Andrew Leigh:
Thanks for coming out today. My name is Andrew Leigh, the Assistant Minister for Productivity, Competition, Charities and Treasury.
Today, the Albanese government is announcing that, with the support of the states and territories, we’re moving to ban unfair trading practices. Specifically, we’re going to be getting rid of 2 practices that have been a scourge for Aussie consumers; subscription traps and drip pricing.
Subscription traps are a problem for 3 out of 4 Australians who have subscriptions. Many people have reported problems in cancelling a gym membership or in getting out of an online subscription.
We’ve heard reports of all kinds of dodgy practices. Some subscriptions can be signed up for online, but to cancel you’ve got to pick up the phone. In other cases, we’ve heard about subscriptions that can be started immediately online, but then if you want to cancel, it takes 28 days.
Many Australians are stuck with subscriptions that they want to cancel, but where they’ve just given up through the process of not being able to cancel an unwanted subscription. One estimate for the Consumer Policy Research Centre is that subscription traps are costing Australians $46 million a year. That’s almost 5 bucks for every Australian household.
Subscription traps will be gone under the Labor government’s reforms to get rid of unfair trading practices. This will be good for consumers and good for honest businesses. Of course, there’s a place for subscriptions in a modern economy, but they should be as easy to get out of as they were to get into. A simple rule for businesses: if you can’t cancel a subscription through the same process that you started the subscription, then perhaps there’s a subscription trap going on. The Albanese Labor government doesn’t want Australians stuck in a Hotel California situation when it comes to their subscriptions.
The second unfair trading practice we’re cracking down on is drip pricing. Drip pricing is where additional costs are added through the purchase process. In one instance, a concert ticket that was advertised for $89 ended up costing $129 once additional surcharges were added in. We had the case of a home internet plan which was advertised for a low introductory price, until the person went through and discovered that there was a non‑negotiable $79.99 fee that was going to be added through the process.
Again, it’s a matter of firms being honest with consumers. If there are unavoidable charges, they need to be advertised up front. You can’t pretend that you’re offering a low price and then charge consumers a high price. Getting rid of drip pricing will be a relief to many Australians who have experienced it when buying movie tickets, concert tickets or airline tickets, and it will be a relief to the honest businesses that don’t engage in drip pricing.
Right now, firms that don’t engage in drip pricing are finding themselves undercut by rivals who are offering a beginning price which isn’t actually the ending price. So, our consumer and our competition reforms go together. Labor is passionate about building a more dynamic, more productive, more competitive economy. And one of the ways we do that is by creating a level playing field for all businesses. So consumers who are caught by subscription traps and drip pricing will breathe a sigh of relief as a result of these announcements. But so too will firms who aren’t using subscription traps, who aren’t using drip pricing, and who are simply aiming to make an honest dollar in the commercial marketplace.
With the support of states and territories, we’ve also announced that we’re going to be proceeding with consumer guarantees. This will ensure that where products are faulty, consumers can get a replacement or a refund speedily. Again, the Labor government has the back of Australian consumers. We understand that people are facing cost‑of‑living pressures. We’re doing all we can to ensure a level playing field by getting rid of unfair trading practices and supporting consumer guarantees. I’d like to thank the states and territories whose representatives came here to Parliament House on Friday for a very productive consumer ministers meeting which has led to a range of outcomes, including these important results. Very happy to take questions.
Journalist:
Can you explain Dr Leigh, what was it that states and territories needed to agree on? Why was their participation in this important?
Leigh:
Yeah, great question. The Australian Consumer Law is a compact between the states, territories and the Commonwealth. So, when we’re making changes to the Australian Consumer Law, we reach out to states and territories, and they’ve been very supportive throughout this process. And this will mean that state and territory consumer regulators will be enforcing unfair trading practices along with the ACCC.
Journalist:
Immediately? Or is this sort of pending – the legislation that you’ll now progress?
Leigh:
We’ll next bring legislation to parliament. We’ll of course do that in our usual constructive, consultative way, but our announcement here is making very clear the Albanese government will proceed with getting rid of unfair trading practices.
Journalist:
And will there be penalties? Financial penalties for businesses that don’t comply with whatever these new rules are?
Leigh:
Absolutely. They’ll be the standard penalties that apply in the Australian Consumer Law, with penalties that were increased by Labor when we first came to office.
Journalist:
What’s the amount of them roughly?
Leigh:
So we’ve got $10 million, 10 per cent of turnover, or 3 times the ill‑gotten gains. They’re the maximum penalties. We of course hope that these practices will go away, and firms don’t need to be penalised. But those significant penalties are there in the act for firms that do the wrong thing.
Journalist:
Are you willing to put a timeline on when consumers will start to see the benefits of these laws at this point?
Leigh:
We’ll be announcing those timelines soon. But what we’ve said very clearly is that these reforms are coming into place. We’re committed to them as a federal government. We’re very pleased that State and Territory governments on both sides of politics I should say, have backed the reforms.
Journalist:
Have you had conversations with others in the parliament? Do you know whether you’ll get broad support for this in the in the Senate?
Leigh:
I’d be very surprised if we didn’t. I mean, these are a problem for many consumers. The surveys that have been done indicate that drip pricing and subscription traps have been an endless frustration. So, I hope they’ll get support right across the parliament and that they’ll pass the parliament quickly.
Journalist:
And what kind of conversations have you had with businesses? Are you anticipating much pushback from these changes from the business sector?
Leigh:
Look, we’ve had a lot of constructive conversations with businesses and indeed, there’s some businesses that are doing the right thing. I gave a shout out to Apple executives when I met them recently. Apple has monthly email reminders for subscriptions and you can cancel your subscriptions from a single place on the iPhone. So while of course, we will have other areas of difference with Apple, I do want to single them out as a firm which has done well on ensuring that people are not subject to subscription traps on the Apple platform.
Journalist:
Is it getting a bit harder to make these sorts of laws when a lot of the companies that we’re talking about are large American companies and that’s now wrapped up in diplomacy and Donald Trump getting lobbying we hear from the tech sector in the states warning against, you know, going after these American companies with new rules on them? Is that context in your mind as you try and proceed with this?
Leigh:
Well, there’s 2 things on that. First of all, in the US there’s certainly concern over subscription traps and moves to crack down on it. And indeed, the FTC under the Trump Administration has taken action around subscription traps. The other thing to say is that this isn’t just directed at tech companies. This is directed at businesses who are doing the wrong thing locally; gyms, cinemas – any of those local firms who are currently engaging in drip pricing and subscription traps to the detriment of their competitors who aren’t will be subject to these new laws.
Journalist:
Thank you.
Leigh:
Thanks everyone.