The sharing economy is growing, and platform operators must take care to comply with the Australian Consumer Law (ACL). The Australian Competition and Consumer Commission (ACCC) released two publications to assist platform operators, suppliers and consumers in the sharing economy to understand their rights and obligations under the ACL.
- Platform Operators in the Sharing Economy: A guide for complying with the competition and consumer law in Australia; and
- The Sharing Economy: A guide for private traders.
These publications provide a comprehensive description of the ACCC’s policies and practices for the sharing economy. Below, we summarise the ACCC’s guidelines as they apply to platform operators, buyers and sellers and explain the importance of complying with Australia’s competition and consumer law.
Platform Operators in the Sharing Economy
Platform operators act as the facilitators of the sharing economy – managing transactions, carrying out administrative functions and communicating between traders and consumers. The following principles set the standards that platform operators should meet in all aspects of their business, including publishing reviews, managing advertising and marketing and general dealings with consumers.
1. Be Transparent
Hiding, not disclosing or providing ambiguous information may mislead consumers. Therefore, the ACCC warns platform operators to be transparent in their pricing, fees, terms and conditions and policies. In particular, businesses should ensure that important information is disclosed prominently and not just in fine print at the bottom of the page.
2. Be accurate and honest
Platform operators must communicate business policies and processes accurately and honestly. ‘Phoenix’ activity remains problematic in the sharing economy (i.e. a person closes an existing account and then opens a new account on a platform in an attempt to reappear on the platform as a new member or user).
People often engage in phoenixing to overcome a bad reputation connected with their old account. Platform operators should be proactive in detecting such misconduct by:
- Being aware of the risks involved in phoenixing;
- Putting policies in place that prohibit such activity on their platform; and
- Ensuring there are systems and processes to detect phoenix activity, including clear identity verification processes for new users.
3. Effective review processes
Consumer reviews and ratings are perhaps the most effective form of promotion in our digital era. However, it’s easy to fake, amend or remove a review. As such, the ACCC looked at the review policies of 71 sharing economy platforms as part of the annual International Consumer Protection and Enforcement Network (ICPEN) sweep. The sweep revealed that 29 sharing economy platforms in Australia include reviews and more than two-thirds failed to disclose policies about how their review process operates. It’s not enough for businesses to merely ensure they do not actively post misleading reviews. The ACCC guidelines highlight the importance of imposing robust procedures to ensure that all reviews are honest and trustworthy.
4. Be fair in all dealings with consumers and traders
Consumers rely on platforms in the sharing economy, which can create a significant imbalance of power between the consumers and traders on one side, and the platform operators on the other. So, it’s important that platform operators comply with the consumer laws, including provisions relating to unfair contract terms, unconscionable conduct and consumer guarantees.
Sharing Economy Guidance for Private Traders
The ACCC recognises that many private traders who supply goods and services to consumers may not understand their rights and responsibilities under the ACL. Therefore, the ACCC has provided a set of guidelines to assist suppliers in meeting their obligations.
1. Don’t engage in misleading or deceptive conduct
Section 18 of the ACL prohibits a person from engaging in conduct that is misleading or deceptive or is likely to mislead or deceive. Private traders should then understand that conduct which may mislead consumers as to the true nature of the trader’s business or quality of its goods or services may breach the ACL.
2. Don’t make false or misleading representations
Section 29 of the ACL provides that a person must not make false or misleading representations. This includes statements, advertisements, images or direct representations conveyed to consumers. It is not always straightforward to know whether conduct will mislead consumers – so traders should always aim to be accurate and honest in all representations regarding their business. In particular, traders are warned against relying on fine print to absolve them from misleading statements.
3. Comply with the consumer guarantees
Any business that provides goods and services must comply with the consumer guarantees. These guarantees include meeting a certain standard when it comes to quality, matching the description of the goods with what is provided and using due care and skill when delivering a service.
Rights of Traders
The guidelines do not end at the trader’s obligations to consumers. The ACCC also emphasises the importance of understanding the rights of private traders when interacting with platform operators.
1. The right to not be misled or deceived
In the same way that you must not mislead consumers, you have the right not to be misled by platform operators. Therefore, any statements made by platform operators to you must be accurate and honest.
2. The right to consumer guarantees
When providing you with goods or services, platform operators must treat you as consumers and adhere to the consumer guarantees. If goods or services a platform operator provides to you fails to meet the consumer guarantees, you may seek a remedy (including a refund or compensation).
3. Refusal to supply
In general, platform operators have the right to refuse to let you use their platform. However, in some circumstances, the law may prohibit a refusal to supply a trade. For instance, a platform operator cannot refuse to let a trader use their platform unless the trader agrees to buy goods or services from a third party. This behaviour, known as ‘third line forcing’, is illegal under the Competition and Consumer Act. Some refusals to supply will also be prohibited if they result in a substantial lessening of competition.
4. Unfair contract terms
It’s important to know your rights regarding contracts and agreements. Just because a clause is in a contract, does not mean it can be fairly imposed. A term may be unfair if it creates a significant imbalance between you and the platform operator and would cause detriment if enforced.
The ACCC’s new guidelines send a clear message that those involved in the sharing economy are not exempt from Australia’s consumer laws. But don’t let these guidelines overwhelm or deter you – provided you adhere to the guidelines and have the appropriate policies in place, your platform can succeed. If you have any questions about your obligations under the ACL or setting up a sharing economy business, get in touch with our consumer lawyers on 1300 544 755.