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Insights

Direct Selling Alert

Direct selling: implications of proposed changes to the Australian Consumer Law

| Published by Rohan Harris, Stephanie Quatela

The direct selling industry is likely to be significantly affected by recently proposed amendments to the Australian Consumer Law (ACL).

Consumer Affairs Australia and New Zealand (CAANZ) recently undertook an extensive review of the Australian Consumer Law. In its final report, released in April this year, CAANZ proposed a number of amendments relevant to the direct selling industry:

1. Voluntary recall requirements

Under the proposals, voluntary recall requirements will be strengthened by inclusion of a statutory definition and increased penalties for failing to notify a voluntary recall.

2. Powers to obtain information about product safety

The Australian Competition and Consumer Commission (ACCC) will have increased powers to obtain information about product safety from consumers and other third parties, rather than relying solely on information provided by suppliers.

3. Price transparency in online shopping

There is a proposed requirement that the headline price for online shopping should include any additional fees or charges associated with preselected options.

4. Application of the law to unsolicited selling

The proposals reinforce that unsolicited selling provisions apply in public places and that they are also intended to capture suppliers who negotiate with consumers, where the suppliers obtained the consumer’s contact details from a third party.

5. Softer evidentiary requirements for litigants

Under the proposals, private litigants will be able to rely on the defendant’s admitted facts from earlier proceedings in their own case.

6. Financial penalties

Maximum financial penalties will be increased in the ACL by aligning them with the penalty regime in the competition provisions of the Competition and Consumer Act 2010. For companies, this means the greater of:

  • the maximum penalty ($10 million), or
  • three times the value of the benefit the company received from the act or omission, or
  • if the benefit cannot be determined, 10 per cent of the most recent annual turnover.

For individuals, the maximum financial penalty will be $500,000.

The current state of play

These proposed amendments from the CAANZ report are widely viewed as being well-developed and could be implemented without any formal regulatory impact assessment.

The CAANZ report is currently being considered by government and the relevant consumer law regulators and could be implemented sooner rather than later. It is vital that you and your business are aware of how these amendments may affect you.

The ongoing review and likely reforms serve as a timely reminder to ensure that you have effective risk management and training in place around the current requirements and future changes, which we can assist you with.

For further assistance regarding the ACL and the proposed amendments, please contact Rohan Harris or Stephanie Quatela.

This article was first published in the DSA Connect Newsletter.

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