Consumer Electronics vendors like LG, who was recently caught lying about the performance of their products are set to face millions in fines after the Australian Competition and Consumer Commission were given new powers to fine companies and individuals.
Under the new legislation the ACCC can seek financial penalties of up to $1.1 million for corporations and $220,000 for individuals in civil cases for unconscionable conduct, pyramid selling and sections of the law dealing with false or misleading conduct.
Currently LG who are facing millions in fines, after Choice detected false labels and devices attached to their refrigerators intended to mislead, is in high level discussions with the ACCC in an effort to quickly settle any fines arising out of the incident which has resulted in product being withdrawn from the market and consumers compensated.
“The new law provides a more responsive national approach, through which the Australian Competition and Consumer Commission will be able to deal more effectively with matters that affect many consumers, particularly vulnerable consumers,” ACCC chairman Graeme Samuel said.
The ACL gives the ACCC new enforcement powers to protect consumers, including the ability to seek or issue:
civil monetary penalties
banning orders
substantiation notices
infringement notices
refunds for consumers, and
public warnings.
“Further the ACCC will be able to deal with ‘repeat or serious offenders’ by seeking court orders banning them from managing corporations,” he said. “This will now be available in cases involving unconscionable conduct, and breaches of various consumer protection and product safety provisions.
“The ACCC will now be able to use substantiation notices to require traders to justify claims they make about products they promote. These will provide a fast-track way to identify if a potentially harmful misrepresentation has been made. Examples could include was/now advertising and claims about food, health, environmental impact and business opportunities.
“Where the ACCC has reasonable grounds, it may now issue an infringement notice in cases of suspected unconscionable conduct, some false or misleading conduct, pyramid selling and various product safety provisions. Infringement notices will enable the ACCC to respond quickly to alleged breaches of these parts of the law and help facilitate a quick resolution of ACCC concerns with traders.
“Infringement notice penalties for false or misleading, unconscionable conduct, pyramid selling and breaches of product safety provisions are $6,600 for corporations and $1,320 for individuals.
“Vulnerable and disadvantaged consumers will particularly benefit from the ACCC’s new ability to seek redress through the courts for consumers who are not included in a particular legal action. For example, the ACCC could ask the court to order an unscrupulous trader to provide refunds to consumers affected by misleading conduct.”
Unfair contract terms are also covered in the new legislation with provisions applying to standard form consumer contracts. These come into effect on 1 July 2010 and public guidance will be circulated to major business and consumer organisations before then.
Mr Samuel said the Federal Government had foreshadowed further amendments to the Australian Consumer Law later this year.
