Consumables is LegalVision’s weekly update on all things competition and consumer law. The update follows the activities of the national regulator, the Australian Competition and Consumer Commission (ACCC) – and keeps you informed about key developments relating to the Competition and Consumer Act 2010 (CCA) and the Australian Consumer Law (ACL).

Energy Retailer Zapped With Penalty For Misrepresentations

The ACCC has penalised energy retailer, Lumo, $10,800 for misrepresentations that their call centre staff made to consumers in February 2016. Lumo had shifted the blame for their increase in retail gas tariffs to the Australian Energy Retailer, when in fact, the energy provider’s decision was purely commercial. The ACCC does not view this type of conduct favourably and issued an infringement notice along with a penalty notice. The ACCC issues infringement notices for relatively minor contraventions of the Competition and Consumer Act 2010 (Cth). If the organisation does not pay the penalty amount, the next step is typically Court proceedings.

ASIC Shines the Spotlight on Dodgy Insurance Add-ons at Car Dealerships

The ACCC has issued a draft determination based on ASIC’s September 2016 report into add-on insurance products offered at car dealerships. The report revealed that while car dealers were paid $602.3 million in commissions over the past three years for insurance add-ons, consumers only received $144 million in successful claims. Focusing on the consumer experience, of the $1.6 billion dollars spent on premiums, consumers saw only 9% returned in claims.

Car dealers sell add-on insurance products at the time the consumer is purchasing a vehicle. When consumers haven’t done any homework on insurance, and want to close the deal, it’s easy just to say ‘yes’.

ASIC’s September 2016 proposal promoted capping commissions to 20% to disincentivise add-ons. Currently, car dealers can earn 75%. ASIC presented the 20% cap as a way to work around market failures and predatory practice. For example, the report noted:

  • sales staff don’t know enough about the add-on insurance products to assess whether it meets consumer needs, and
  • specific product information is limited or completely absent, and
  • insurers also offer consumers up to 41 different products or levels despite many being ineligible or unsuited for several of these options.

Although the ACCC’s draft determination affirms that a ‘band-aid solution’ is not on the cards, it has not revealed what a long-term solution looks like. The ACCC expects to have a final decision in March 2017, so watch this space for their verdict.

Keeping an Eye on Petrol Pricing

The ACCC has released its quarterly report on petrol pricing. In 2014, the Australian Government directed the ACCC to keep an eye on pricing and profits of petrol retailers for three years to encourage competition. In December 2016, petrol prices across Australia peaked to the highest point since the June quarter of 2015.

Metropolitan car drivers in Sydney, Melbourne, Brisbane, Adelaide and Perth paid an average increase of 7.8 cents a litre. The price spike is largely due to the Organisation of the Petroleum Exporting Countries’ (OPEC) November announcement that crude oil production would be limited.

When shopping around for a better deal on fuel, consumers can try apps and sites such as GasBuddy, Motormouth and FuelCheck that use crowd-sourced data from motorists to highlight the exact prices at petrol stations around your location.

The Love Doctor’s Prescription

In 2016, online scammers took home a remarkable $25 million from Australians. 4,100 Australians looking for love contacted the ACCC’s Scamwatch to report dating scams in 2016 – making it the most profitable scam type Scamwatch tracked. Unsurprisingly, Facebook was the most popular contact method with scammers targeting those over 45. Ensure you stay alert when searching for your perfect match.

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Questions? Get in touch with our consumer lawyers and tune in next week for more Consumables.

Kirstie Le Lievre

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