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The most efficient way for consumers to get what they want is through the ‘market’, not the government, but businesses have more power than their customers. Some businesses can and will use abuse this power and cheat and steal from consumers to make money. Because of this, the government regulates the behaviour of businesses to have a market economy that functions properly. These laws mainly protect consumers against; misleading/deceptive representations, unconscionable conduct, unfair contracts, and unsafe goods and/or services.
To protect consumers, different legal and non-legal approaches have been taken.
Statutory protections by the government, like the Australian Consumer Law (ACL) and the National Credit Code (NCC), and by the state, like the Fair Trading Act 1987 (NSW) and the Contracts Review Act 1980 (NSW), help regulate businesses and protect consumers. Under section 29 of the ACL, businesses are prohibited from making false claims about their products and/or services. In the ACCC v. Harvey Norman 2012 case, 4 Harvey Norman stores were found guilty of making false or misleading representation regarding consumer guarantee rights.
The misrepresentations were made orally by sales people in the store. The Court recognised the issues and penalised the stores, issuing fines and ordering them to display in-store signs displaying corrective notices and implement a consumer law compliance program. Out of the four stores, two of them ceased trading in May 2013. This demonstrated how effective the consumer law achieves its objectives.
Independent governmental statutory agencies also help in enforcing the ACL and help to bring attention to businesses that are not complying with the law and help to fix the problem.
An independent statutory body called the Australian Competition and Consumer Commission (ACCC) aims to make markets work for consumers, now and in the future. The ACCC helps to keep the market safe and fair for consumers. A major business brought to the attention of the ACCC was found to be making misleading claims. Coles claims and advertises that its bread is ‘baked today, sold today’ and ‘freshly baked in-store’. It was found that the bread was not, in fact, baked in Australia, but partially baked months earlier in overseas factories. Coles accepted a guilty verdict and claimed that new packaging was already being produced. Coles could face fines of up to $1.1 million per breach. This demonstrates how effective the ACCC is in enforcing the ACL but penalties may not be harsher enough. For a large business, like Coles, $1.1 million is not that much of a penalty compared to the profits it makes.
Non-statutory protections to help the ACL in achieving its objectives can be just as effective as statutory protections. One protection is the media. The media is a very powerful tool and can wreak havoc on the profitability of a business. To stay out of the harsh spotlight that is the media, businesses tend to ‘straighten out’ really quickly if found to be in breach of a section of the ACL. This helps to protect consumers to the degree that it makes businesses comply with the law quickly but it doesn’t stop them from doing it to stat with until they get caught.
Another non-statutory measure in protecting consumers is through External Dispute Resolution Schemes (EDR). An example of an EDR is the Financial Ombudsmen Service (FOS) which helps to protect consumers in matters regarding credit loans. The FOS is a cheaper, faster way of reaching a solution to a conflict between a consumer and a business. These solutions have been unbiased, 50% benefiting the consumer and 50% benefiting the business. Rather than taking a business to court, a consumer can go to a FOS where a solution can be reached quicker and cheaper but this decision is final, regardless of which party it benefits. This non-statutory body is very effective in protecting consumers from businesses to the extent that it reaches an unbiased solution but an issue has already occurred.
There are statutory and non-statutory measures taken to protect consumers and the market economy. Statutory measures like the ACL (Cth), NCC (Cth), Fair Trading Act 1987 (NSW), and the Contracts Review Act 1980 (NSW) create laws and regulate businesses. Different non-statutory bodies, like the media and EDR schemes (e.g. FOS), help to enforce the laws made by the state and government.. Together, they help to achieve the objectives of consumer law in protecting consumers against misleading/deceptive representations, unconscionable conduct, unfair contracts, and unsafe goods and/or services.
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