SUBJECTS: Australian Consumer Law, Unfair Contract Terms, Premium mobile messages
LEON BYNER:
Let's talk to the Assistant Treasurer Chris Bowen.
Chris I have to commend you for this, last year we took thousands of complaints and one of the most popular is where you sign up with a phone contract for two years, and a day after that 12 months where the warranties offered by the manufacturer, the phone dealerships will say to you quite barefaced 'well we're not interested in statutory warranties, if you want this phone repaired you either have to buy out of your contract, or you have to buy the phone or pay for the repairs'.
What do you say to that?
CHRIS BOWEN:
Well it is a big issue Leon, thanks for your comments. There are a lot of terms in contracts which aren't negotiated, these are 'take it or leave it' contracts. If you want the good or the service 'sign here and this is the deal'. And many people feel that they need to have that good or service and a sign.
Now when you look at the fine print, there can be unfair elements of that contract, and what the new law will be, the ACCC or the other appropriate regulators can say 'well that term is clearly unfair', and can seek to have it struck out of the contract. That will apply across-the-board to corporations in Australia.
What we are interested in, is terms that give all the power to one party, and aren't really negotiated but simply provide all the flexibility to the supplier, and the consumer, frankly, can go jump. What we want to do is to get red of that.
Across the board as you say, from telecommunications - right through the economy - these are complaints that come up regularly and, as you say, it has been in place in Victoria for some time, and we are going to make it national - providing it passes the Parliament - from the first of January 2010.
BYNER:
So basically what this means is that if you sign a contract to get a phone, and even in your heart of hearts you know that the contract is not fair, all you have to do is ring ACCC?
BOWEN:
There will be a complaints mechanism and the ACCC, which will be the regulator in most instances, ASIC for banks and financial institutions, will then be able to seek to have that term of the contract struck out.
Now the experience in Victoria was that once the regulator actually picks up on it, and calls the supply or the retailer, and says 'look we think this is unfair, and we're going to take you on in court', there is a lot of them evidence to show that the retailer will say 'look we will drop it'; so it doesn't get that far, and the terms will come out of the contracts.
So this is a big change, it is a change that has been a long time coming and frankly should of happened a long time ago.I am very glad that we are able to roll it out nationally.
Also Leon, the other thing I am announcing today is there is a significant boost for the ACCC's powers. We cast the ACCC as standing up for consumers, but it is not fair to say that you have to stand up for consumers, but by the way we are tying one hand behind your back. So there will be a big boost to the ACCC's powers, they will be able to issue infringement notices, public warning notices, substantiation notices - that means they can go to retailers and say 'well what you say this in your advertisement, tell us how you make that claim' - and also banning orders which is very important.
Some people simply can't be trusted to deal with consumers, shonks and charlatans who should be drummed out of business, there is not many but they give good businesses a bad name. So there will be banning orders in place, this is a big boost for the ACCC.
BYNER:
Give us a typical, one or two examples, of a consumer problem where these new powers will immediately apply.
BOWEN:
Let's deal with unfair contracts for a second, look at some of the terms that are used in Victoria and are taken on, and may apply under a national law. There are some contracts that say you have to pay to fee whether the service is provided or not; there are some contracts that say even in the most extenuating circumstances you can't cancel a contract but the retailer can; that you are not able to sue the retailer if anything goes wrong. These are really unfair contract terms which put all the risk on to the consumer and the poor old consumer has got no choice, if they want the good or service but to sign.
Others, for a service that has been delivered over time, you might pay a certain amount per month but then the supplier can just up that without notice without warning and you can't do anything about it and you are obliged to pay that. They are the sort of things that the unfair contract regime is designed to take on.
Now with the other powers, again a range of issues. Again as I say, a lot of shonks and charlatans, fly by night operators, that come in, open up, rip people off, close down and then open up under another name. The ACCC will now have public warning powers and also banning powers for serial offenders.
BYNER:
If this is going to happen, why did it take the year to get it into law?
BOWEN:
Well Leon, people have been talking about this long, long time and what we did you strike an agreement with the States last year - that we will have one consumer affairs law across the country - so taking the eight states and territories and the federal law, and turning it into one law. As you can imagine there are a lot of differences between those laws and there is a lot of work to be done to get one good proper law and we set ourselves the target of 2011.
But after some thought, what we decided to do, at the Commonwealth level, was to say that was good, and that was appropriate, and that's very important work, but why leave the ACCC and consumers with one hand tied behind our back for a lot of time?
So as you and your listeners would know, getting things through the Parliament can be difficult so I will move this legislation –and its fairly detailed legislation - I will move this legislation in the next few months, before the middle of the year. To have it passed through both houses of Parliament in the second half of the year that can take some time. Then it will apply from the first of January 2010. And that gives retailers the chance to look at their contracts, and say 'well this term here we think this might be now regarded as unfair' and gives a bit of a transition period for people to take it out.
BYNER:
Just quickly, all these premium SMS's, we had Graeme Samuel on the show last year and he said that he was taking a number of companies to court, where through no fault of your own - it is a familiar scenario - that you could be on a computer and a cost calculator will pop up and it says 'just put in your local phone number or someone else's', and you do that, and then all of a sudden you get these wallpapers or messages, but they come at seven or eight dollars a pop, and you can't cancel.
BOWEN:
You are right, it is inadvertent, on the computer, it is also targeting kids quite frankly. Targeting people who are teenagers and young kids, you know 1800 'does he love me' or 1800 'will she go out with me', and all that sort of nonsense.
And then they get their phone bill and they've got hundreds, and I've seen instances of thousands of dollars that they just didn't realise that they were signing up for. The ACCC has commenced a number of actions against these sorts of operations and that's the way we do it through the courts, and again these enhanced powers of the ACCC will make those actions easier.
BYNER:
Okay Chris, the Federal government's got to be commended for doing this, because we have taken thousands of complaints, which generally, come under the things you are talking about.
BOWEN:
Look this is the bread and butter consumer interest, giving the little guy a break frankly, and we are very glad to be able to do it.
BYNER:
All right Chris Bowen, the Assistant Treasurer.