Introduction

Ensuring that enforcement mechanisms are appropriate to respond adequately to breaches of a legislative regime and deter further breaches is fundamental to that regime achieving its objectives. Some consumer protection enforcement agencies in Australia have suggested that the existing enforcement mechanisms available for breaches of Australia’s consumer protection law are limiting their ability to enforce the law adequately.

Australia’s consumer protection law prohibits businesses from engaging in unfair trading practices that are detrimental to consumers. Such practices include misrepresentations, ‘bait advertising’, ‘pyramid selling’ and misleading or deceptive conduct.

There are a number of enforcement mechanisms available to enforcement agencies², businesses and consumers to ensure that the consumer protection law can be effectively enforced. Enforcement mechanisms generally are designed to achieve four objectives: to deter future contraventions of the provisions; to punish parties engaging in serious or repeat contraventions of the provisions; to provide redress to persons who have suffered loss or damage as a result of a contravention of the provisions; and to stop conduct that is in breach of the consumer protection provisions to limit ongoing consumer detriment. Currently, the two broad categories of enforcement mechanisms available in the consumer protection law to achieve these objectives are criminal penalties (monetary fines) and civil remedies (for example, injunctions and damages).

The current mix of criminal penalties and civil remedies may not be effective in responding quickly to breaches of the consumer protection law to prevent consumer detriment and deter future breaches. This is because there may be circumstances where it will not be appropriate or possible to pursue a criminal penalty but a civil remedy is inadequate. Alternatively, notwithstanding the seriousness of the breach, it may be more important to stop the conduct to limit ongoing consumer detriment than to seek a criminal penalty. Currently, achieving appropriate deterrence through the imposition of a penalty, a timely response to prevent ongoing or future consumer harm, and consumer redress cannot be achieved in a single court proceeding. In such circumstances, there may be an incentive for some businesses to engage in future breaches because a sufficiently high cost has not followed from the breach.

This paper considers whether introducing civil penalties, or some other enforcement strategy, would be an appropriate response to these concerns. These enforcement strategies could be introduced as a substitute for, or an alternative to, the existing criminal fines. As responsibility for Australia’s consumer protection law is shared between the Australian Government and the States and Territories, the issues raised in this paper also relate to the consumer protection provisions in the state and territory Fair Trading Acts. The Fair Trading Acts broadly replicate the consumer protection provisions of the Trade Practices Act 1974 (Cth) (TPA).

The discussion in this paper about whether an alternative enforcement strategy should be introduced has two key parts: the nature of the existing mechanisms and possible options for change.

² The enforcement agencies are the statutory authorities responsible for enforcement of the consumer protection provisions. These are the Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC) at the Commonwealth level and the Office of Fair Trading or equivalent in each State and Territory.

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