Earlier in this series, we explored what conduct in advertising and marketing can amount to a breach of Australia’s Consumer Law (ACL). We now turn to what penalties the Australian Competition and Consumer Commission (ACCC) can enforce against businesses engaging in prohibited conduct including fines, injunctions and enforceable undertakings.
Penalties Under the ACL: Fines
The ACL under Chapter 4 sets out the enforcement provisions and remedies. As we mentioned earlier, the prohibition against making misleading representations amounts to a criminal offence, and the individual or business is consequently fined. A breach of section 18 will result in only civil remedies. Importantly, however, a business found to contravene section 18 will also likely have breached section 29.
For individuals, fines are of up to $220,000 and for corporations, $1.1 million. If several individuals are joined as defendants in proceedings concerning misleading and deceptive advertising, each will be fined accordingly.
Penalties Under the ACL: Injunctions
The court can also grant an injunction as well as damages to a person who has suffered resulting loss or damage from the conduct. Where the ACCC brings a prosecution against an individual or business, the court may also make several non-punitive orders including:
- A community service order;
- A probation order for less than 3 years;
- An order requiring disclosure of specified information; and
- An order requiring publication of a specified advertisement.
Penalties Under the ACL: Enforceable Undertakings
Perhaps as important as the ACCC’s penalties is the adverse publicity resulting from a breach of the consumer protection provisions. Consider a recent example in Queensland where a market-sharing cartel established to share the state’s market for fire alarm and sprinkler system tenders and to fix prices. As well as costing the firm $5 million in fines, articles were repeatedly published detailing the company’s involvement in the “scam” and distributed nationally. In the matters I have been involved in, it was the adverse publicity resulting from any action by the ACCC that dominated my client’s decision to consider the regulator’s settlement offers seriously.
Any enforceable undertaking given will form part of the ACCC’s public register, but in our experience will not be the subject of any media storm. To the contrary, the ACCC is well-known for publicising its court actions against those which it cannot persuade to settle. In fact, the ACCC has been criticised for misusing publicity. To the extent that it might amount to contempt of court where the regulator names the parties involved in legal proceedings, and the allegations made before the Court has heard the matter and delivered the judgement.
The ACCC’s use of publicity to enforce its agenda is to be expected and there is no reason to assume they will change their approach. It will greatly benefit businesses to consider carefully using clarity and truthfulness in all their business communications with their consumers.
LegalVision’s specialist advertising and consumer lawyers can review and vet all advertising and marketing collateral across all mediums. We can suggest changes to overcome any potential problems, and to ensure that your advertising material complies with the law.
Questions? Get in touch on 1300 544 755.