Are businesses being deterred for breaking the Australian Consumer law? We don’t think so and have called for higher penalties for businesses that breach the ACL.
For example, @JemmaCastle’s recent investigation found Pirovic Enterprises was hit with a $300,000 penalty for selling “free range” eggs (they weren’t). However, the company made more than double selling those eggs. Another one - Coles was ordered to pay a $2.5m penalty for misleading claims about its bread being “baked today, sold today” but the profit was around $7.28m.
Yes I totally agree. If you can make $10m doing something illegal and risk only a $500,000 fine then it would make sense to a lot of shady businesses to do so. I was looking at a high profile case in the building world where a fine of $180,000 was levied and yet the profit from doing what the builder did was going to yield many millions. It is regarded in the trade as just an expense of doing business. It is absolutely fundamental that much larger fines can be levied to discourage illegal operation otherwise we can expect shady operators to continue breaking the law.
There is also comment in the article from consumer law expert Jeannie Paterson that a fine could also be a percentage of the profits, which is an interesting idea.
I agree that these fines are often viewed as just another cost of sales.
The fines levied should be greater than the profits made by their transgression(s) and large enough to ‘hurt’.
Because in the public is generally unaware of the transgression and subsequent penalty, I also believe that these businesses should be legally required at their cost to advertise at EVERY point of sale the penalty and the reason(s) for it for a specific period, say 3 months.
Unfortunately, the fines imposed by the courts or ACCC do not help consumers who have been duped or sold faulty goods, Therefore, these consumers should be able to get refunds from their retailer (with proof of purchase of course). If it is an importer or wholesaler, the retailer then claims back the money from the retailer. This would be advertised on the notices at all the points of sale.
The subsequent loss of sales and cost of refunds on top of the significant fine would be the only way to deter these businesses from just treating it like they were spending petty cash.
Nice one @meltam. Even enormous fines have their limit of effectiveness, a signal at the POS would have the chance to educate and affect buying behaviour.
Unfortunately our illustrious governments would not make many requirements for any advertisement. I can imagine 1/2 pt font on the side of a pinhead attached to the POS terminal, and a paragraph displayed for somewhat less than a millisecond on a TV ad. Why? Highlighting it so we could understand what they did might hurt their profits (and thus donations) and cannot have any of that, can we?
The only time a penalty works is when it almost but does not quite put a company out of business. You want them to be hurt but not so badly people lose jobs or the tax base is reduced because of management decisions. Of course making managers as well as directors personally responsible for fraudulent bahaviour with jail time attached might work a treat.
Nothing will change until the Captains of Industry are gaoled for their actions. Fines, regardless of how large they are, are a complete joke - the company pays, and the people responsible are given multi-million dollar bonuses.
I think the signs would be where the product in question would be displayed, and the sign sizes proportional to the infringement. The larger the infringement, the larger the sign. The fonts sizes would be mandated to be legible.
I agree with jail time for those responsible. I can’t remember any of the finance company directors etc going any jail time. They all had time to rearrange their finances so they continued to live in luxury while their former clients went to the wall.
@meltam@BrendanMays@PhilT
When Coles were busted for their misleading claims of ‘fresh-baked bread’, they were instructed to display very obvious signs at their service desks and in their bakeries.
Earlier in the year Optus disconnected us for no reason other than its own negligence. It took over 2 months for the service to be restored. During that time we contacted (early!) the TIO (Telecommunications Ombudsman’s Office and the Minister’s office (Mitch Fiifield).
I discovered to my horror that the TIO was a commercial enterprise and its name was clearly meant to deceive the public into thinking that it was a government run organisation. It is not. The Minister sent me links to legislation for compensation but did nothing. We subsequently discovered that the legislation is worthless as there was an out whereby a telco could claim a MSG (Mass Service Disruption) and avoid any compensation. This is what Optus did and it did not pay a single dollar for having thrown our lives into chaos for over 2 months let alone the significant cost of using alternative communications devices and having to go to places where these were available. Optus claimed a 2 month MSG and when I asked for proof no response was made.
Governments have indeed acting fraudulently and much legislation has been put in place with holes for business to have an out if the cost of their behaviour becomes more than a token cost. Optus is a badly run business which employs overseas people in Call Centres which do nothing no matter how many times one rings them and which refuse to transfer calls to Australia for resolution. The sacking of another 500 local employees of late would only add to this behaviour. God help anybody who uses this telco. We’re gone and will never be back despite having been with Optus for 10 years. You never find these things out until this sort of thing happens but by then you are done.
Another out that I discovered when my landline and internet was out many days because of incompetence, and the telco gives you credit for mobile use/mobile data, whether or not it covers your costs to “keep live”, they are thus deemed to have provided service and you are only due a daily adjustment not the Consumer Landline Guarantee. In the end I got about $85 credit when the CLG would have been about $350.
Government is brilliant at window dressing and protecting business, while only going through the motions in protecting us. Even the ACL, as good as it looks, is essentially toothless if a company wants to ignore it, excepting in the most egregious cases when government has no choice but to step up and prosecute.
We received not one red cent from Optus. Legislation was ignored and this is how the telcos work. Our only option was through the courts and after a quote for $5000 a day I cut my losses and had to accept that Optus negligence is politically and legally acceptable because our elected puppets intentionally turn a blind so that they can claim no knowledge. THEY ALL KNOW!
I live near an oil refinery . They used to regularly have "burn offs " at night . Strange spills were found in Koroit Creek etc . They used to get fined the usual $250,000 then apologise to the local community ., sponsor the local libraries , subsidise free pre- school and kindergarten centres and them burn off again and release noxious effluent into the creek again and get fined again , apologise etc again . See when you are making Billions of Dollars profit every year it appears in Australia you can do whatever you want without , or very minor , repercussions .
Here’s an update of interest to the topic - the courts recently sentenced an electronics store operator to imprisonment after breaching the Australian consumer Law.
Not profits, needs to be gross revenue, otherwise it gets all hidden in overseas accounts as “loans” and other tax avoidance schemes.
Percentages are a much better system than fixed dollars. Some of the scandanavian countries do with the traffic fines. That way, a rich guy in a new Rolls gets hit equally as much as the pensioner in a 30 year old Honda. It has to become more than just a “cost of doing business”.
Yes placing a given % as a fine eradicates any discussion as to what is substantial enough. But in things like your speed was in this bracket so your fine is this %, the outcome is known because the line that is crossed is a fixed value. The problem lies when a Court has to decide what factors make an offence worth x amount of dollars rather than y amount of dollars, even if a % is the guide they will say something is not as great or is greater than some other case and therefore should have some penalty imposed subject to that. How do you then tier the % penalties so that it accounts for these variances?
I am sure they could formalise it some way to accommodate this but it would be a huge undertaking I think. If it was then used I can just see the arguments about how this or that offence should be treated this or that way to increase or lessen the penalty. The arguments are already made in current cases as to why a penalty should be larger or smaller so perhaps the quantum arguments would not really alter. I guess though using the % it would give some certainty to the penalty once the level of offending had been determined. Would Courts be more likely then to reduce the determination to reduce the burden on an offender rather than risk them collapsing?
I think discussion could rage all day over what metric to fine on is better than another eg Gross Revenue vs Net Revenue/Gross Profit vs Net Profit. I agree that Net Profit is not a satisfactory level at which to apply the fine/penalty as too much can be ferreted away but that still leaves Gross Revenue and Net Revenue and the business you are seeking to fine/penalise. If for example you consider XYZ (a fictional company for the purposes of an example) that manufactures, produces and sells goods vs a corner store. XYZ as a Producer/Manufacturer and Seller of goods might be a good example of when Gross Revenue was a good point of penalty application, however the corner shop might be a better candidate for Net Revenue as the penalty point.
As raised above in some posts public display of the penalty and offence/ruling should also be an obligation on the business, if national then nationally, if State or Territory then at least State or Territory wide, if local then at least locally eg City, Shire, District. The display should be for some reasonable amount of time and be obvious.
However in all of this without discussion and some decision making we will continue to suffer the status quo and I applaud all the posters ideas as they promote a better way forward than the current system which seems to not really discourage, or even at times seemingly rewards, bad practice.
