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2019 saw a continued trend of record-breaking fines imposed against companies for breaches of the Australian Consumer Law – for example:

  • Cornerstone Investments Pty Ltd (trading as Empower Institute) was fined $26.5 million – then the highest ever aggregate penalty order imposed under the Australian Consumer Law for misleading or deceptive conduct and unconscionable conduct
  • this was topped later in the year by Volkswagen’s record fine of $125 million for false and misleading representations in contravention of the Australian Consumer Law

Both cases involved particularly egregious breaches of the law as:

  • Empower Institute was found to have engaged in unconscionable conduct by using unethical sales tactics (eg, offers of “free laptop computers”) to sign up disadvantaged clients to expensive private education courses – the clients were mostly Indigenous, had poor literacy and numeracy skills, were from disadvantaged remote communities, and the company knew or ought to have known that most of their clients were unlikely to pass the courses but would be saddled with large student debts
  • in a well-publicised case, Volkswagen was found to have intentionally deceived regulators around the world by installing software in its vehicles to ‘cheat the test’ and comply with diesel emission standards, when in reality its cars exceeded emission standards during normal driving – this also involved false and misleading representations made to consumer

Interestingly, both of these cases were decided under the old Australian Consumer Law penalty regime whereas under the new Australian Consumer Law penalty regime (which applies to acts, omissions or offences occurring on or after 1 September 2018), the maximum penalty for companies for each contravention of the Australian Consumer Law is the greater of:

  • $10 million; or
  • 3 x the value of the benefit directly or indirectly obtained by the company (and any related companies) which is reasonably attributable to the contravention; or
  • if the value of the benefit cannot be determined, 10% of the annual turnover of the company (and any related companies) for the 12 month period leading up to the contravention

Thus, if these companies were to commit the same contraventions today they would face significantly larger penalties.

Action:

To assist businesses to meet their obligations, we presented a webinar on the Australian Consumer Law including a discussion about unconscionable conduct and misleading or deceptive conduct in November 2019, a copy of which can be viewed on our website: https://www.matthewsfolbigg.com.au/media/#75910-commercial-law-media-page/77097-commercial-law