I sit on the Commerce Select Committee and we have been covering the Consumer Law Reform Bill which has just been reported back to the house. This Bill, which proposes the most significant changes to consumer laws in more than 20 years, is a substantive and complex piece of legislation which updates a number of laws including the Consumer Guarantees Act (CGA) and the Fair Trading Act (FTA).
Despite intensive lobbying from big businesses, our committee recommended further substantive changes to the Bill:
- Tripling the penalties for breaches of the FTA
- Compulsory interview powers for the Commerce Commission so people have to answer their questions
- Provisions preventing unfair contract terms in standard form contracts
- Protections that will now cover all transactions between traders and consumers including auctions which were previously excepted
Most significantly for conscious consumers, the Bill proposes a prohibition on making “unsubstantiated representations”. This is a biggie as it means that the onus of proof about a claim will shift from the Commerce Commission onto the business instead. Businesses will have to prove the claims that they make about their products are true. We think this is really important so that consumers can be confident that their decisions to buy products for environmental reasons for example, are based on the truth.
Unsurprisingly this change was strongly opposed by many businesses who basically argued that it would be too expensive to require them to provide evidence for their claims – a weak augment that the committee rightly rejected.
However we did take on board concerns about the possible impact on advertising creativity by making it clear that the provision does not cover representations that a reasonable person would not expect to be substantiated. I am sure that the promoters of a certain high profile product will be relived that they do not have to provide evidence of wing growth!
In the committee stages I will be pushing hard to ensure that the Bill retains all of these clauses, and for the prohibition on unsubstantiated representation to be strengthened by giving the Commerce Commission the ability to issue power of substantiation notices, as is the case in Australia.