well as a series of “specific prohibitions” designed to address particular unfair trading practices.
2.1 General prohibition
The proposed general prohibition is intended to be principles-based and flexible, with the stated policy aim of providing a safety net to capture unfair trading practices which may evolve over time, in a similar way to the general prohibition on misleading or deceptive conduct.
Drawing on consumer protection regulation in the European Union, the general prohibition would capture conduct that:
- unreasonably distorts of manipulates, or is likely to unreasonably distort or manipulate, the economic decision-making or behaviour of a consumer; and
- causes, or is likely to cause, material detriment to the consumer (not limited to financial loss).
The Consultation Paper is seeking feedback on whether the concept of ‘unreasonableness’ or a ‘legitimate interest’ element should be incorporated into the general prohibition. For guidance, Treasury has set out a proposed ‘grey list’ of types of conduct which may comprise unfair trading practices under the general prohibition:
- the omission of material information where there is a reasonable expectation that the information be disclosed
- the provision of material information in a confusing manner, including in a manner that overwhelms consumers
- impeding the ability of consumers to exercise legal rights
- use of design elements in an online consumer interface that unduly pressures, obstructs or undermines consumers in decision-making (aimed at targeting ‘dark patterns’).
As these ‘grey list’ examples are high-level, there is a degree of uncertainty on how specific business practices may be caught by the general prohibition.
2.2 Specific prohibitions
In addition to the general prohibition, Treasury’s proposed policy response includes the introduction of a number of specific prohibitions targeting specific forms of unfair trading practices. The areas of focus are:
| Area of focus | Proposal or feedback sought |
| Subscription-related practices | Proposed requirements to address concerns in relation to unfair subscription-related practices, including requirements for businesses to:
|
| Drip pricing | Drip pricing is when a price is advertised at the beginning of an online purchase, but then extra fees and charges are gradually added during the purchasing process.
The ACL already contains provisions which require businesses to provide consumers with a ‘single price’ and general provisions around false or misleading representations and misleading and deceptive conduct. Treasury is seeking feedback as to whether existing provisions are adequate in addressing concerns arising in relation drip pricing. |
| Dynamic pricing | Treasury is seeking feedback as to whether existing provisions in the ACL (e.g., bait advertising) are adequate in addressing dynamic pricing (in which the price of a good or service increases during the purchasing process), and whether a specific prohibition should be introduced. |
| Online account requirements | Treasury notes consumer complaints about being required to complete a lengthy sign-up process to create an account and receiving unwanted marketing material as a consequence of creating an account. The concern is that consumers are required to disclose more personal information to a business than is reasonably necessary for the business to provide the product or service.
Treasury is seeking feedback on whether a specific prohibition in relation to practices where online purchases require the creation of an online account, noting the regulation or personal information under the Australian Privacy Principles and the regulation of marketing materials under the Spam Act 2003 (Cth)). A proposed requirement is for businesses to provide ‘guest check out’ option for online transactions. |
| Barriers to accessing customer support | There is currently no specific obligation on businesses to provide a point of contact or minimum level of customer service for general consumer queries.
Treasury is seeking feedback on whether the proposed general prohibition on unfair trading practices would be sufficient to capture failures to provide consumers with adequate access to customer service support, or whether there should be a specific prohibition to target this type of conduct. |
2.3 Penalties
Treasury is seeking views on how penalties should apply, and the most appropriate approach for implementing any penalty regime. In response to the exploratory issues paper in 2023, submissions advocated for penalties to apply from the introduction of the regime and for penalties to be in line with other breaches of the ACL (being the greater of $50M, three times the benefit or 30% of turnover). Counter to that, other submissions proposed a staged approach that would see the unfair trading practices provisions introduced and then a period of time allowing for businesses compliance to occur and judicial consideration to develop before penalties would be available.
It is proposed that penalties be introduced from the outset of any unfair trading prohibition.
3. Further points for consultation and longer-term reform
At this stage the consultation process has focused on proposed amendments to the ACL. However, the Consultation Paper highlights that there will be a further round of consultation on whether the proposed unfair trading practices provisions should be mirrored in the ASIC Act to ensure appropriate alignment across the ACL and financial services laws.
Currently, the focus of the consultation has been on the proposed reforms only applying in relation to dealings with consumers. In the Consultation Paper Treasury proposes a staged approach with the prohibition initially applying to business-to-consumer dealings, before considering whether the prohibition should be applied to business-to-business dealings. This staged proposal follows a similar approach that was taken to the introduction of the unfair contract terms regime in 2010, which was then expanded to business-to-business dealings in 2016.
4. Input to the consultation paper and next steps from here
Treasury’s consultation landing page is available here. Written submissions in response to the Consultation Paper can be made to consumerlaw@treasury.gov.au until 13 December 2024.
The outcome of this consultation period will shape the options for amending the ACL, with Treasury set to prepare detailed options to amend the ACL following this final feedback. Next steps will then involve the preparation of a Regulatory Impact Statement setting out the preferred policy position, which will then be subject to consultation with States and Territories.
While the timing of the next Federal Election may impact the introduction and passage of legislation, it is clear that policy development will continue, with State, Territory, and Commonwealth levels of Government committing to the reform.
