We’ve got a test for you! Our friends in the legal team have devised a short story to test your knowledge of the Australian Consumer Law (ACL). Come on a road trip with us, checking out cafés across the Great Australian Bight and then up our eastern seaboard. As a small business owner, it’s important that you understand your responsibilities to customers, so have a read of the answers below and get in touch if you have any questions.
My friend and I went to the Scarborough café* in Port Adelaide on Labour Day several months ago. The café doubles up as a fish and chips shop during the Port Festival, which was on during our visit. When we ordered our food, we were told that we had to pay an extra 10% since it was a public holiday. There was no sign or text regarding this on their menus. Does the café’s practice comply with the ACL?
No, the cafe does not comply! Under the Australian Consumer Law, the menu must display that a surcharge for food and beverages applies on the specified day in a way that is transparent and prominent. Notably, however, cafés and restaurants fall under an exception to the total minimum price rule under the legislation so that they do not have to print new menus and update prices altogether for public holidays.
We went to the Scarborough café because we saw a community news channel advertisement of a seafood brunch for two deal for only $19. The TV ad did not display any terms and conditions, but they told us we still had to pay the surcharge. Does the café’s practice comply with the ACL?
No. Under the national legislation, the exception to the total minimum price rule for restaurants and cafés does not apply when advertising on television. So the Scarborough café should have clearly indicated in its advertisement that prices are subject to change during public holidays.
We then rolled into Victoria and went straight to a café in St Kilda. A blackboard beside the espresso machine read: “‘Fair Trade Coffee Only!’ We stand in solidarity with the workers of Brazil”. I chose to visit this café because I’d heard from friends that it was unique in that it seriously considered its social impact. I commended the barista on being aware of food ethics, and he replied, “Only half our coffee is fair trade, but we tell our customers it’s all fair trade”. Does the café’s practice comply with the ACL?
No. Under section 29 it is illegal, among other things, to make a false or misleading representation regarding the quality or standard of a product. Since the café has represented that its coffee is fair trade ‘only’, it has likely breached section 29.
After that, we drove north and turned east from the Aussie Alps to get to Sydney. We chose a small café by the name of Federation Funk*. The barista offered my friend $10 over the counter if she would give the café a rating on its FB page. My friend just gave the café a 2-star rating and the café commented below “Thanks, Jane! We hope you visit us again!” Does the café’s practice comply with the ACL?
No. The café may be liable for misleading and deceptive conduct under the ACL. Despite the low review, the café would generally be expected to disclose that it had a commercial relationship with the reviewer.
What if the barista had come over to our table and offered $10 over the counter if my friend gave the café a 4-star rating or above on its FB page. My friend then gives the café a 4.5-star rating and the café comments below the review: “Thanks, Jane! We hope you visit us again! Disclosure: this patron was under a commercial relationship with the café.” Would the café’s practice comply with the ACL?
No. The café may be liable for misleading and deceptive conduct under the ACL. While the café may offer an incentive in exchange for a review, it should be open to complimentary or critical reviews. Limiting its reviews to “4-star and above” would likely amount to misleading or deceptive conduct.
On the other side of the café we see a patron enjoying her latte so much, that she takes to the café’s Facebook wall to exclaim how Federation Funk’s coffee contains half as much sugar as its competitor across the road. The left panel of Federation Funk’s Facebook page claims that the business typically responds to queries within 1 hour. The café owners take three days to respond to the patron’s dubious claims, by which time the business owners of the competitor café have written at length in the post’s comments section how they use much less sugar than claimed. Federation Funk apologises for not having managed their social media effectively, disputing the patron’s claim and deleting the comment. Does Federation Funk have a responsibility to respond to the customer’s claims of another business? Does Federation Funk’s practice comply with the ACL?
Possibly. A business may be responsible for misleading comments posted by others on social media pages of a business. The café should at all times be quick and responsive to feedback as this is conducive to positive customer relations with the business. However, there is no set rule about how much any given business should manage its social media, for the purpose of weeding out misleading statements. The Australian Competition and Consumer Commission (ACCC) has weighed in on the monitoring of social media pages, noting the smaller the business by staff size and follower base online, the less it is expected of a company to monitor its social media presence regularly. Given that Federation Funk is a small café with limited staff, it is unlikely that they would be held liable for misleading and deceptive conduct.
My friend and I went to a café in Fortitude Valley today. The sign on the front of the café read: ‘Free Wifi, Come Inside!’. I went in specifically because I needed to send off an email before I went to work. I tried accessing their network, but it didn’t appear on my mobile phone. I asked the barista, and he said, “We advertise free wifi, but the network has been down for a few weeks.” Does the café’s practice comply with the ACL?
No. Under section 18 of the ACL, the advertising of free wifi may be deemed misleading and deceptive conduct. Further, though less likely, it is possible that the section 35 prohibition on bait advertising could apply in situations like this.
As you can see, the Australian Consumer Law plays a very important role in the operation of cafés, restaurants and many other small businesses. It’s important to be aware of the rules you must follow properly to maintain the success and reputation of your enterprise. Some key considerations for cafés include: properly displaying surcharges, accurately representing the quality or standard of a product and not engaging in misleading conduct. If you have any other questions regarding consumer law or the operation of your business generally, get in touch with our consumer lawyers on 1300 544 755.
*Café names are fictitious and any resemblance to actual businesses are purely coincidental.