Misleading conduct by businesses still the ACCC’s biggest problem

Elizabeth Barry 25 July 2017 NEWS

sme owner

Reports about misleading conduct and false representations were nearly double the reports received about any other issue.

The Australian Competition and Consumer Commission's (ACCC) Small business in focus report, which details the Commission's activities in small business, franchising and agriculture for the first half of the year, has revealed that misleading conduct and false representations are still the most-reported issues.

There has been a focus on curtailing unfair contract terms this year, with not only the ACCC but also the Small Business Ombudsman and the Australian Securities and Investments Commission ramping up their activities to ensure small businesses are treated fairly.

The ACCC received 1,429 reports relating to misleading conduct in 2016-17, slightly down from the 2015-16 year (1,439). This represented more than double the number of reports from the next largest category for issues reported by small businesses. The ACCC received 643 reports about consumer guarantees from small businesses in 2016-17, down from 818 in 2015-16.

Misleading conduct and false representations were also the most-reported issues for franchise and agriculture although on a smaller scale. The ACCC received 58 reports from franchises in 2016-17 and in 2015-16 as well as 59 reports from agriculture in Jan-June 2017. The reported number for agriculture was slightly down from the 81 reports in the July-December period 2016.

The ACCC provides a detailed definition to both misleading conduct and false representations. Generally, "conduct" relates to actions and statements in advertisements, promotions, quotations and representations made by the person. This conduct is likely to breach the law "if it creates an overall impression among the audience about (for example) the price, value or quality of consumer goods or services."

An example is Sensis, the company that publishes the Yellow Pages, that had a clause in its contract terms which would automatically renew 12-month contracts unless they were explicitly cancelled.

False or misleading representations relate to goods and services supplied by a business. It is unlawful for a business to make false or misleading representations about goods or services "when supplying, offering to supply or promoting those goods or services."

A recent example of this comes from the dairy industry. The ACCC alleged that Murray Goulburn made false representations to Southern Mile Region dairy farmers regarding pricing forecasts.

Interestingly, the ACCC has had a drop in reports for small businesses in the previous six months, with the total number of reports and enquiries dropping from 6,968 to 6,397 from July-December 2016 to Jan-June 2017. However, more enquiries were received from franchisees, with the total of 319 up from 285 in the July-December 2016 period.

Picture: Shutterstock

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