tag:theconversation.com,2011:/fr/topics/consumer-law-9359/articlesConsumer law – The Conversation2023-12-07T01:16:24Ztag:theconversation.com,2011:article/2192292023-12-07T01:16:24Z2023-12-07T01:16:24ZNobody reads T&C’s – but the High Court’s Ruby Princess decision shows consumer law may protect us anyway<p>How many times have you booked travel - like a cruise or a tour - and simply clicked that you’ve read and agreed to the terms and conditions for your trip without actually reading them? </p>
<p>What if something went wrong on your trip and it turned out the terms you didn’t read prevented you from suing in certain courts? </p>
<p>This was just one problem faced by some of the passengers on the now infamous Ruby Princess cruise ship, which was supposed to be making a pleasant trip from Sydney to New Zealand and back in March 2020, but instead became the location for one of the most well-known <a href="https://www.abc.net.au/news/2020-04-18/how-coronavirus-turned-the-ruby-princess-into-a-bastard-cruise/12158924">early outbreaks of COVID</a>.</p>
<p>Now, the High Court has found that consumers can be protected even if they haven’t fully read their terms and even if they were outside Australia when they accepted them.</p>
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Read more:
<a href="https://theconversation.com/stormy-seas-ahead-confidence-in-the-cruise-industry-has-plummeted-due-to-covid-19-152146">Stormy seas ahead: confidence in the cruise industry has plummeted due to COVID-19</a>
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<h2>Class action against cruise lines</h2>
<p>As a result of the outbreak, Susan Karpik brought a <a href="https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA/2023/1280.html">class action suit</a> in the Federal Court of Australia against Carnival plc and Princess Cruise Lines Ltd, the owners and operators of the ship. </p>
<p>The suit alleged that Princess had not taken appropriate safety precautions to best ensure passengers did not get COVID while on board. Karpik won her suit on her own claims, with the Federal Court finding Princess <a href="https://www.abc.net.au/news/2023-10-25/nsw-ruby-princess-passengers-win-class-action-carnival/103018412">was liable to her</a>, including for damages related to her husband’s death from COVID. </p>
<p>This was also a win for the other 2,600 passengers, who can now rely on the Federal Court’s ruling that safety precautions were not taken.</p>
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Read more:
<a href="https://theconversation.com/if-you-want-to-avoid-giving-away-your-first-born-make-sure-you-read-the-terms-and-conditions-before-signing-contracts-218705">If you want to avoid ‘giving away your first born’ make sure you read the terms and conditions before signing contracts</a>
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<p>Karpik and most of the Ruby Princess passengers were subject to Australian terms and conditions for their travel. However, nearly 700 passengers were subject to US terms and conditions. </p>
<p>These terms stated that any lawsuit related to travel on the Ruby Princess could only be brought in US Federal Court in Los Angeles, California, and that passengers were not allowed to sue in a class action - known as a class action waiver. </p>
<p>This means any lawsuit could only be brought individually, something that could be very expensive for each of the passengers. Princess argued that these passengers were bound by the US terms and therefore could not be part of the Australian class action.</p>
<h2>International complications</h2>
<p>The 700 passengers were represented by Patrick Ho, a Canadian citizen who had booked his cruise through a Canadian travel agent. He argued he was not made sufficiently aware of the US terms for them to apply. He also argued the class action waiver was unfair under Australian law and so could not be enforced. </p>
<p>Judge Stewart of the Federal Court agreed with some of these arguments and found the class action waiver was unfair under the Australian consumer law and that Ho could remain in the class.</p>
<p>But Princess then appealed to the Full Federal Court, which disagreed with Judge Stewart and found Ho had sufficient notice of the US terms before taking his trip and had agreed to them. </p>
<p>The court also found no unfairness in any of the terms under Australian law. This meant that Ho - and the 700 other passengers - could not be part of the Australian class, or any other class action.</p>
<p>The passengers then appealed that decision in the High Court.</p>
<h2>What did the High Court decide?</h2>
<p>Yesterday, the High Court <a href="https://eresources.hcourt.gov.au/downloadPdf/2023/HCA/39">unanimously ruled in favour</a> of the passengers. In so doing, it put companies doing business in Australia on notice that Australia’s consumer protection laws apply both inside and outside the country’s borders.</p>
<p>It decided the class action waiver was unfair to the passengers. This was because Australian consumer law prohibits unfair consumer contracts and because the express terms of that law apply to companies doing business in Australia, regardless of whether they are headquartered in Australia or overseas. </p>
<p>As the High Court explained, a price of a company doing business in Australia is that it must adhere to Australia’s consumer protection laws. </p>
<p>As the High Court made clear, the consumer laws exist for the protection of people who enter into contracts with companies. </p>
<p>Parts of those contracts may be considered unfair where there are terms that are one-sidedly beneficial for the company, where that benefit is not necessary to protect a legitimate interest of the company, and where the consumer is harmed in some way by the existence of the benefit.</p>
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<p>All these elements were present in the US terms as applied to Ho. </p>
<p>As the High Court found, the class action waiver was only beneficial to Princess. The only interest served was to reduce passengers’ ability to sue as a class (and therefore Princess’s need to defend itself against such a suit) and that Ho would be harmed by not being able to be a part of a legitimate Australian class action.</p>
<p>The High Court further found that since the class action waiver was unfair, there were good reasons not to enforce the additional term that all suits had to be brought in US courts in California. </p>
<p>This decision stands as a strong protection for consumers entering into agreements with companies doing business in Australia. It also makes class actions in Australian courts more available for consumers who might benefit from the protections the Australian consumer laws offer. </p>
<p>It is still a good idea to read your terms and conditions before agreeing to anything. But as the High Court has just ruled, you may not be completely out of luck if you don’t.</p><img src="https://counter.theconversation.com/content/219229/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>James D Metzger does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The High Court has found that consumers can be protected even if they haven’t fully read their terms and even if they were outside of Australia when they accepted them.James D Metzger, Senior Lecturer in Law & Justice, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2187052023-12-05T00:32:37Z2023-12-05T00:32:37ZIf you want to avoid ‘giving away your first born’ make sure you read the terms and conditions before signing contracts<p>In 2019, a travel insurance company held a secret <a href="https://www.squaremouth.com/campaign/pays-to-read">contest</a> in which they included a line in the fine print of their policy promising $10,000 to the first person who spotted it.</p>
<p>Seventy-three policies were bought before the award was finally claimed. But those 73 who had obviously not read the policy, would not have been alone. </p>
<p>It seems most of us don’t read the terms and conditions of some relatively important, legally binding contracts before signing up.</p>
<p>In one <a href="https://via.library.depaul.edu/bclj/vol8/iss3/2/">study</a> only 8% of people read a bank account contract, 19% a car rental contract and 25% a dry-cleaning contract before committing to a deal. Similarly, more than 80% of participants in a different <a href="https://law.stanford.edu/wp-content/uploads/2023/06/SSRN-id1916831.pdf">study</a> reported “not reading at all” or “not really” reading click through agreements. </p>
<h2>A good reason to read a contract</h2>
<p>Even more confrontingly, 98% of participants in another <a href="https://www.tandfonline.com/doi/abs/10.1080/1369118X.2018.1486870">study</a> effectively agreed to give up their first born child after supposedly having read the fictional terms and conditions of an agreement online.</p>
<p>The number of people who do actually read the terms and conditions may be even lower with another <a href="https://www.jstor.org/stable/10.1086/674424">study</a> finding only 0.1% of shoppers accessed the licence agreement and most only read a small portion.</p>
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<a href="https://images.theconversation.com/files/563185/original/file-20231204-19-1koptv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A hand holding a magnifying glass over a page of a contract, highlighting some specific detail" src="https://images.theconversation.com/files/563185/original/file-20231204-19-1koptv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/563185/original/file-20231204-19-1koptv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/563185/original/file-20231204-19-1koptv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/563185/original/file-20231204-19-1koptv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/563185/original/file-20231204-19-1koptv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/563185/original/file-20231204-19-1koptv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/563185/original/file-20231204-19-1koptv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Studies show very few people read contracts, let alone read them in full.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/contract-checked-magnifying-glass-on-subject-1287395218">Ralf Geithe/Shutterstock</a></span>
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<p>Despite our best intentions, most of us simply sign <a href="https://psycnet.apa.org/record/2011-25681-001">terms and conditions</a>, rarely read the fine print, and <a href="https://www.researchgate.net/publication/308719190_Confident_but_Confounded_Consumer_Comprehension_of_Telecommunications_Agreements">fail</a> to appreciate the consequences. </p>
<p>However, once we are presented with a particular problem arising from or related to the contract, our attitude alters. <a href="https://via.library.depaul.edu/bclj/vol8/iss3/2/">Studies</a> have shown the number of people who return to their contracts <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=984765">after a problem</a> more than doubles for car rentals, triples for dry-cleaning issues and rises nearly seven times for a bank account.</p>
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Read more:
<a href="https://theconversation.com/forgiveness-or-punishment-the-governments-proposed-safe-harbour-laws-send-mixed-messages-on-cyber-security-218025">Forgiveness or punishment? The government's proposed 'safe harbour' laws send mixed messages on cyber security</a>
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<p><a href="https://www.tandfonline.com/doi/abs/10.1080/10463280802613866">Unsurprisingly</a> though, <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=984765">most people</a> don’t believe it’s their fault. Rather, they assume it’s to do with something they weren’t made aware of at the time of purchase or they <a href="https://accan.org.au/our-work/research/1307-confident-but-confounded">believe</a> it is easily fixed.</p>
<h2>So, why don’t we read the fine print?</h2>
<p>Like all things in human behaviour, it’s complicated. </p>
<p>Some reasons given by consumers include terms and conditions are <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1744-1714.2008.00068.x">too long</a> and time-consuming, they are <a href="https://onlinelibrary.wiley.com/doi/abs/10.1002/acp.2350080107">full of legal jargon</a>, they seem all <a href="https://www.taylorfrancis.com/chapters/edit/10.4324/9781315573717-13/contract-regulation-ucita-high-tech-consumers-meet-consumer-protection-critics-richard-epstein">the same</a>, they are <a href="https://law.stanford.edu/wp-content/uploads/2023/06/SSRN-id1916831.pdf">irrelevant</a> and they have <a href="https://heinonline.org/HOL/LandingPage?handle=hein.journals/nylr77&div=22&id=&page=">no choice</a> but to accept them if they want the particular product.</p>
<p>They also believed if there was something wrong with the agreement somebody else would have pointed it out (and fixed it before them) and vendors are usually <a href="https://www.taylorfrancis.com/chapters/edit/10.4324/9781315573717-14/rolling-contracts-agency-problem-clayton-gillette">reputable</a> so they wouldn’t be put at risk.</p>
<p>The last two reasons point to a rational tendency to equate <a href="https://proactsafety.com/articles/low-probability-risks-cant-be-ignored#:%7E:text=The%20term%20%22low%2Dprobability%22,will%20result%20from%20such%20risks.">low probability risks</a> with zero probability risks, as well as to use mental shortcuts that simplify decision-making and align with a person’s beliefs. There are also social norms and signals for us not to read the contract, such as the <a href="https://psycnet.apa.org/record/2010-01480-004">expectation</a> to “sign the form and keep moving”.</p>
<p><a href="https://jolt.law.harvard.edu/articles/pdf/v23/23HarvJLTech49.pdf?report=reader">Problems</a> arise in markets where it appears easy to switch from one contract to another, but where there are complex agreements, including telecommunications, banking, health insurance and gyms. These sectors might use strong marketing tactics, such as bundling offers, along with apparently easily accessible customer service, which can cause consumers to be <a href="https://www.sciencedirect.com/topics/psychology/overconfidence">overconfident</a> in their dealings with businesses.</p>
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Read more:
<a href="https://theconversation.com/why-youre-probably-paying-more-interest-on-your-mortgage-than-you-think-213862">Why you're probably paying more interest on your mortgage than you think</a>
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<p>Sometimes it is simply the length and complexity of contracts that puts people off reading them. <a href="https://www.statista.com/statistics/1129251/word-count-terms-of-service-leading-online-services/">For example</a>, assuming a reading rate of 240 words a minute, Spotify’s terms of service is estimated to take about 36 minutes, while TikTok’s would take 31. Microsoft would take over an hour. For comparison, reading all of Chinese war strategist Sun Tzu’s The Art of War would take only 50 minutes. </p>
<p>These extremely long policies, coupled with the fact individuals feel most information is <a href="https://psycnet.apa.org/record/2011-25681-001">unimportant</a>, influence willingness to read the fine print. Realistically, failure to read the terms and conditions, particularly because contracts are rarely negotiable, seems like a perfectly rational response. This is made even more likely if we thinks the costs of reviewing a dense document outweighs its benefits.</p>
<h2>Agreements are binding (kind of)</h2>
<p>Legally, though, terms and conditions are enforceable and allow businesses to reduce costs that might otherwise be associated with <a href="https://scholarship.law.cornell.edu/facpub/1062/">bargaining</a>.</p>
<p>Getting us to agree to the terms and conditions upfront also provides an opportunity for businesses to pass on certain <a href="https://www.sciencedirect.com/science/article/abs/pii/S0263786396000786">risks</a> to the consumer. Clearly this should be a concern for lawmakers. The idea of a well-informed consumer who understands their obligations and the rights under an agreement is a foundation of <a href="https://www.accc.gov.au/business/selling-products-and-services/unfair-business-practices">consumer law</a>. </p>
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<a href="https://images.theconversation.com/files/563184/original/file-20231204-27-axssf0.jpg?ixlib=rb-1.1.0&rect=60%2C26%2C4432%2C2633&q=45&auto=format&w=1000&fit=clip"><img alt="Hands typing on a keyboard displaying a note about terms and conditions" src="https://images.theconversation.com/files/563184/original/file-20231204-27-axssf0.jpg?ixlib=rb-1.1.0&rect=60%2C26%2C4432%2C2633&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/563184/original/file-20231204-27-axssf0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/563184/original/file-20231204-27-axssf0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/563184/original/file-20231204-27-axssf0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/563184/original/file-20231204-27-axssf0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/563184/original/file-20231204-27-axssf0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/563184/original/file-20231204-27-axssf0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">An unfair contract can be voided under consumer law.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/online-business-concept-man-using-laptop-646365247">McLittle Stock/Shutterstock</a></span>
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<p>The <a href="https://consumer.gov.au/consumers-and-acl">Australian Consumer Law</a> does help reduce some risk by deeming terms of a standard consumer contract <a href="https://consumer.gov.au/sites/consumer/files/2016/05/0553FT_ACL-guides_ContractTerms_web.pdf">unfair</a> if they have been presented unclearly or disadvantage one party, regardless of whether they have been accepted by the consumer.</p>
<p>However, it is unlikely most consumers read consumer law or use it given the <a href="https://www.mondaq.com/australia/contracts-and-commercial-law/1392132/critical-reforms-to-unfair-contract-terms-laws-in-australia-now-in-force">complexity</a> of challenging a vendor who is unwilling to abide by them.</p>
<h2>Dealing with reality</h2>
<p>If we are serious about the concept of the informed consumer, then we have to accept some realities. </p>
<p>We have to acknowledge consumer attention is <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6688548/#:%7E:text=The%20limitation%20is%20on%20how,exert%20their%20pull%20in%20parallel.">limited</a> and information overload and <a href="https://www.sciencedirect.com/topics/economics-econometrics-and-finance/asymmetric-information">assymetry</a> prevents people from comprehending what is and isn’t important. </p>
<p>We also have to accept the type of information and the way it’s presented <a href="https://accan.org.au/media-centre/hot-issuesblog/447-seeking-straight-answers-a-short-video">does have an impact</a> on whether people understand the consequences of signing an agreement. </p>
<p>Critically, most terms and conditions currently seem to be designed to protect the seller more than they are to help the consumer to make an informed choice.</p>
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Read more:
<a href="https://theconversation.com/forgiveness-or-punishment-the-governments-proposed-safe-harbour-laws-send-mixed-messages-on-cyber-security-218025">Forgiveness or punishment? The government's proposed 'safe harbour' laws send mixed messages on cyber security</a>
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<p>Research does suggest consumers are more inclined to <a href="https://via.library.depaul.edu/bclj/vol8/iss3/2/">read terms and conditions</a> before committing when the product or service cost is significant, the contract is perceived as short, and there is a belief they will be able to change or influence contract terms. </p>
<p>Indeed, if businesses seriously do want their customers to be informed, shorter, less abstract and more focused terms and conditions that highlight the critical information related to potential harm is <a href="http://accan.org.au/files/Reports/Seeking%20Straight%20Answers_accessible.doc">one solution</a>. Another might be to quiz participants with a <a href="https://pubmed.ncbi.nlm.nih.gov/21421578/">short knowledge test</a> as they sign the document to see if they have actually understood the agreement. </p>
<p>Or perhaps they could hide surprise $10,000 “<a href="https://tjg.joeysit.com/of-dragons-and-easter-eggs-a-chat-with-warren-robinett/">Easter eggs</a>” in their terms and conditions and create a culture of reward for effort, instead of the current deficit approach.</p><img src="https://counter.theconversation.com/content/218705/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Despite our best intentions, most of us rarely read the fine print and simply agree to terms and conditions while ignoring the consequences.Paul Harrison, Director, Master of Business Administration Program (MBA); Co-Director, Better Consumption Lab, Deakin University, Deakin UniversityJeff Rotman, Senior Lecturer in Marketing and Consumer Psychology & Co-Director of the Better Consumption Lab, Deakin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1960192023-03-14T20:43:07Z2023-03-14T20:43:07ZConsumer Privacy Protection Act could lead to fines for deceptive designs in apps and websites<figure><img src="https://images.theconversation.com/files/510195/original/file-20230214-24-dapuo7.JPG?ixlib=rb-1.1.0&rect=23%2C31%2C2507%2C1831&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Canada’s proposed Consumer Privacy Protection Act prohibits online consent processes that are deceptive or misleading.
</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><iframe style="width: 100%; height: 100px; border: none; position: relative; z-index: 1;" allowtransparency="" allow="clipboard-read; clipboard-write" src="https://narrations.ad-auris.com/widget/the-conversation-canada/consumer-privacy-protection-act-could-lead-to-fines-for-deceptive-designs-in-apps-and-websites" width="100%" height="400"></iframe>
<p>Canada’s <a href="https://www.parl.ca/DocumentViewer/en/44-1/bill/C-27/first-reading">proposed Consumer Privacy Protection Act (CPPA)</a> prohibits online consent processes that are deceptive or misleading. </p>
<p>Companies may face fines for breaking the act’s rules. This could be trouble for social media platforms, online shopping companies and other services that use deceptive user interface designs in their apps and websites.</p>
<p>The CPPA is a component of <a href="https://www.parl.ca/DocumentViewer/en/44-1/bill/C-27/first-reading">Bill C-27</a>, described by the federal government as <a href="https://ised-isde.canada.ca/site/innovation-better-canada/en/canadas-digital-charter/bill-summary-digital-charter-implementation-act-2020">an attempt to improve Canadian privacy law</a> and ensure responsible use of personal information and artificial intelligence by companies. </p>
<p>The possibility of fines for deceptive or misleading consent processes suggests the government views consent as fundamental to personal information protections. As a result, companies may be held accountable for deceptive user interface designs associated with app and website consent processes.</p>
<p>User interface design means deciding how to present buttons, links, prompts, images, video, text and other visual elements on-screen. Decisions about the shape, colour, size and placement of these elements influence what people see first or second, where they click/tap, whether a purchase is made, a complaint is lodged or consent is given.</p>
<p>Deceptive designs (sometimes problematically called <a href="https://www.deceptive.design">dark pattern designs</a>) are design choices that can mislead, coerce and exploit people for the benefit of for-profit companies. A <a href="https://doi.org/10.1145/3359183">study of about 11,000 shopping sites</a> describes 15 types of deceptive designs, each with a unique approach to manipulation.</p>
<h2>Fines for deceptive design</h2>
<p>Deceptive design is a top information policy issue internationally, and problematic consent processes are a primary focus of current enforcement efforts. In 2022, the Commission Nationale de l'Informatique et des Libertés (CNIL), a data protection authority in France, <a href="https://www.cnil.fr/en/cookies-cnil-fines-google-total-150-million-euros-and-facebook-60-million-euros-non-compliance">fined Google the equivalent of C$215 million and Facebook the equivalent of C$86 million</a> for deceptive design. </p>
<p>CNIL said the companies provided people with a button to accept online cookies “immediately,” but did not provide a similar prompt for refusal. CNIL claimed that requiring multiple clicks to refuse all cookies improperly influenced the consent process.</p>
<p>Action by the U.S. Federal Trade Commission (FTC) <a href="https://www.ftc.gov/news-events/news/press-releases/2022/11/ftc-action-against-vonage-results-100-million-customers-trapped-illegal-dark-patterns-junk-fees-when-trying-cancel-service">led to internet telephone company Vonage having to refund</a> the equivalent of C$133 million to customers for deceptive designs that made it easy to sign up for a service, but very difficult to cancel. FTC action also <a href="https://www.ftc.gov/news-events/news/press-releases/2020/09/childrens-online-learning-program-abcmouse-pay-10-million-settle-ftc-charges-illegal-marketing">led to the company that runs the online learning program ABCMouse</a> having to pay the equivalent of C$13 million for similar designs. </p>
<figure class="align-center ">
<img alt="A sign that says 'Federal Trade Commission Building' sits in front of a square beige bulidings" src="https://images.theconversation.com/files/508496/original/file-20230206-17-nkq202.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/508496/original/file-20230206-17-nkq202.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/508496/original/file-20230206-17-nkq202.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/508496/original/file-20230206-17-nkq202.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/508496/original/file-20230206-17-nkq202.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/508496/original/file-20230206-17-nkq202.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/508496/original/file-20230206-17-nkq202.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The U.S. Federal Trade Commission is addressing the use of deceptive designs by companies.</span>
<span class="attribution"><span class="source">(AP Photo/Alex Brandon)</span></span>
</figcaption>
</figure>
<p>The <a href="https://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2022/03/04/it-turns-out-state-lawmakers-hate-auto-renew-contracts-too">company Noom</a>, which owns an app for tracking food and exercise consumption, recently settled the equivalent of a C$83 million class action suit after customers alleged they were unfairly charged subscription fees. </p>
<p>Commenting on deceptive designs, <a href="https://www.ftc.gov/news-events/news/press-releases/2022/09/ftc-report-shows-rise-sophisticated-dark-patterns-designed-trick-trap-consumers">the FTC stated</a> that “more and more companies are using digital dark patterns to trick people into buying products and giving away their personal information…these traps will not be tolerated.” </p>
<h2>The clickwrap</h2>
<p>A deceptive design common to online consent processes is the clickwrap. The clickwrap, or clickthrough agreement, is a set of user interface designs people often encounter when signing up for a new app or website, or when terms of service and privacy policies change.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/gtQ2tNUTF3Q?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">A video essay about how clickwrap designs help digital platforms pressure people into accepting terms and conditions. (Jonathan Obar)</span></figcaption>
</figure>
<p>Clickwraps can include an appealing “accept” button and less-noticeable links to policies. As people read from the top of the screen to the bottom, they might notice the colourful accept button first and miss links to policies below the button or elsewhere on screen. </p>
<p><a href="https://doi.org/10.1177/2056305118784770">In a previous study I co-authored about clickwraps</a>, study participants said they saw a prominently displayed accept/join button first, while links to policies were small and “easy to miss.”</p>
<p>A <a href="https://dx.doi.org/10.2139/ssrn.3898254">recent paper I co-authored that has yet to be peer-reviewed</a> suggests the text on clickwrap accept buttons rarely says “agree,” and often says something like “sign up” or “create account” instead. This choice of text may distract people from the consent process taking place, keeping the focus on a quick sign up.</p>
<p>Clickwraps are a problem if the goal is to ensure an engaging online consent process. They raise concerns about for-profit companies moving individuals quickly towards monetized parts of services, instead of encouraging people to question if joining the service is a good idea.</p>
<p>An online consent process is a unique opportunity to engage people in far more than a boring contract.</p>
<p>Information on the future of artificial intelligence (AI), the benefits and drawbacks of data sharing and use, opt-in/out mechanisms, contact information for policymakers and privacy advocates, and digital literacy tools could all be available for review before consent is provided. </p>
<p>Instead, clickwraps make it easy to skip the fine print, as well as the opportunity to understand how service use has implications for the future.</p>
<h2>Implications for AI and the future</h2>
<p>One implication is the connection between deceptive user interface designs and the future of AI development. This is perhaps one reason the Canadian government is prioritizing the issue. </p>
<p>As big data expands through the ubiquity of the internet, endless data sets are now available across the global economy. Some AI developers don’t engage directly with consumers, which raises questions about who is responsible for ensuring data is acquired via lawful consent processes.</p>
<figure class="align-center ">
<img alt="A man wearing a suit and glasses speaks into a microphone from behind a desk. Canadian flags stand in the background." src="https://images.theconversation.com/files/514742/original/file-20230310-18-q24z8g.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/514742/original/file-20230310-18-q24z8g.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/514742/original/file-20230310-18-q24z8g.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/514742/original/file-20230310-18-q24z8g.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/514742/original/file-20230310-18-q24z8g.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/514742/original/file-20230310-18-q24z8g.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/514742/original/file-20230310-18-q24z8g.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Privacy Commissioner of Canada Philippe Dufresne speaking at a press conference in Ottawa on Jan. 26, 2023.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Spencer Colby</span></span>
</figcaption>
</figure>
<p>The <a href="https://www.priv.gc.ca/en/about-the-opc/what-we-do/consultations/completed-consultations/consultation-ai/reg-fw_202011/">Office of the Privacy Commissioner of Canada emphasizes</a> that the lack of a direct relationship with some AI developers, along with the challenge of understanding how data may be used in the future, further burdens people with having to decide whether clicking “sign up” is wise.</p>
<p>As governments figure out how to ensure meaningful consent is central to AI development, digital service providers must do their part to design user interfaces that are not deceptive or misleading.</p>
<p>If Canada’s Bill C-27 becomes law, will government-imposed monetary penalties move companies away from clickwraps and towards interface designs that facilitate education and understanding? It’s difficult to tell. It may depend on whether the Canadian government follows the lead of policymakers in the U.S. and France to hold companies accountable for deceptive designs.</p><img src="https://counter.theconversation.com/content/196019/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Some of Jonathan Obar's work referenced in this article received funding from the Office of the Privacy Commissioner of Canada, the Social Sciences and Humanities Research Council, and York University.</span></em></p>Whether or not Bill C-27 moves companies away from deceptive design in apps and websites depends on how, and if, the Canadian government holds companies accountable for their actions.Jonathan Obar, Associate Professor, Department of Communication and Media Studies, York University, CanadaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1844502022-06-07T23:15:52Z2022-06-07T23:15:52ZHidden costs, manipulation, forced continuity: report reveals how Australian consumers are being duped online<figure><img src="https://images.theconversation.com/files/467406/original/file-20220607-15990-frj1pn.jpeg?ixlib=rb-1.1.0&rect=59%2C35%2C3934%2C2958&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Australian consumers’ choices on websites and apps are being manipulated through online designs taking advantage of their weaknesses. That’s according to research on consumers’ online experiences and the presentation of websites and apps, <a href="https://cprc.org.au/wp-content/uploads/2022/06/CPRC-Duped-by-Design-Final-Report-June-2022.pdf">released today</a> by the Consumer Policy Research Centre (CPRC).</p>
<p>The research gives examples of consumers being manipulated or deceived into unintentionally buying items, paying more, or giving up more personal data than they meant to.</p>
<p>Examples include situations where an online store automatically added items to consumers’ carts, and “Hotel California” techniques which make it easy to subscribe to a service, but much harder to unsubscribe. </p>
<p>According to the CPRC’s findings, 83% of Australians surveyed had experienced one or more negative consequences – including financial harm or feeling manipulated – as a result of these “<a href="https://www.wired.com/story/how-to-spot-avoid-dark-patterns/#">dark patterns</a>”.</p>
<p>Some misleading designs breach the Australian Consumer Law. However, not all designs that have unfair consequences will necessarily be captured under the law. The latest report adds to existing calls to <a href="https://www.theguardian.com/australia-news/2019/sep/08/not-fair-why-judges-have-been-accused-of-failing-australian-consumers">amend consumer law</a> by introducing a ban on unfair trading practices. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/accc-world-first-australias-federal-court-found-google-misled-users-about-personal-location-data-159138">ACCC 'world first': Australia's Federal Court found Google misled users about personal location data</a>
</strong>
</em>
</p>
<hr>
<h2>What are dark patterns?</h2>
<p><a href="https://www.forbrukerradet.no/dark-patterns/">Experts</a> and <a href="https://www.ftc.gov/news-events/events/2021/04/bringing-dark-patterns-light-ftc-workshop">regulators</a> around the world have highlighted concerning online design techniques in recent years, labelling them “dark patterns” or “deceptive design”.</p>
<p>These designs often take advantage of a consumer’s recognised behavioural biases. For instance, “<a href="https://www.intereconomics.eu/contents/year/2018/number/1/article/using-behavioural-economics-for-rather-than-against-consumers-a-practitioners-perspective.html">default bias</a>” is consumers’ bias in favour of leaving default choices in place to avoid making complex decisions. Businesses take advantage of this by pre-ticking boxes in favour of the business’s preferences, despite consumer interests.</p>
<p>The <a href="https://www.accc.gov.au/system/files/DPB%20-%20DPSI%20-%20September%202021%20-%20Full%20Report%20-%2030%20September%202021%20%283%29_1.pdf">Australian Competition & Consumer Commission</a> has examined dark patterns, <a href="https://www.accc.gov.au/system/files/Digital%20platform%20services%20inquiry.pdf">defining</a> them as:</p>
<blockquote>
<p>The design of user interfaces intended to confuse users, make it
difficult for users to express their actual preferences, or manipulate
users into taking certain actions.</p>
</blockquote>
<p>The CPRC study conducted a randomised sweep of websites and apps to identify deceptive design features.</p>
<h2>Hidden costs: I bought what?</h2>
<p>The CPRC found several examples of online stores automatically adding items to consumers’ shopping carts, such as insurance or service plans.</p>
<p>For example, in one case a consumer buying a washing machine from a major online retailer for A$1,059, may or may not have noticed a single-line item, “3 Year Care Plan For Home - $160”, in the final steps of their purchase.</p>
<p>In other cases, customers were presented with offers of a product care plan at several points in the checkout process. The CPRC says:</p>
<blockquote>
<p>this design approach risks implying that […] a product care plan is required when most faults or problems are adequately covered by the consumer guarantees.</p>
</blockquote>
<p>For products sold in Australia, consumer guarantees about the quality of products are provided free of charge under the Australian Consumer Law.</p>
<h2>“Hotel California” or forced continuity</h2>
<p>Another concerningly common pattern is the relative difficulty consumers experience when trying to unsubscribe from a service, compared with how easy it is to sign up. CPRC labels this “Hotel California”, after the famous line in the Eagles’ song: “You can check out any time you like, but you can never leave”.</p>
<p>Examples from the CPRC’s findings included attempting to cancel an Amazon Music Unlimited subscription, which required a consumer to navigate more than five screens. Similarly, cancelling an eBay Plus subscription required four additional steps after selecting “cancel membership”.</p>
<p>The CPRC argues it should be as easy to opt-out of a service as it is to opt-in. While extra steps may not seem disastrous in isolation, they can especially disadvantage those already experiencing vulnerabilities, such as sudden illness, loss of a loved one, or low digital literacy.</p>
<p>This is sometimes combined with another manipulative design technique called “confirmshaming”. With this, consumers are asked to confirm a statement that makes them feel shamed or foolish, such as if they want to “lose their benefits” or if they “refuse to support” a good cause.</p>
<h2>Data grabs, colours and countdowns</h2>
<p>The CPRC also found the majority of consumers surveyed (89%) had experienced being asked for more personal information than was needed to access the relevant product or service. This was achieved in various ways, including by:</p>
<ul>
<li>pre-ticking the option to receive marketing communications</li>
<li>forcing the consumer to create a profile to browse or purchase a product, and</li>
<li>treating the mere use of a website as acceptance of data terms or conditions.</li>
</ul>
<p>Other examples of manipulative design included highlighting the business’s preference in a colour known to <a href="https://fil.forbrukerradet.no/wp-content/uploads/2018/06/2018-06-27-deceived-by-design-final.pdf">entice consumers to agree or act</a> (often green or blue), using a rapid countdown to create a false sense of urgency, and warning that a number of other customers are looking at a product. </p>
<p>Importantly, the research found consumers aged between 18 and 28 were more likely to suffer negative impacts from manipulative design, leading to substantial effects on their financial well-being and privacy. A significant proportion of consumers in this younger age bracket reported they:</p>
<ul>
<li>accidentally bought something (12%)</li>
<li>spent more than they intended (33%)</li>
<li>disclosed more personal information than they wanted to (27%)</li>
<li>created an online account when they didn’t want to (37%), and</li>
<li>accidentally signed up to something (39%).</li>
</ul>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/467413/original/file-20220607-18-5op3ky.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Young man in a store peruses his phone, with a laptop open on a table in front of him" src="https://images.theconversation.com/files/467413/original/file-20220607-18-5op3ky.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/467413/original/file-20220607-18-5op3ky.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/467413/original/file-20220607-18-5op3ky.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/467413/original/file-20220607-18-5op3ky.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/467413/original/file-20220607-18-5op3ky.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/467413/original/file-20220607-18-5op3ky.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/467413/original/file-20220607-18-5op3ky.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The research found young people in particular were vulnerable to manipulative techniques used by online businesses.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<h2>We need to upgrade business practices and consumer law</h2>
<p>For businesses, using dark patterns to boost profit will likely lead to long-term losses in the form of consumer trust and loyalty. Almost one in three people surveyed said they stopped using a website or app (either temporarily or permanently) after experiencing dark patterns. </p>
<p>Misleading designs may also lead to penalties for businesses under the Australian Consumer Law. This happened last year when <a href="https://www.accc.gov.au/media-release/google-misled-consumers-about-the-collection-and-use-of-location-data">Google’s privacy settings</a> were found likely to mislead consumers.</p>
<p>However, other designs that have unfair consequences <a href="https://cprc.org.au/unfair-trading-practices-in-digital-market-evidence-and-regulatory-gaps-2/">might not fall foul of consumer laws</a>, if they don’t meet certain criteria set out by the law. </p>
<p>The CPRC’s research adds to evidence in support of the Australian Competition & Consumer Commission’s <a href="https://www.accc.gov.au/system/files/DPB%20-%20DPSI%20-%20September%202021%20-%20Full%20Report%20-%2030%20September%202021%20%283%29_1.pdf">existing recommendation</a> that our consumer law should include an unfair practices prohibition, similar to those in the European Union and the United Kingdom.</p><img src="https://counter.theconversation.com/content/184450/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Katharine Kemp receives funding from The Allens Hub for Technology, Law and Innovation. She is a Member of the Advisory Board of the Future of Finance Initiative in India, and the Australian Privacy Foundation.</span></em></p>Younger people aged 18 to 28 were more likely to be negatively impacted by manipulative designs on websites and apps.Katharine Kemp, Senior Lecturer, Faculty of Law & Justice, UNSW, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1591382021-04-19T05:59:25Z2021-04-19T05:59:25ZACCC ‘world first’: Australia’s Federal Court found Google misled users about personal location data<figure><img src="https://images.theconversation.com/files/395647/original/file-20210419-17-19eklxj.jpg?ixlib=rb-1.1.0&rect=2%2C0%2C1914%2C1273&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Henry Perks / Unsplash</span></span></figcaption></figure><p>The Federal Court has <a href="https://www.accc.gov.au/media-release/google-misled-consumers-about-the-collection-and-use-of-location-data">found</a> Google misled some users about personal location data collected through Android devices for two years, from January 2017 to December 2018. </p>
<p>The Australian Competition & Consumer Commission (ACCC) says this decision is a “world first” in relation to Google’s location privacy settings. The ACCC now intends to seek various orders against Google. These will include monetary penalties under the Australian Consumer Law (ACL), which could be up to A$10 million or 10% of Google’s local turnover. </p>
<p>Other companies too should be warned that representations in their privacy policies and privacy settings could lead to similar liability under the ACL.</p>
<p>But this won’t be a complete solution to the problem of many companies <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3432769">concealing what they do with data</a>, including the way they share consumers’ personal information.</p>
<h2>How did Google mislead consumers about their location history?</h2>
<p>The Federal Court found Google’s previous location history settings would have led some reasonable consumers to believe they could prevent their location data being saved to their Google account. In fact, selecting “Don’t save my Location History in my Google Account” alone could not achieve this outcome.</p>
<p>Users needed to change an additional, separate setting to stop location data from being saved to their Google account. In particular, they needed to navigate to “Web & App Activity” and select “Don’t save my Web & App Activity to my Google Account”, even if they had already selected the “Don’t save” option under “Location History”. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-ugly-truth-tech-companies-are-tracking-and-misusing-our-data-and-theres-little-we-can-do-127444">The ugly truth: tech companies are tracking and misusing our data, and there's little we can do</a>
</strong>
</em>
</p>
<hr>
<p>ACCC Chair Rod Sims responded to the Federal Court’s findings, saying:</p>
<blockquote>
<p>This is an important victory for consumers, especially anyone concerned about their privacy online, as the Court’s decision sends a strong message to Google and others that big businesses must not mislead their customers.</p>
</blockquote>
<p>Google has since changed the way these settings are presented to consumers, but is still liable for the conduct the court found was likely to mislead some reasonable consumers for two years in 2017 and 2018. </p>
<h2>ACCC has misleading privacy policies in its sights</h2>
<p>This is the second recent case in which the ACCC has succeeded in establishing misleading conduct in a company’s representations about its use of consumer data. </p>
<p>In 2020, the medical appointment booking app HealthEngine admitted it had disclosed more than 135,000 patients’ non-clinical personal information to insurance brokers without the informed consent of those patients. HealthEngine <a href="https://www.accc.gov.au/media-release/healthengine-to-pay-29-million-for-misleading-reviews-and-patient-referrals">paid fines of A$2.9 million</a>, including approximately <a href="http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA/2020/1203.html?context=1;query=%22HealthEngine%20Pty%20Ltd%22;mask_path=">A$1.4 million</a> relating to this misleading conduct.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-safe-are-your-data-when-you-book-a-covid-vaccine-157869">How safe are your data when you book a COVID vaccine?</a>
</strong>
</em>
</p>
<hr>
<p>The ACCC has two similar cases in the wings, including another <a href="https://www.accc.gov.au/media-release/correction-accc-alleges-google-misled-consumers-about-expanded-use-of-personal-data">case</a> regarding Google’s privacy-related notifications and a case about Facebook’s representations about <a href="https://www.accc.gov.au/media-release/accc-alleges-facebook-misled-consumers-when-promoting-app-to-protect-users-data">a supposedly privacy-enhancing app called Onavo</a>. </p>
<p>In bringing proceedings against companies for misleading conduct in their privacy policies, the ACCC is following the <a href="https://www.ftc.gov/news-events/media-resources/protecting-consumer-privacy/privacy-security-enforcement">US Federal Trade Commission</a> which has sued many US companies for misleading privacy policies. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/395651/original/file-20210419-17-1hsvk2m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/395651/original/file-20210419-17-1hsvk2m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/395651/original/file-20210419-17-1hsvk2m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/395651/original/file-20210419-17-1hsvk2m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/395651/original/file-20210419-17-1hsvk2m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/395651/original/file-20210419-17-1hsvk2m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/395651/original/file-20210419-17-1hsvk2m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The ACCC has more cases in the wings about data privacy.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
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<h2>Will this solve the problem of confusing and unfair privacy policies?</h2>
<p>The ACCC’s success against Google and HealthEngine in these cases sends an important message to companies: they must not mislead consumers when they publish privacy policies and privacy settings. And they may receive significant fines if they do. </p>
<p>However, this will not be enough to stop companies from setting privacy-degrading terms for their users, if they spell such conditions out in the fine print. Such terms are currently commonplace, even though consumers are <a href="https://www.oaic.gov.au/engage-with-us/research/australian-community-attitudes-to-privacy-survey-2020-landing-page/2020-australian-community-attitudes-to-privacy-survey/">increasingly concerned</a> about their privacy and want more privacy options. </p>
<p>Consider the US experience. The US Federal Trade Commission brought action against the <a href="https://www.ftc.gov/news-events/press-releases/2014/04/ftc-approves-final-order-settling-charges-against-flashlight-app">creators of a flashlight app</a> for publishing a privacy policy which didn’t reveal the app was tracking and sharing users’ location information with third parties. </p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/we-need-a-code-to-protect-our-online-privacy-and-wipe-out-dark-patterns-in-digital-design-145622">We need a code to protect our online privacy and wipe out 'dark patterns' in digital design</a>
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<p>However, in the agreement settling this claim, the <a href="https://www.washingtonpost.com/news/the-switch/wp/2013/12/09/heres-why-the-ftc-couldnt-fine-a-flashlight-app-for-allegedly-sharing-user-location-data/">solution</a> was for the creators to rewrite the privacy policy to disclose that users’ location and device ID data are shared with third parties. The question of whether this practice was legitimate or proportionate was not considered. </p>
<p>Major changes to Australian privacy laws will also be required before companies will be prevented from pervasively tracking consumers who do not wish to be tracked. The <a href="https://www.ag.gov.au/integrity/consultations/review-privacy-act-1988">current review of the federal Privacy Act</a> could be the beginning of a process to obtain fairer privacy practices for consumers, but any reforms from this review will be a long time coming. </p>
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<p><em>This is an edited version of an <a href="https://newsroom.unsw.edu.au/news/business-law/world-first-federal-court-rules-google-has-misled-users-personal-location-data">article</a> that originally appeared on <a href="https://newsroom.unsw.edu.au/">UNSW Newsroom</a>.</em></p><img src="https://counter.theconversation.com/content/159138/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Katharine Kemp receives funding from The Allens Hub for Technology, Law and Innovation. She is a Member of the Advisory Board of the Future of Finance Initiative in India, the Centre for Law, Markets & Regulation and the Australian Privacy Foundation.</span></em></p>Companies are allowed to track users as much as they like — as long as they spell it out in the fine print. But a ground-breaking Australian legal judgement should give them pause.Katharine Kemp, Senior Lecturer, Faculty of Law, UNSW, and Academic Lead, UNSW Grand Challenge on Trust, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1592062021-04-19T05:19:38Z2021-04-19T05:19:38ZPrivacy erosion by design: why the Federal Court should throw the book at Google over location data tracking<figure><img src="https://images.theconversation.com/files/395637/original/file-20210419-13-1glet3p.jpg?ixlib=rb-1.1.0&rect=8%2C0%2C5982%2C3988&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>The Australian Competition and Consumer Commission has had a significant <a href="https://www.accc.gov.au/media-release/google-misled-consumers-about-the-collection-and-use-of-location-data.">win</a> against Google. The Federal Court found Google misled some Android users about how to disable <a href="https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2021/2021fca0367">personal location tracking</a>.</p>
<p>Will this decision actually change the behaviour of the big tech companies? The answer will depend on the size of the penalty awarded in response to the misconduct. </p>
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Read more:
<a href="https://theconversation.com/accc-world-first-australias-federal-court-found-google-misled-users-about-personal-location-data-159138">ACCC 'world first': Australia's Federal Court found Google misled users about personal location data</a>
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<p>In theory, the penalty is <a href="https://www.legislation.gov.au/Details/C2021C00151/Html/Volume_3#_Toc67406308">A$1.1 million per contravention</a>. There is a contravention each time a reasonable person in the relevant class is misled. So the total award could, in theory, amount to many millions of dollars. </p>
<p>But the actual penalty will depend on how the court characterises the misconduct. We believe Google’s behaviour should not be treated as a simple accident, and the Federal Court should issue a heavy fine to deter Google and other companies from behaving this way in future. </p>
<h2>Misleading conduct and privacy settings</h2>
<p>The case arose from the representations made by Google to users of Android phones in 2018 about how it obtained personal location data.</p>
<p>The Federal Court held Google had <a href="https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2021/2021fca0367">misled</a> some consumers by representing that “having Web & App Activity turned ‘on’ would not allow Google to obtain, retain and use personal data about the user’s location”. </p>
<p>In other words, some consumers were misled into thinking they could control Google’s location data collection practices by switching “off” Location History, whereas Web & App Activity also needed to be disabled to provide this protection.</p>
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Read more:
<a href="https://theconversation.com/the-accc-is-suing-google-for-misleading-millions-but-calling-it-out-is-easier-than-fixing-it-143447">The ACCC is suing Google for misleading millions. But calling it out is easier than fixing it</a>
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<p>The ACCC also argued consumers reading Google’s privacy statement would be misled into thinking personal data was collected for their own benefit rather than Google’s. However, the court dismissed this argument on the grounds that reasonable users wanting to turn the Location History “off” </p>
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<p>would have assumed that Google was obtaining as much commercial advantage as it could from use of the user’s personal location data. </p>
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<p>This is surprising and might deserve further attention from regulators concerned to protect consumers from corporations “data harvesting” for profit.</p>
<h2>How much should Google pay?</h2>
<p>The penalty and other enforcement orders against Google will be made at a <a href="https://www.accc.gov.au/media-release/google-misled-consumers-about-the-collection-and-use-of-location-data">later date</a>. </p>
<p>The aim of the penalty is to deter Google specifically, and other firms like Google, from engaging in misleading conduct again. If penalties are too low they may be treated by wrongdoing firms as merely a “<a href="https://www.accc.gov.au/media-release/full-federal-court-orders-6-million-penalty-for-nurofen-specific-pain-products">cost of doing business</a>”. </p>
<p>However, in circumstances where there is a high degree of <a href="https://www.accc.gov.au/media-release/full-court-dismisses-volkswagen-125m-penalty-appeal">corporate culpability</a>, the Federal Court has shown willingness to award higher amounts than in the past. This has occurred even where the regulator has not sought higher penalties. In the recent <a href="https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/full/2021/2021fcafc0049">Volkswagen Aktiengesellschaft v ACCC</a> judgement, the full Federal Court confirmed an award of A$125 million against Volkswagen for making false representations about compliance with Australian diesel emissions standards.</p>
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<img alt="" src="https://images.theconversation.com/files/395639/original/file-20210419-21-1kki6os.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/395639/original/file-20210419-21-1kki6os.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=407&fit=crop&dpr=1 600w, https://images.theconversation.com/files/395639/original/file-20210419-21-1kki6os.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=407&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/395639/original/file-20210419-21-1kki6os.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=407&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/395639/original/file-20210419-21-1kki6os.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=512&fit=crop&dpr=1 754w, https://images.theconversation.com/files/395639/original/file-20210419-21-1kki6os.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=512&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/395639/original/file-20210419-21-1kki6os.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=512&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The Federal Court found Google’s information about local data tracking was misleading.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
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<p>In setting Google’s penalty, a court will consider factors such as the nature and extent of the misleading conduct and any loss to consumers. The court will also <a href="https://jade.io/j/?a=outline&id=509081">take into account</a> whether the wrongdoer was involved in “deliberate, covert or reckless conduct, as opposed to negligence or carelessness”. </p>
<p>At this point, Google may well argue that only some consumers were misled, that it was possible for consumers to be informed if they read more about Google’s privacy policies, that it was only one slip-up, and that its contravention of the law was unintentional. These might seem to reduce the seriousness or at least the moral culpability of the offence. </p>
<p>But we argue they should not unduly cap the penalty awarded. Google’s conduct may not appear as “<a href="https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/full/2021/2021fcafc0049">egregious and deliberately deceptive</a>” as the Volkswagen case. </p>
<p>But equally Google is a massively profitable company that makes its money precisely from obtaining, sorting and using its users’ personal data. We think therefore the court should look at the number of Android users potentially affected by the misleading conduct and Google’s responsibility for its own choice architecture, and work from there.</p>
<h2>Only some consumers?</h2>
<p>The Federal Court acknowledged not all consumers would be misled by Google’s representations. The court accepted many consumers would simply accept the privacy terms without reviewing them, an outcome consistent with the so-called <a href="https://theconversation.com/the-privacy-paradox-we-claim-we-care-about-our-data-so-why-dont-our-actions-match-143354">privacy paradox</a>. Others would review the terms and click through to more information about the options for limiting Google’s use of personal data to discover the scope of what was collected under the “Web & App Activity” default.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-privacy-paradox-we-claim-we-care-about-our-data-so-why-dont-our-actions-match-143354">The privacy paradox: we claim we care about our data, so why don't our actions match?</a>
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<p>This might sound like the court was condoning consumers’ carelessness. In fact the court made use of insights from economists about the <a href="https://theconversation.com/inducing-choice-paralysis-how-retailers-bury-customers-in-an-avalanche-of-options-116078">behavioural biases</a> of consumers in making decisions. </p>
<p>Consumers have limited time to read legal terms and limited ability to understand the future risks arising from those terms. Thus, if consumers are concerned about privacy they might try to limit data collection by selecting various options, but are unlikely to be able to read and understand privacy legalese like a trained lawyer or with the background understanding of a data scientist. </p>
<p>If one option is labelled “Location History”, it is entirely rational for everyday consumers to assume turning it off limits location data collection by Google.</p>
<p>The number of consumers misled by Google’s representations will be difficult to assess. But even if a small proportion of Android users were misled, that will be a very large number of people. </p>
<p>There was evidence before the Federal Court that, after press reports of the tracking problem, the number of consumers switching off the “Web” option increased by 500%. Moreover, Google makes considerable profit from the large amounts of personal data it gathers and retains, and profit is important when it comes deterrence.</p>
<h2>Google’s choice architecture</h2>
<p>It has also been revealed that some employees at Google were not aware of the problem until an <a href="https://apnews.com/article/828aefab64d4411bac257a07c1af0ecb#:%7E:text=SAN%20FRANCISCO%20(AP)%20%E2%80%94%20Google,explicitly%20tell%20it%20not%20to.&text=Computer%2Dscience%20researchers%20at%20Princeton,findings%20at%20the%20AP's%20request">exposé</a> in the press. An urgent meeting was held, referred to internally as the “Oh Shit” meeting.</p>
<p>The individual Google employees at the “Oh Shit” meeting may not have been aware of the details of the system. But that is not the point. </p>
<p>It is the <a href="https://www.uwa.edu.au/news/Article/2021/February/Crown-Collingwood-and-the-corporate-conscience">company</a> fault that is the question. And a company’s culpability is not just determined by what some executive or senior employee knew or didn’t know about its processes. Google’s corporate mindset is manifested or revealed in the systems it designs and puts in place.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/inducing-choice-paralysis-how-retailers-bury-customers-in-an-avalanche-of-options-116078">Inducing choice paralysis: how retailers bury customers in an avalanche of options</a>
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<p>Google designed the information system that faced consumers trying to manage their privacy settings. This kind of system design is sometimes referred to as “<a href="https://fil.forbrukerradet.no/wp-content/uploads/2018/06/2018-06-27-deceived-by-design-final.pdf.">choice architecture</a>”. </p>
<p>Here the choices offered to consumers steered them away from opting out of Google collecting, retaining and using personal location data. </p>
<p>The “Other Options” (for privacy) information failed to refer to the fact that location tracking was carried out via other processes beyond the one labelled “Location History”. Plus, the default option for “Web & App Activity” (which included location tracking) was set as “on”.</p>
<p>This privacy eroding system arose via the design of the “choice architecture”. It therefore warrants a serious penalty.</p><img src="https://counter.theconversation.com/content/159206/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jeannie Marie Paterson receives funding from the Australian Research Council for research conducted with Professor Elise Bant on 'Developing a Coherent Law of Misleading Conduct' DP 180100932.</span></em></p><p class="fine-print"><em><span>Elise Bant receives funding from the Australian Research Council for research conducted with Professor Jeannie Marie Paterson on 'Developing a Rational Law of Misleading Conduct' DP180100932 and for her Future Fellowship research on 'Unravelling Corporate Fraud' FT190100475.</span></em></p>To deter Google and other big tech companies from misleading users about data collection, the Federal Court should impose heavy fines.Jeannie Marie Paterson, Professor of Law, The University of MelbourneElise Bant, Professor of Law, The University of Western AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1520792020-12-15T18:25:16Z2020-12-15T18:25:16ZNZ businesses are still including potentially unfair terms in their general contracts — consumers deserve better<figure><img src="https://images.theconversation.com/files/374987/original/file-20201215-19-1m7mzfd.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C7668%2C5116&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">www.shutterstock.com</span></span></figcaption></figure><p>The last time you used a car parking building and paid for the service online, did you pause to read the terms and conditions? If not, you might be surprised to find the car park operator could have the right to remove your vehicle without having to give any reason — and would not be obliged to refund any charges you’ve paid.</p>
<p>This is just one example of commercial terms identified as potentially unfair in a <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3748793">new study</a> by Te Herenga Waka—Victoria University of Wellington in association with the Ministry of Business, Innovation and Employment.</p>
<p>The study compared contracts from 2015 and 2018 (the latest available data) to assess whether businesses are revising their contracts to remove “potentially unfair terms” in line with <a href="https://www.mbie.govt.nz/dmsdocument/7112-review-of-consumer-law-fair-trading-act-evaluation-report">changes</a> to the Fair Trading Act introduced in 2015. </p>
<p>Such terms are defined as those a court could find unfair, based on the law’s own criteria. Other examples of potentially unfair terms revealed in the study include:</p>
<blockquote>
<p>We may choose not to connect […] services to your premises for any reason, including where we reasonably consider it uneconomic or unsafe to do so. We may exercise this right at any time, even after we have accepted your application for […] services.</p>
<p>You agree to pay any such charges and fees in addition to your membership fee and acknowledge that all fees in the agreement are subject to change at our discretion and without notice.</p>
</blockquote>
<p>The study reveals potentially unfair terms are relatively common in standard form contracts — those terms and conditions for which most of us simply click “I agree”. </p>
<h2>An increasing problem</h2>
<p>Every one of the 134 contracts from 2018 contained at least one potentially unfair term. The most common penalises the customer but not the service provider for a breach or termination of the contract.</p>
<p>A <a href="https://www.stuff.co.nz/business/83949811/laws-to-protect-consumers-from-unfair-contract-terms-arent-working-claims-academic-alexandra-sims">previous study</a> by the University of Auckland in 2015 had looked at contracts issued by New Zealand businesses. The new study was able to directly assess 119 of these to see whether they had amended their contracts to remove potentially unfair terms.</p>
<p>In fact, there was an overall increase of 9.2% in unfair terms between 2015 and 2018. Significant increases were seen in the health and fitness and telecommunications industries. </p>
<p>Just 22 of the 119 contracts reviewed had fewer potentially unfair terms in 2018. Significant declines were seen in banking, digital music and transport.</p>
<p>These results will disappoint those who had hoped the Fair Trading Act changes in 2015 would lead to a reduction in unfair terms in standard form consumer contracts.</p>
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<h2>More enforcement required</h2>
<p>The study report makes several recommendations aimed at improving compliance with the law, including more active enforcement by the Commerce Commission. </p>
<p>So far, the commission has issued just two sets of court proceedings seeking declarations of unfair terms. One of these resulted in a declaration that certain terms in the contracts of mobile trader Home Direct relating to a voucher entitlement scheme were <a href="https://comcom.govt.nz/news-and-media/media-releases/2019/refunds-for-home-direct-customers-after-first-unfair-contracts-term-declaration">unfair</a>. The other case concerned the terms of ticket re-seller Viagogo and is ongoing.</p>
<p>A key issue identified in the report is that consumers themselves can’t take action in court (or any other tribunal) when they have bought goods or services on potentially unfair terms.</p>
<p>The report recommends consumers should be able to take an unfair terms case to the <a href="https://disputestribunal.govt.nz/">Disputes Tribunal</a> and that the tribunal be allowed to adjudicate.</p>
<h2>Consumers need more information</h2>
<p>Lower-level enforcement is also recommended, such as the commission issuing warning letters. Education would also improve the situation.</p>
<p>The establishment of a database of terms that New Zealand and Australian courts have found to be unfair would help both traders and consumers. Given the similarities in the jurisdictions, Australian cases are likely to be influential in New Zealand.</p>
<p>Commission reviews of <a href="https://comcom.govt.nz/__data/assets/pdf_file/0018/86121/Unfair-contract-terms-Telecommunications-contracts-review-February-2016.pdf">telecommunications</a>, <a href="https://comcom.govt.nz/__data/assets/pdf_file/0019/86122/Unfair-contract-terms-Energy-retail-contracts-review-August-2016.pdf">electricity, gas</a> and <a href="https://comcom.govt.nz/__data/assets/pdf_file/0020/86123/Unfair-contract-terms-Gym-contracts-review-August-2017.PDF">gym</a> contracts have resulted in those industries reviewing contracts for potentially unfair terms. The report recommends more industry reviews.</p>
<p>Without such measures, it seems likely businesses will continue to include potentially unfair terms in their standard form contracts. New Zealand consumers deserve better protection.</p><img src="https://counter.theconversation.com/content/152079/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Victoria Stace received funding from MBIE. MBIE gave some money for the research - but I did not benefit from this personally it just paid for the research assistant.</span></em></p><p class="fine-print"><em><span>Alexandra Sims and Emily Chan do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A new study suggests the Commerce Commission needs to get tougher with New Zealand businesses over their general terms and conditions.Victoria Stace, Senior Lecturer, Te Herenga Waka — Victoria University of WellingtonAlexandra Sims, Associate Professor in Commericial Law, University of Auckland, Waipapa Taumata RauEmily Chan, Legal Research Assistant, Te Herenga Waka — Victoria University of WellingtonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1469882020-10-28T17:29:11Z2020-10-28T17:29:11ZRather than recalling unsafe products, why not ensure they’re safe in the first place?<figure><img src="https://images.theconversation.com/files/366046/original/file-20201028-13-8mdfad.jpg?ixlib=rb-1.1.0&rect=50%2C75%2C5615%2C3657&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>The death of Brittney Conway, the three-year-old Gold Coast girl killed <a href="https://www.abc.net.au/news/2020-10-23/gold-coast-family-calls-for-mandatory-button-battery-regulation/12797326">by swallowing a button battery</a>, has again drawn attention to deaths and injuries caused by consumer goods – and to a longstanding deficiency in Australia’s consumer safety laws.</p>
<p>About 20 Australian children a week are hospitalised due to swallowing batteries, and three have died since 2013. Preventing such cases was one of the <a href="https://www.accc.gov.au/about-us/australian-competition-consumer-commission/product-safety-priorities-2019">top product safety priorities</a> of the Australian Competition and Consumer Commission in 2019. </p>
<p>In 2019 a total of about 780 Australians were killed by consumer products, and a further 52,000 injured, according to the <a href="https://www.accc.gov.au/media-release/over-a-million-recalled-products-still-in-circulation-in-australia">consumer watchdog</a>. </p>
<p>Misadventure can never be eliminated, but more safety measures could be implemented. Product makers, for example, could ensure small batteries cannot be easily removed from devices by children. </p>
<p>Consider the 31,000 LED wristbands distributed to spectators at the AFL grand final in Bribane last Saturday. The AFL <a href="https://www.productsafety.gov.au/recall/australian-football-league-promotional-led-wristband">issued a safety recall on Tuesday</a>, days after child safety group <a href="https://www.facebook.com/KidsafeQld/posts/4673614532710717">Kidsafe Queensland warned</a> the wristband’s battery compartment, containing two button batteries, was not adequately secured. </p>
<figure class="align-center ">
<img alt="The promotional LED PixMob wristband recalled by the Australian Football Commission." src="https://images.theconversation.com/files/366057/original/file-20201028-21-b80lnb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/366057/original/file-20201028-21-b80lnb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=321&fit=crop&dpr=1 600w, https://images.theconversation.com/files/366057/original/file-20201028-21-b80lnb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=321&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/366057/original/file-20201028-21-b80lnb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=321&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/366057/original/file-20201028-21-b80lnb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=404&fit=crop&dpr=1 754w, https://images.theconversation.com/files/366057/original/file-20201028-21-b80lnb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=404&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/366057/original/file-20201028-21-b80lnb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=404&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The promotional LED PixMob wristband recalled by the Australian Football Commission.</span>
<span class="attribution"><a class="source" href="https://www.productsafety.gov.au/recall/australian-football-league-promotional-led-wristband">www.productsafety.gov.au</a></span>
</figcaption>
</figure>
<p>The problem, as acknowledged in March 2019 by the <a href="https://www.productsafety.gov.au/news/unsafe-goods-should-be-illegal-to-sell">consumer watchdog’s head, Rod Sims</a>, is that it is generally not against consumer protection regulations to supply unsafe goods in Australia. </p>
<p>Only <a href="https://www.productsafety.gov.au/product-safety-laws/safety-standards-bans/mandatory-standards">a select list of about 44 product types</a> are regulated by mandatory safety standards. These include things such as aquatic equipment, bicycle gear, cots, prams, toys for children aged three and under, and all toys containing magnets, lead and other hazardous elements.</p>
<p>But for thousands of other products, the <a href="https://consumerlaw.gov.au/">Australian Consumer Law</a> (ACL) is reactive. Regulators can act only after a problem becomes apparent and enough people are actually or potentially injured or killed. </p>
<p>Sims spelled out the fix by calling on Australian law makers to follow European and other nations by introducing a “general safety provision” obliging firms to be proactive, not reactive, in ensuring they supply safe products.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/button-batteries-kill-heres-how-we-can-prevent-needless-child-deaths-from-battery-ingestion-101187">Button batteries kill. Here's how we can prevent needless child deaths from battery ingestion</a>
</strong>
</em>
</p>
<hr>
<h2>Moving from reaction to prevention</h2>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/366064/original/file-20201028-21-1c151vm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Sleeping with the Enemy recalled its Summer Mini-Personalised Sleepwear range on October 6 2020" src="https://images.theconversation.com/files/366064/original/file-20201028-21-1c151vm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/366064/original/file-20201028-21-1c151vm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=790&fit=crop&dpr=1 600w, https://images.theconversation.com/files/366064/original/file-20201028-21-1c151vm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=790&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/366064/original/file-20201028-21-1c151vm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=790&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/366064/original/file-20201028-21-1c151vm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=992&fit=crop&dpr=1 754w, https://images.theconversation.com/files/366064/original/file-20201028-21-1c151vm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=992&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/366064/original/file-20201028-21-1c151vm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=992&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Sleeping with the Enemy recalled its Summer Mini-Personalised Sleepwear range on October 6 2020. The garments pose a fire risk to the wearer.</span>
<span class="attribution"><a class="source" href="https://www.productsafety.gov.au/recall/sleeping-with-the-enemy-summer-mini-personalised-sleepwear">www.productsafety.gov.au</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>Currently, for any product not covered by <a href="https://www.productsafety.gov.au/product-safety-laws/safety-standards-bans/mandatory-standards">mandatory safety standards</a>, Australian suppliers tend to voluntarily recall items found to be unsafe. They do this mainly to avoid compensation claims and reputational risk.</p>
<p>Those harmed can pursue compensation from sellers for breaching consumer guarantees or from manufacturers for product liability. But even big <a href="https://www.smh.com.au/business/consumer-affairs/after-the-high-court-threw-out-the-anz-bank-fee-case-are-class-actions-cactus-20160729-gqgcpm.html">class-action</a> law firms tend to find it easier to bring claims for investors rather than customers. </p>
<p>The Australian Competition and Consumer Commission can also ban products found to be dangerous, with <a href="https://www.productsafety.gov.au/product-safety-laws/safety-standards-bans/product-bans">19 products</a> currently on its list. These include plastic children’s items containing the <a href="https://www.productsafety.gov.au/bans/dehp-in-childrens-plastic-items">chemical diethylhexyl phthalate</a> (DEHP), combustible candle holders and gas masks containing asbestos.</p>
<p>But all this remains a <a href="https://www.choice.com.au/shopping/consumer-rights-and-advice/your-rights/articles/support-grows-for-a-general-safety-provision">reactive response</a>. Suppliers are only indirectly incentivised to market safe products. </p>
<figure class="align-left zoomable">
<a href="https://images.theconversation.com/files/366075/original/file-20201028-13-kum5ta.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Bubs & Me Boutique recalled this dummy chain on October 26 2020" src="https://images.theconversation.com/files/366075/original/file-20201028-13-kum5ta.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/366075/original/file-20201028-13-kum5ta.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=1355&fit=crop&dpr=1 600w, https://images.theconversation.com/files/366075/original/file-20201028-13-kum5ta.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=1355&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/366075/original/file-20201028-13-kum5ta.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=1355&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/366075/original/file-20201028-13-kum5ta.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1703&fit=crop&dpr=1 754w, https://images.theconversation.com/files/366075/original/file-20201028-13-kum5ta.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1703&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/366075/original/file-20201028-13-kum5ta.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1703&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Bubs & Me Boutique recalled this dummy chain on October 26 2020. It poses a strangulation hazard.</span>
<span class="attribution"><a class="source" href="https://www.productsafety.gov.au/recall/bubs-me-boutique-dummy-chains">www.productsafety.gov.au</a></span>
</figcaption>
</figure>
<p>A general safety provision, backed by financial penalties and other regulatory powers, would require them to supply only safe products, taking into factors such as consumer expectations and industry best practices. </p>
<p>Britain has had such a provision since 1987, and the European Union since 1992. Hong Kong, Macau, Malaysia, Canada and Singapore have <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3551793">followed suit</a>. </p>
<p>Adding a general safety provision to Australian law was canvassed by Productivity Commission inquiries in <a href="https://www.pc.gov.au/inquiries/completed/consumer-product-safety">2006</a> and <a href="https://www.pc.gov.au/inquiries/completed/consumer-policy/report">2008</a>. These found insufficient evidence benefits would outweigh costs, so other legislative reforms should be tried first. </p>
<p>But the 2017 final report of the government’s <a href="https://consumerlaw.gov.au/consultations-and-reviews/australian-consumer-law-review">review of the ACL</a> reached a different conclusion. Noting the Australian market for consumer goods had changed significantly, with many more low-cost imports, it recommended an “overarching general obligation” on traders to ensure the safety of their products.</p>
<p>A general safety provision, the report said, would place “a clear onus” on traders to ensure the safety of the products they sold to Australian consumers: </p>
<blockquote>
<p>It would shift responsibility for managing product safety risks from consumers and regulators to traders who are better placed to control those risks at the design and manufacturing stage of a product’s life.</p>
</blockquote>
<p>The annual economic cost of deaths and injuries from unsafe consumer is at least A$4.5 billion, estimates the Australian Treasury (which in October 2019 <a href="https://consult.treasury.gov.au/market-and-competition-policy-division-internal/main-consultation/">sought submissions</a> on reform options including a general safety provision). This assumes a “value of a statistical life year” of about A$200,000 for premature deaths and disability. There are also A$500 million in direct hospital costs, and further costs associated with minor injuries and property loss.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/australian-consumer-law-is-failing-beer-drinkers-85260">Australian consumer law is failing beer drinkers</a>
</strong>
</em>
</p>
<hr>
<h2>Australia is lagging behind other nations</h2>
<p>My own <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7283989/">research</a> (and <a href="https://erga-omnes.sydney.edu.au/2019/10/improving-the-effectiveness-of-the-consumer-product-safety-system-australia-in-international-comparative-context/">submission</a> to the Treasury) provide evidence supporting a general safety provision. </p>
<p>First, the <a href="https://globalrecalls.oecd.org/">OECD Global Recalls</a> portal (which tracks product recalls around the world) shows Australia had higher per capita voluntary recalls than Korea, Britain, Japan and the US between 2017 and 2019. Canada’s recall rate was similar, but it has a <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1600502">more stringent duty on suppliers</a> to report product accidents to regulators compared with Australia. </p>
<p>This suggests relatively more unsafe products are making it to market in Australia. About 40% of those recalls involve child products, of which around 60% come from China.</p>
<p>Second, the number of annual recalls has been rising in Australia, as shown by figures compiled by peak advocacy group <a href="https://www.choice.com.au/-/media/df52380f2b9c4e33a239eb82c1dd8216.ashx?la=en">Choice</a> from <a href="https://www.productsafety.gov.au/recalls">government data</a>. The increase from about 2011 is in line with burgeoning online shopping. Greater e-commerce due to the COVID-19 pandemic may add to the numbers.</p>
<hr>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/366123/original/file-20201028-13-hglarh.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/366123/original/file-20201028-13-hglarh.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/366123/original/file-20201028-13-hglarh.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=406&fit=crop&dpr=1 600w, https://images.theconversation.com/files/366123/original/file-20201028-13-hglarh.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=406&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/366123/original/file-20201028-13-hglarh.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=406&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/366123/original/file-20201028-13-hglarh.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=511&fit=crop&dpr=1 754w, https://images.theconversation.com/files/366123/original/file-20201028-13-hglarh.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=511&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/366123/original/file-20201028-13-hglarh.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=511&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<hr>
<p>Further analysis by <a href="https://eprints.qut.edu.au/197226/">Catherine Niven and colleagues</a> shows Australian recalls of children’s products increased 88% from 2011 to 2017 (US recalls decreased by 21%). Just as alarmingly, almost two-thirds of the recalls involved products not complying with specific mandatory standards (also demonstrated by two recent recalls pictured above). </p>
<h2>Time to put safety first</h2>
<p>Regulators could seek to sanction local suppliers more for such non-compliance with existing law. </p>
<p>But introducing a broader general safety provision would create a <a href="https://productsafetysolutions.com.au/new-product-safety-laws-being-considered/">paradigm shift</a> in how companies deal with safety. </p>
<p>Manufacturers, distributors and retailers would need to think more carefully about (and document) safety assessments before putting products into circulation. </p>
<p>This is more efficient and safer than releasing products and then trying to recall them after problems start to be reported, hoping not too many consumers get harmed. It would also encourage businesses to “<a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3398046">trade up</a>” to the standards expected in many of our trading partners. </p>
<p>Choice has confirmed many Australians <a href="https://www.choice.com.au/shopping/consumer-rights-and-advice/your-rights/articles/weak-product-safety-laws-in-australia">wrongly assume</a> we already have a general safety provision. </p>
<p>It’s time to improve the law to avoid confusion and send better signals to suppliers.</p><img src="https://counter.theconversation.com/content/146988/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Luke Nottage receives funding from the Australian Research Council: DP170103136, "Evaluating consumer product regulatory responses to improve child safety". He provides occasional pro bono advice to Choice regarding consumer law and policy reform, and acknowledges assistance from Choice and Catherine Niven in compiling the graph reproduced here charting Australia's annual recalls from 1998 to 2019.</span></em></p>Australian needs a ‘general safety provision’ that obliges firms to be proactive, not reactive, in ensuring they supply safe consumer products.Luke Nottage, Professor, Sydney Law School, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1443792020-09-14T15:05:43Z2020-09-14T15:05:43ZHow Nigeria’s new competition law will benefit the economy - and what to watch for<figure><img src="https://images.theconversation.com/files/357454/original/file-20200910-24-xtd4iu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">An unregulated economy leaves the economically disadvantaged at the mercy of the rich and powerful </span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-illustration/judges-gavel-block-against-flag-nigeria-1344673268">Novikov Aleksey/Shutterstock </a></span></figcaption></figure><p>Competition laws protect consumers and create <a href="https://www.academia.edu/8822080/The_Need_and_the_Challenges_to_the_Establishment_of_a_Competition_Law_Regime_in_Nigeria">confidence</a> in an economy. It’s a signal to investors and entrepreneurs that a market is fair and open. And the reward for countries that regulate competition is that on average they <a href="https://pdfs.semanticscholar.org/b5a0/f7df84ba435d90e5565225ae3db00e93c387.pdf">produce more</a> value per capita than others.</p>
<p>In Nigeria the competition law regime has been inadequate compared with its economy’s size and complexity. It hasn’t had a comprehensive law addressing anti-competitive trade practices like monopoly, price regulation and abuse of dominance.</p>
<p>The government previously had a monopoly over certain key sectors of the economy, such as telecommunications and electric power. After these were largely privatised, anti-competitive activities remained evident. These raised entry barriers, limited innovation and reduced quality in the market.</p>
<p>After <a href="https://pdfs.semanticscholar.org/2b89/5cf06379dfec95e8447e93e3b1b34eb02867.pdf">earlier unsuccessful attempts</a>, the Nigerian government has now enacted a national competition law, <a href="http://fccpc.gov.ng/guidelines/documents/">the Federal Competition and Consumer Protection Act 2018</a>. Our <a href="https://www.tandfonline.com/doi/full/10.1080/03050718.2020.1770617?scroll=top&needAccess=true">research</a> looks at how effective this is likely to be in creating a fair and efficient market that benefits Nigerian businesses and consumers alike. </p>
<h2>A few dominant players</h2>
<p>Lack of competition regulation created outright dominance of a few players in some industries.</p>
<p>In television, for example, DStv Nigeria was able to control pricing mechanisms. <a href="https://medium.com/@ayokunleojelade/competition-law-and-the-control-of-monopoly-in-nigeria-853f6d57886b">Between 2009 and 2017</a>, prices increased eight times. </p>
<p>A major cement producer, <a href="https://www.dangotecement.com/">Dangote Cement</a>, is said to have <a href="https://medium.com/@ayokunleojelade/competition-law-and-the-control-of-monopoly-in-nigeria-853f6d57886b">forced the market cement price</a> up in 2017. </p>
<p>Similarly in telecommunications, MTN has been accused of <a href="https://www.bloomberg.com/news/articles/2019-10-22/nigeria-mulls-action-to-boost-competition-in-telecoms-industry">undermining competition.</a>.</p>
<p>President Muhammadu Buhari <a href="http://fccpc.gov.ng/news-events/releases/2019/02/06/federal-competition-and-consumer-protection-bill/">assented</a> to the Federal Competition and Consumer Protection Act in February 2019. It established the <a href="http://fccpc.gov.ng/">Federal Competition and Consumer Protection Commission</a>, which oversees consumer protection and competition issues in all entities in Nigeria. These include commercial and government bodies or agencies. </p>
<h2>Powers and potential problems</h2>
<p>Competition exists when no single buyer or seller can control the price in the market. This occurs when there are enough agents active in the market. New agents can enter the market if they want to and price is thus <a href="http://cpparesearch.org/nu-en-pl/competition-policy-nigerian-commercial-governance/">determined by the market</a> as a whole. </p>
<p>The <a href="http://fccpc.gov.ng/guidelines/documents/">Act</a> provides rules to minimise market distortions across all sectors. It also ensures that fair play is respected. It prohibits unfair business practices that are likely to reduce competition and lead to higher prices, reduced quality or levels of service, or less innovation. </p>
<p>But there are some issues that could affect the new act’s efficiency. One is the domination of the Act over sector specific competition legislation. The advantage is that it brings a uniform perspective and jurisprudence to competition issues in Nigeria. On the other hand, some competition issues are sector based. This is why various government agencies have standards and laws for regulating competition in their specific sectors. </p>
<p><a href="https://www.tandfonline.com/doi/abs/10.1080/03050718.2020.1770617?af=R&journalCode=rclb20">For example</a> the <a href="https://nerc.gov.ng/">Nigerian Electricity Regulatory Commission</a> regulates the electricity sector while the <a href="https://www.ncc.gov.ng/">Nigerian Communications Commission</a> deals with the telecommunication sector. The <a href="https://sec.gov.ng/">Securities and Exchange Commission</a> regulates the capital market and the <a href="https://www.cbn.gov.ng/">Central Bank of Nigeria</a> oversees banking. The domination of the Act over sector specific legislation has the tendency to create an overlap and interfere with the roles and functions of these agencies.</p>
<p>To guard against this power tussle, the Act allows for negotiation of agreements with sector specific regulators. It’s also possible to harmonise regulations to resolve any inconsistencies in enforcement.</p>
<p>The <a href="http://fccpc.gov.ng/">Federal Competition and Consumer Protection Commission</a> was set up to administer and enforce the Act. It can also conduct quality tests on consumer goods as it deems necessary. It can compel makers and suppliers to certify that they have met all standards for goods and services, and warn of any health hazards. These powers are similar to those of the Standards Organisation of Nigeria and the National Agency for Food and Drug Administration and Control. There is an overlap of function and authority, so all these agencies will have to work together. </p>
<p>Another issue is funding of the new regulatory regime. Rather than depending exclusively on budgetary allocation, a better way of funding could have been through a combination of different sources such as general revenues, fees or fines. This would <a href="https://www.tandfonline.com/doi/abs/10.1080/03050718.2020.1770617?af=R&journalCode=rclb20">make it more difficult</a> for any single source of funding to dominate the budget and influence the Commission’s activities.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-a-lack-of-competition-in-south-africas-private-health-sector-hurts-consumers-125380">How a lack of competition in South Africa's private health sector hurts consumers</a>
</strong>
</em>
</p>
<hr>
<p>The new Act is applicable to certain conduct outside Nigeria. This could bring up questions about whose laws apply. To clear up any ambiguity, Nigeria should publish the procedure for applying its competition law internationally.</p>
<p>In addition, the powers of the president of Nigeria to regulate prices are at variance with the power of the Price Control Board to fix prices of commodities as provided in the Price Control Act. </p>
<p>The new competition law has given a lot of powers to the new, untested Commission. It will have to be staffed by professionals who are knowledgeable in antitrust laws, economics and intellectual property and representatives of the various sectors of production.</p>
<p>The importance of the legal framework for competition regulation in Nigeria cannot be over emphasised. An unregulated economy leaves the economically disadvantaged at the mercy of the rich and powerful. </p>
<p>That is not only dangerous to the economy but also dangerous to democracy. This is the case in Nigeria today as the nation is sliding into a two-class society: <a href="https://www.kitsapdailynews.com/letters/the-dangers-of-unregulated-laissez-faire-capitalism/">rich wealth hoarders and impoverished workers</a>.</p><img src="https://counter.theconversation.com/content/144379/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Oluchukwu Precious Obioma does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Lack of competition regulation created outright dominance of a few players in some industries.Oluchukwu Precious Obioma, PhD candidate, Department of Commercial and Corporate Law, Faculty of Law, University of NigeriaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1364022020-05-07T19:52:38Z2020-05-07T19:52:38ZSpruiking the stars: some home builders are misleading consumers about energy ratings<p>Australia’s competitive volume housing construction sector is busy spruiking various upgrades and packages to sell the appealing notions of <a href="http://www.prres.net/papers/Bartak_Exploring_the_energy_efficiency_conversation.pdf">lifestyle and luxury on a budget</a>. Along with sparkling stone benchtops and alfresco dining areas, some builders use sustainability and energy-efficiency features to entice customers. However, our <a href="https://doi.org/10.1016/j.enpol.2020.111370">recent study</a> found the ways some volume builders promote energy efficiency and sustainability could mislead consumers and breach the <a href="https://consumerlaw.gov.au/australian-consumer-law/legislation">Australian Consumer Law</a>. </p>
<h2>Understanding the stars</h2>
<p>Stars are a simple shorthand or “measuring tape” to help consumers to quickly and easily identify the energy efficiency of each home, and to compare one house to another. Under the <a href="https://www.nathers.gov.au/governance/national-construction-code-and-state-and-territory-regulations">Nationwide House Energy Rating Scheme (NatHERS)</a> the best rating is ten stars. Six stars is the regulatory <em>minimum</em> required of most new homes in Australia. </p>
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<strong>
Read more:
<a href="https://theconversation.com/australias-still-building-4-in-every-5-new-houses-to-no-more-than-the-minimum-energy-standard-118820">Australia's still building 4 in every 5 new houses to no more than the minimum energy standard</a>
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<p>A <a href="https://ahd.csiro.au/dashboards/energy-rating/">NatHERS rating is the most common method</a> of demonstrating compliance with <a href="https://www.abcb.gov.au/Resources/Publications/Education-Training/energy-efficiency-ncc-volume-two">energy-efficiency</a> standards. The ten-star NatHERS scale differs from many other commonly used star rating schemes, such as <a href="https://new.gbca.org.au/green-star/rating-system/">Green Star</a>, where five or six stars indicate best, not minimum, performance. This is where the <a href="https://www.thefifthestate.com.au/innovation/rating-tools/issue-no-368-on-why-too-many-stars-are-causing-confusion-and-greenwash/">potential for consumers to be misled</a> begins. </p>
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<a href="https://images.theconversation.com/files/333011/original/file-20200506-49565-1yvfrnc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/333011/original/file-20200506-49565-1yvfrnc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/333011/original/file-20200506-49565-1yvfrnc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=422&fit=crop&dpr=1 600w, https://images.theconversation.com/files/333011/original/file-20200506-49565-1yvfrnc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=422&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/333011/original/file-20200506-49565-1yvfrnc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=422&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/333011/original/file-20200506-49565-1yvfrnc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=530&fit=crop&dpr=1 754w, https://images.theconversation.com/files/333011/original/file-20200506-49565-1yvfrnc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=530&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/333011/original/file-20200506-49565-1yvfrnc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=530&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">NatHERS (on the left) uses a ten-star scale, on which six stars is the minimum standard for most new homes built in Australia. Other six-star energy rating systems, such as for home appliances (right), add to the potential for confusion about the use of NatHERS stars.</span>
<span class="attribution"><span class="source">NatHERS, Energy Rating/Commonwealth of Australia</span></span>
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</figure>
<p>Most new home buyers are not well versed in building design or energy efficiency regulations. They tend to <a href="https://doi.org/10.5130/AJCEB.v17i2.5245">rely on industry experts such as builders</a> when making such decisions about their new home. </p>
<p>We wanted to find out how Australia’s volume home builders communicated to consumers about energy ratings. Were they meeting their obligations under the Australian Consumer Law?</p>
<h2>What does the law say?</h2>
<p><a href="https://www.accc.gov.au/publications/advertising-selling/advertising-and-selling-guide/avoid-misleading-or-deceptive-claims-or-conduct/misleading-or-deceptive-conduct">Section 18(1) of the Australian Consumer Law</a> states:</p>
<blockquote>
<p>A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.</p>
</blockquote>
<p>As the Australian Competition and Consumer Commission’s <a href="https://www.accc.gov.au/publications/green-marketing-and-the-australian-consumer-law">guide on green marketing</a> points out, when making statements about green initiatives the <em>overall impression</em> to a typical audience is most important. It cautions businesses:</p>
<blockquote>
<p>You should be careful that the overall impression you create about the goods or services you sell is not misleading. In other words, it is not enough for each representation to be technically or narrowly correct. It is just as important to look at the overall impression created in the minds of average consumers in the target audience. </p>
</blockquote>
<h2>What we found</h2>
<p><a href="https://doi.org/10.1016/j.enpol.2020.111370">Our study</a> examined the websites of <a href="https://hia.com.au/housing/in-focus/2018/HIA-Housing-100-unveiled">Australia’s largest volume home builders</a> to see how they explained the energy efficiency of their homes to potential buyers. We found logos and language that could mislead consumers about the energy-efficiency performance of those homes. </p>
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Read more:
<a href="https://theconversation.com/low-energy-homes-dont-just-save-money-they-improve-lives-81084">Low-energy homes don't just save money, they improve lives</a>
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<p>No websites we examined actually used the official NatHERS logo. Instead, some builders had created their own version of a six-star logo. Each example we found showed a grouping of six stars only, suggesting a rating of six out of six was the best rating. </p>
<p>Buyers are likely to interpret these logos as meaning six stars is superior or excellent performance, rather than the <em>minimum</em> performance benchmark that applies to all new homes. One logo went further, claiming six-star “sustainability” – when a <a href="https://www.nathers.gov.au/about">NatHERS rating only measures thermal energy efficiency</a>.</p>
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<a href="https://images.theconversation.com/files/332917/original/file-20200505-49579-lw967r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/332917/original/file-20200505-49579-lw967r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/332917/original/file-20200505-49579-lw967r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=192&fit=crop&dpr=1 600w, https://images.theconversation.com/files/332917/original/file-20200505-49579-lw967r.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=192&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/332917/original/file-20200505-49579-lw967r.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=192&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/332917/original/file-20200505-49579-lw967r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=241&fit=crop&dpr=1 754w, https://images.theconversation.com/files/332917/original/file-20200505-49579-lw967r.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=241&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/332917/original/file-20200505-49579-lw967r.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=241&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Logos the study found show a grouping of six stars only, suggesting six is the best rating, claiming six-star ‘sustainability’ and even offering this minimum standard ‘at no extra cost’.</span>
<span class="attribution"><a class="source" href="https://www.sciencedirect.com/science/article/abs/pii/S0301421520301269?via%3Dihub">Source: Observing energy rating stars through the Australian Consumer Law lens</a>, <span class="license">Author provided</span></span>
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<p>We also found statements on websites that inaccurately equated a six-star rating with a high energy performance. The website of one builder suggested six stars was a “superior” measure of service or quality. Another linked six stars with broader sustainability performance and commitment (<a href="https://www.nathers.gov.au/about">not just thermal energy efficiency</a>). One volume builder even described a six-star rating as an “award”! </p>
<p>In each case these statements could easily be misinterpreted as meaning the home was an exceptional product offering, rather than meeting the basic industry standard. </p>
<p>These volume home builder websites use logos and language that imply a high level of energy efficiency or a superior product offering, rather than simply indicating compliance with the minimum regulatory standard that applies to all new homes. As a result, home buyers are likely to be misled about the energy efficiency of these new homes. </p>
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Read more:
<a href="https://theconversation.com/homes-with-higher-energy-ratings-sell-for-more-heres-how-australian-owners-could-cash-in-128548">Homes with higher energy ratings sell for more. Here's how Australian owners could cash in</a>
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<h2>Effect matters, regardless of intent</h2>
<p><a href="https://doi.org/10.1016/j.enpol.2020.111370">Our research</a> does not seek to suggest volume home builders have deliberately set out to mislead potential buyers. However, Section 18(1) is concerned with <em>effect</em> rather than <em>intent</em>. While builders may not intend to mislead buyers, this may be an outcome of current advertising practices. </p>
<p>Therefore, as we point out to both volume home builders and new home buyers, any information about house energy ratings needs to be clear and accurate. It should reinforce that six stars is the <em>minimum</em> standard that applies, not the <em>best</em>. </p>
<p>Energy-efficiency measures such as star ratings for new homes are an important part of efforts to <a href="https://theconversation.com/making-every-building-count-in-meeting-australias-emission-targets-126930">reduce Australia’s energy demand and minimise contributions to climate change</a>. Misleading statements about house energy ratings not only risk breaching the Australian Consumer Law, but also weaken community trust in star ratings and in the information the home-building industry provides. It’s time to review the spruiking.</p>
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<p>
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<strong>
Read more:
<a href="https://theconversation.com/making-every-building-count-in-meeting-australias-emission-targets-126930">Making every building count in meeting Australia's emission targets</a>
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<img src="https://counter.theconversation.com/content/136402/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Georgia Warren-Myers is a member of the Thrive Research Hub at the University of Melbourne which has supported this research. </span></em></p><p class="fine-print"><em><span>Erika Bartak is a member of the Thrive Research Hub at the University of Melbourne which has supported this research. </span></em></p><p class="fine-print"><em><span>Lucy Cradduck does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Builders compete for customers by touting the features of their homes. Some builders promote ‘six-star’ home energy ratings in ways that could mislead consumers and breach Australian Consumer Law.Georgia Warren-Myers, Senior Lecturer in Property, The University of MelbourneErika Bartak, PhD Candidate (Sustainable housing), The University of MelbourneLucy Cradduck, Senior Lecturer, Faculty of Law, Queensland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1327662020-03-13T00:30:39Z2020-03-13T00:30:39ZWhen your house has a (disturbing) history, what should buyers be told about its ‘past’?<figure><img src="https://images.theconversation.com/files/320019/original/file-20200311-116255-hcfad0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">AAP/Paul Miller</span></span></figcaption></figure><p>Imagine you have just bought a home. You have moved in and, during a friendly chat with the neighbours, you find out the property had been the <a href="https://www.abc.net.au/news/2018-07-07/what-is-stigmatised-property-and-what-are-your-rights/9911608">scene of a serious crime</a> or <a href="https://www.aicnsw.com.au/our-dream-house-was-a-meth-lab/">used to manufacture</a> methamphetamine.</p>
<p>How would you react? Is this something you would want to have known prior to the sale? If you had known, would this have affected you decision to buy the property? And was the real estate agent or vendor <a href="https://www.domain.com.au/news/what-do-agents-have-to-reveal-about-a-home8217s-history-20170810-gxcm5k/">under any obligation</a> to let you know?</p>
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<strong>
Read more:
<a href="https://theconversation.com/what-should-buyers-of-a-house-be-told-about-it-102196">What should buyers of a house be told about it?</a>
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<p>In most cases, the answer is (somewhat surprisingly to buyers) “no”. However, amendments to Victoria’s Sale of Land Act 1962 <a href="https://www.consumer.vic.gov.au/latest-news/sale-of-land-changes-in-effect-legislation-update">have now broadened the matters</a> that must be disclosed to buyers prior to a sale, including where a serious crime has occurred. Renters who find they have entered into a stigmatised property must resort to the consumer protection laws discussed below. </p>
<h2>Why were the laws required?</h2>
<p>The ancient doctrine of <em>caveat emptor</em> (let the buyer beware) still impacts on real estate transactions. It means the buyer bears the responsibility of making their own enquiries about the property. </p>
<p>Property inspections are usually confined to the physical condition of the property. While it would be possible, at least theoretically, to arrange for a person to investigate its “background”, this can be a difficult process, especially if such information is concealed or hard to come by. </p>
<p>As a result, each state and territory has introduced laws that provide for some level of disclosure to the buyer during the conveyancing process. The extent of disclosure required and the nature of matters that must be disclosed varies from jurisdiction to jurisdiction.</p>
<p>Furthermore, section 18 of the Australian Consumer Law <a href="http://classic.austlii.edu.au/au/legis/cth/consol_act/caca2010265/sch2.html#_Toc32223214">considers conduct</a> as misleading or deceptive where a matter is not disclosed but, in the circumstances, there is a reasonable expectation it would be.</p>
<p>The problem is that while disclosure may be required in matters involving, for example, a structural fault or a road-widening proposal, such information is confined to physical issues affecting the property.</p>
<p>However, what happens when the matter involves not a physical defect but a psychological or stigmatising one, such as a murder, for example? Such information may be of considerable importance to potential buyers who, for personal or religious reasons, would find living in a property where such an event occurred intolerable. On a more mercenary note, the impact on resale value of the property <a href="http://journalarticle.ukm.my/7237/1/115-293-1-PB.pdf">could be significant</a>.</p>
<h2>The nature of ‘stigmatised’ property</h2>
<p>Concern about the effect of stigma on property is not a recent phenomenon. Courts in several jurisdictions, including Australia, <a href="https://api.research-repository.uwa.edu.au/portalfiles/portal/1218611/3632_3632.pdf">have had to grapple</a> with buyers who had discovered, after purchase, that the property had been the scene of a serious crime or criminal activity, a suicide had occurred, persons had been suffering from certain illnesses, or a sex offender lived nearby.</p>
<p>In one case a young man had murdered his parents and sister in their Sydney home. The property was later sold to a young couple. After discovering the tragic events that had occurred in the home, they sought to withdraw from the sale on religious grounds. </p>
<p>There was a <a href="https://www.theage.com.au/national/estate-agents-fined-over-triple-murder-house-20041220-gdz86g.html">significant amount of criticism</a> of the real estate agent for not informing the buyers about what had occurred there. After considerable public pressure and an investigation by the NSW Office of Fair Trading, the contract was set aside.</p>
<p>On a more ethereal note, there have been a series of cases in the United States where buyers have sought, in some cases successfully, to have a sale rescinded <a href="http://zillow.mediaroom.com/2019-10-29-Selling-a-Haunted-House-Heres-What-You-Need-to-Know">because the house</a> was (allegedly) haunted or the subject of <a href="https://casetext.com/case/stambovsky-v-ackley">paranormal activity</a>. </p>
<h2>Disclosure laws regarding stigma</h2>
<p>The Victorian legislation clarifies obligations for estate agents and vendors regarding <a href="https://www.consumer.vic.gov.au/latest-news/sale-of-land-changes-in-effect-legislation-update">the disclosure of “material facts”</a>.</p>
<p>In summary, an estate agent or vendor cannot knowingly conceal any material facts about a property when selling land. The legislation is supported by guidelines that clarify the nature of a material fact. This includes circumstances where, during the current or previous occupation, the property was the scene of a serious crime or an event that may create long-term potential risks to the health and safety of occupiers of the land.</p>
<p>Specific examples include extreme violence such as a homicide, the use of the property for the manufacture of substances such as methylamphetamine, or a defence or fire brigade training site involving the use of hazardous materials. Relevant factors can include the reaction of other potential buyers to the fact, including their willingness to buy in light of the revelation.</p>
<p>Significant penalties and even imprisonment await vendors and real estate agents who do not comply.</p>
<h2>Will the laws work?</h2>
<p>As with any new legislation, we will have to wait and see how this plays out. However, some preliminary comments can be made. </p>
<p>First, it will be interesting to see how the term “knowingly” is interpreted. Could an agent or vendor avoid the provisions if they merely suspect an issue but do not look further into it? The term “wilful blindness” comes to mind. </p>
<p>Second, a fact can be material in either a general or a specific sense. The general sense seems straightforward, as it refers to information most people would consider when deciding whether to buy a property. </p>
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Read more:
<a href="https://theconversation.com/who-bears-the-cost-when-your-uber-or-airbnb-turns-bad-39699">Who bears the cost when your Uber or Airbnb turns bad?</a>
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<p>However, how serious must a crime be to be material? What if the situation involves cultivation of marijuana rather than a more egregious substance? </p>
<p>More complex is where a material fact may be of importance to a specific buyer but not buyers generally. For example, in the case discussed above, the buyers’ religion made it impossible for them to live in a home where a violent murder had occurred. In this case, the onus seems to be on the prospective buyer to ask questions about matters of concern to them.</p>
<h2>What now?</h2>
<p>Although one suspects that buyers of an allegedly haunted house might not succeed under this legislation, the laws address a significant gap regarding disclosure of psychological considerations in the purchase of a property rather than the traditional physical ones.</p><img src="https://counter.theconversation.com/content/132766/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Eileen O'Brien does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>At the moment, buying a house with a “history” falls under the “buyer beware” provision. But changes to Victorian law shift the onus to estate agents to disclose “stigmatised” property.Eileen O'Brien, Professor of Law and Ageing, School of Law, University of South AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1279012019-12-03T02:45:11Z2019-12-03T02:45:11ZHow plant-based meat is stretching New Zealand’s cultural and legal boundaries<figure><img src="https://images.theconversation.com/files/304609/original/file-20191202-156120-egmji2.jpg?ixlib=rb-1.1.0&rect=78%2C104%2C4267%2C2794&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A New Zealand pizza chain deceived customers by offering plant-based meat without telling them - but it did so out of concerns for the environment.</span> <span class="attribution"><span class="source">from www.shutterstock.com</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span></figcaption></figure><p>Earlier this year, the New Zealand-based pizza chain <a href="https://www.stuff.co.nz/life-style/food-wine/78790234/the-history-of-hell-pizza">Hell Pizza</a> offered a limited-edition “Burger Pizza”. Its customers weren’t told that the “meat” was plant-based. </p>
<p>Some customers <a href="https://www.stuff.co.nz/business/113824494/hell-pizza-covertly-dishes-up-beyond-meat-burger-patties">complained</a> to the Commerce Commission, which enforces consumer law in New Zealand. Yet, <a href="https://www.stuff.co.nz/business/113867599/scorned-hell-pizza-customers-bitter-over-fake-burger-meat">others</a> did not mind – or even appreciated – the move. The Commerce Commission, however, warned that the stunt likely breached consumer protection law. </p>
<p>Hell Pizza’s ruse should catalyse discussion around the scope and purpose of consumer law, the culture of meat consumption and the future of animal farming. Under current law, “teaching through deception” is not possible. But we argue that consumer law needs to adopt a more nuanced approach. </p>
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Read more:
<a href="https://theconversation.com/whats-made-of-legumes-but-sizzles-on-the-barbie-like-beef-australias-new-high-tech-meat-alternative-124429">What's made of legumes but sizzles on the barbie like beef? Australia's new high-tech meat alternative</a>
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<h2>Traditional legal approach</h2>
<p>In October, the Commerce Commission <a href="https://comcom.govt.nz/case-register/case-register-entries/the-depths-lp-ta-hell-pizza/media-releases/commission-warns-hell-pizza-over-burger-pizza">warned</a> the pizza chain that it had probably breached the <a href="http://www.legislation.govt.nz/act/public/1986/0121/latest/DLM96439.html">Fair Trading Act 1986</a>. In particular, it had likely made false or misleading representations. </p>
<p>The Commerce Commission <a href="https://comcom.govt.nz/__data/assets/pdf_file/0034/178792/Warning-letter-to-The-Depths-LP-trading-as-Hell-Pizza-Redacted-25-September-2019.pdf">stated</a> that a “burger traditionally includes a patty of minced beef” and “medium-rare is a term associated with meat, usually beef”. </p>
<p>As a result, the pizza chain advised it had <a href="https://comcom.govt.nz/__data/assets/pdf_file/0034/178792/Warning-letter-to-The-Depths-LP-trading-as-Hell-Pizza-Redacted-25-September-2019.pdf">no intention</a> of engaging in this kind of campaign again. Interestingly, the pizza company has recently announced that the <a href="https://www.youtube.com/watch?v=TbaEo19Oc9k">Burger Pizza is back on the menu</a>. </p>
<p>Australia’s consumer law around misleading and deceptive conduct is notably similar to New Zealand’s. In Australia, <a href="https://www.abc.net.au/news/2019-09-15/push-to-ban-milk-meat-seafood-labels-on-plant-based-produce/11513754">debates</a> around the meaning of the terms “milk”, “seafood” and “meat” are taking place. These discussions present an opportunity to rethink some of our conventions. </p>
<h2>When is meat meat?</h2>
<p>The traditional need to protect consumers from deceptive practices is clear. That said, it is perhaps also time to nudge consumers to reconsider their preconceptions and consumption of meat. </p>
<p>Hell Pizza said it launched its plant-based meat product out of concerns for the future of the planet. According to the company, <a href="https://hellpizza.com/wickedpedia/2019/07/03/burger-pizza-statement">80% of consumers did not have an issue with being duped</a>, and 70% would order the pizza again. </p>
<p>There are a few good reasons to reduce the amount of meat we eat. <a href="https://www.ncbi.nlm.nih.gov/pubmed/19339402">Research shows</a> that meat consumption is putting pressure on the environment. The amount of food and water required to raise animals for consumption <a href="https://news.cornell.edu/stories/1997/08/us-could-feed-800-million-people-grain-livestock-eat">exceeds</a> the nutrient value humans get from consuming meat. Further, livestock create <a href="https://ehp.niehs.nih.gov/doi/full/10.1289/ehp.11034">waste and emissions</a> that contribute to climate change. </p>
<p>Plant-based meat may be more environmentally friendly. It also eliminates concerns around animal rights. Additionally, it is often perceived as a <a href="https://pdfs.semanticscholar.org/cf90/d287aa226b483aed430ff4f0432081bfd3d7.pdf">healthier alternative</a>. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/is-vegetarianism-healthier-we-asked-five-experts-112133">Is vegetarianism healthier? We asked five experts</a>
</strong>
</em>
</p>
<hr>
<h2>Future foods</h2>
<p>The plant-based meat industry faces two immediate challenges. The first is taste. If meat substitutes do not taste as good as animal-based meat, people will be <a href="http://freakonomics.com/podcast/meat/">less willing to consume them</a>. </p>
<p>The second main challenge is cost. If plant-based meat is significantly more expensive than animal-based meat, consumers may opt for the latter. </p>
<p>The cost of plant-based meat has become affordable enough for prominent market players, such as <a href="https://www.stuff.co.nz/business/116767086/dominos-adds-plantbased-meat-to-its-pizza-menu">Dominoes Pizza</a> and <a href="https://www.stuff.co.nz/business/farming/116657991/burger-king-finds-recipe-for-success-with-its-impossible-whopper">Burger King</a>, to offer plant-based products. </p>
<p>Hell Pizza was not the first New Zealand company to offer its consumers plant-based meat products. In another controversy, Air New Zealand offered plant-based burgers in the business cabin on selected flights. This led to some criticism, including the deputy prime minister, Winston Peters, who was acting prime minister at the time, complaining that it was a “<a href="https://www.stuff.co.nz/business/farming/105216779/air-nzs-impossible-burger-criticised-by-former-primary-industries-minister">bad look</a>” for the airline not to promote New Zealand meat. </p>
<p>Such a response is short-sighted. Animal farming is an important industry in New Zealand, <a href="http://www.environmentguide.org.nz/activities/agriculture/">contributing significantly</a> to the economy and social fabric. Because of its importance, New Zealanders should take seriously the potential impact of plant-based meat and the consequences of this emerging market. </p>
<h2>Market disruption</h2>
<p>Some companies have already stated their aspiration to completely <a href="http://freakonomics.com/podcast/meat/">replace animals as a food production technology</a> by 2035. The meat industry is likely to use its power to protect its interests. But these interests are not the only ones that should be voiced and considered. </p>
<p>Instead of merely criticising companies that offer meat alternatives and use innovative marketing tools to do so, we should embrace these initiatives as an opportunity to rethink some of our conventions. We need to adapt to new realities in ways that make our societies more ethical, while also encouraging consumers to be more mindful of the environment and health-related aspects of their foods. </p>
<p>The boundaries of consumer law should reflect this. The law regulates against misleading and deceptive conduct mainly because it is purportedly bad for consumers. However, the law should adopt a more holistic approach - one that considers the motivation for the allegedly misleading behaviour. </p>
<p>Protecting consumers from deceptive conduct is not an end in itself. Perhaps the degree and context of the misleading behaviour should be considered against other legitimate objectives. We believe that such legitimate objectives include caring for the environment, minimising animal cruelty and advancing public health.</p><img src="https://counter.theconversation.com/content/127901/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Plant-based meats are disrupting the food market and some companies.Samuel Becher, Associate Professor of Business Law, Te Herenga Waka — Victoria University of WellingtonJessica C Lai, Senior Lecturer in Commercial Law, Te Herenga Waka — Victoria University of WellingtonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1178952019-05-29T19:47:17Z2019-05-29T19:47:17ZThe behavioural economics of discounting, and why Kogan would profit from discount deception<figure><img src="https://images.theconversation.com/files/276935/original/file-20190529-126256-1agluc1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The consumer watchdog has accused Kogan Australia of misleading customers, by touting discounts on more than 600 items it had previously raised the price of.</span> <span class="attribution"><span class="source">www.shutterstock.com</span></span></figcaption></figure><p>Kogan Australia has grown from a garage to an online retail giant in a little more than a decade. Key to its success have been its discount prices. </p>
<p>But apparently not all of those discounts have been legit, according to the Australian Competition and Consumer Commission.</p>
<p>The <a href="https://www.accc.gov.au/media-release/kogan-in-court-for-alleged-false-or-misleading-discount-advertisements">consumer watchdog has accused</a> the home electronics and appliances retailer of misleading customers, by touting discounts on more than 600 items whose prices it had sneakily raised by at least the same percentage.</p>
<p>Kogan is yet to <a href="https://www.accc.gov.au/media-release/kogan-in-court-for-alleged-false-or-misleading-discount-advertisements">have its day in court</a>, so we won’t dwell on its case specifically.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/276710/original/file-20190528-92790-1keo1em.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/276710/original/file-20190528-92790-1keo1em.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/276710/original/file-20190528-92790-1keo1em.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=419&fit=crop&dpr=1 600w, https://images.theconversation.com/files/276710/original/file-20190528-92790-1keo1em.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=419&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/276710/original/file-20190528-92790-1keo1em.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=419&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/276710/original/file-20190528-92790-1keo1em.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=526&fit=crop&dpr=1 754w, https://images.theconversation.com/files/276710/original/file-20190528-92790-1keo1em.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=526&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/276710/original/file-20190528-92790-1keo1em.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=526&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The ACCC alleges Kogan’s ‘TAXTIME’ promotion offered a 10% discount on items whose prices had all been raised by the equivalent percentage.</span>
<span class="attribution"><a class="source" href="https://www.accc.gov.au/media-release/kogan-in-court-for-alleged-false-or-misleading-discount-advertisements">ACCC</a></span>
</figcaption>
</figure>
<p>But the scenario does raise an interesting question. How effective are these types of price manipulation? After all, checking and comparing prices is dead easy online. So what could a retailer possibly gain?</p>
<p>Well, as it happens, potentially quite a lot. </p>
<p>Because consumers are human beings, our actions aren’t necessarily rational. We have strong emotional reactions to price signals. The sheer ubiquity of discounts demonstrate they must work. </p>
<p>Lets review a couple of findings from behavioural (and traditional) economics that help explain why discounting – both real and fake – is such an effective marketing ploy. </p>
<h2>Save! Save! Save!</h2>
<p>In standard economics, consumers are assumed to base their purchasing decisions on absolute prices. They make “rational” decisions, and the “framing” of the price does not matter. </p>
<p>Psychologists <a href="https://www.newyorker.com/books/page-turner/the-two-friends-who-changed-how-we-think-about-how-we-think">Daniel Kahneman and Amos Tversky</a> challenged this assumption with their insights into consumer behaviour. Their best-known contribution to behavioural economics is “<a href="http://www.its.caltech.edu/%7Ecamerer/Ec101/ProspectTheory.pdf">prospect theory</a>” – a psychologically more realistic alternative to the classical theory of rational choice.</p>
<p>Kahneman and Tversky argued that behaviour is based on changes, which were relative. Framing a price as involving a discount therefore influences our perception of its value. </p>
<p>The prospect of buying something leads us to compare two different changes: the positive change in perceived value from taking ownership of a good (the gain); and the negative change experienced from handing over money (the loss). We buy if we perceive the gain to outweigh the loss. </p>
<p>Suppose you are looking to buy a toaster. You see one for $99. Another is $110, with a 10% discount – making it $99. Which one would you choose?</p>
<p>Evaluating the first toaster’s value to you is reasonably straightforward. You will consider the item’s attributes against other toasters and how much you like toast versus some other benefit you might attain for $99. </p>
<p>Standard economics says your emotional response involves weighing the loss of $99 against the gain of owning the toaster.</p>
<p>For the second toaster you might do all the same calculations about features and value for money. But behavioural economics tells us the discount will provoke a more complex emotional reaction than the first toaster.</p>
<p>Research shows most of us will tend to “segregate” the price from the discount; we will feel separately the emotion from the loss of spending $99 and the gain of “saving” $11. </p>
<p>Economist Richard Thaler demonstrated this in <a href="http://bear.warrington.ufl.edu/brenner/mar7588/Papers/thaler-mktsci1985.pdf">a study involving 87 undergraduate students</a> at Cornell University. He quizzed them on a series of scenarios like the following:</p>
<blockquote>
<blockquote>
<p>Mr A’s car was damaged in a parking lot. He had to spend $200 to repair the damage. The same day the car was damaged, he won $25 in the office football pool.
Mr B’s car was damaged in a parking lot. He had to spend $175 to repair the damage.
Who was more upset?</p>
</blockquote>
</blockquote>
<p>Just five students said both would be equally upset, while 63 (more than 72%) said Mr B. Similar hypotheticals elicited equally emphatic results. </p>
<p>Economists now refer to this as the “<a href="https://pdfs.semanticscholar.org/88a5/540ea635b9bd7b4ef295fde4157a51c3d54a.pdf">silver lining effect</a>” – segregating a small gain from a larger loss results in greater psychological value than integrating the gain into a smaller loss.</p>
<p>The result is we feel better handing over money for a discounted item than the same amount for a non-discounted item.</p>
<h2>Must end soon!</h2>
<p>Another behavioural trick associated with discounts is creating a sense of urgency, by emphasising the discount period will end soon.</p>
<p>Again, the fact people typically evaluate prospects as changes from a reference point comes into play. </p>
<p>The seller’s strategy is to shift our reference points so we compare the current price with a higher price in the future. This makes not buying feel like a future loss. Since most humans are loss-averse, we may be nudged to avoid that loss by buying before the discount expires. </p>
<p>Expiry warnings also work through a second behavioural channel: anticipated regret. </p>
<p>Some of us are greatly influenced to behave according to whether we think we will regret it in the future. </p>
<p>Economic psychologist Marcel Zeelenberg and colleagues demonstrated this in experiments with students at the University of Amsterdam. Their conclusion: <a href="https://pure.uva.nl/ws/files/977077/1484_14726.pdf">regret-aversion better explains choices</a> than risk-aversion, because anticipation of regret can promote both risk-averse and risk-seeking choices.</p>
<p>Depending to what extent we have this trait, an expiry warning can compel us to buy now, in case we need that item in the future and will regret not having taken the opportunity to buy it when discounted. </p>
<p>Discounting is thus an effective strategy to get us to buy products we actually don’t need. </p>
<h2>Look no further!</h2>
<p>But what about the fact that it is so easy to compare prices online? Why doesn’t this fact nullify the two effects we’ve just discussed?</p>
<p>Here the standard economics of consumer search would agree that consumers might be misled despite being perfectly rational. </p>
<p>If a consumer judges a discount promotion is genuine, they have a tendency to assume it is less likely they will find a lower price elsewhere. This belief makes them less likely to continue searching. </p>
<p>In <a href="https://eprints.qut.edu.au/62185/1/wp2010-22.pdf">experiments on this topic</a>, my colleague Changxia Ke and I have found a discernible “discount bias”. The effect is not necessarily large, depending on circumstances, but even a small nudge towards choosing a retailer with discounted items over another could end up being worth millions. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-consumers-fall-for-sales-but-companies-may-be-using-them-too-much-72277">Why consumers fall for 'sales', but companies may be using them too much</a>
</strong>
</em>
</p>
<hr>
<p>Once a consumer has made a decision and bought an item, they are even less likely to search for prices. They therefore may never learn a discount was fake. </p>
<p>There are entire industries where it is general practice to frame prices this way. Paradoxically, because this makes consumers search less for better deals, it allows all sellers to charge higher prices. </p>
<p>The bottom line: beware the emotional appeal of the discount. Whether real or fake, the human tendency is to overrate them.</p><img src="https://counter.theconversation.com/content/117895/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ralph-Christopher Bayer receives funding from the Australian Research Council and the International Olympic Committee. </span></em></p>Insights from behavioural (and traditional) economics help explain why discounting – both real and fake – is such an effective marketing ploy.Ralph-Christopher Bayer, Professor of Economics , University of AdelaideLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1116322019-02-19T19:09:20Z2019-02-19T19:09:20ZAmazon’s Dash Buttons, now banned in Germany, would also push legal limits in Australia<figure><img src="https://images.theconversation.com/files/259642/original/file-20190219-121735-naxkag.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Amazon's WiFi buttons enable you to instantly order specific branded products such as soft drinks, beer and condoms. You needn't even get out of bed.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/13815526@N02/27019217596">Pierre Lecourt/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-sa/4.0/">CC BY-NC-SA</a></span></figcaption></figure><p>Online retail giant Amazon’s “Dash Buttons” are considered a key part of Amazon’s strategy to dominate online shopping around the globe.</p>
<p><a href="https://mashable.com/2015/07/30/amazon-dash-button-launch/#48GAtkihcmqh">Derided</a> as “gimmicky” and lauded as “unquestionably efficient”, the battery-powered WiFi-connected gizmos were launched in <a href="https://www.usatoday.com/story/tech/2015/03/31/amazon-dash-ordering-button/70747342/">March 2015</a>. About the size of a packet of chewing gum, they enable Amazon Prime customers to instantly order particular items at the push of a button.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/amazons-dashing-vision-of-the-future-of-shopping-think-fast-think-less-buy-more-39757">Amazon's dashing vision of the future of shopping: Think fast, Think less, Buy more</a>
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</em>
</p>
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<p>More than <a href="https://techcrunch.com/2017/04/25/theres-now-an-amazon-dash-button-for-underwear/">300 different buttons</a> are now available for specific branded products such as coffee, washing powder, energy drinks, tissues and confectionery. Amazon sells thousands of the buttons every day – for US$4.99 – and those buttons in turn ensure customers keep buying consumable items from Amazon.</p>
<p>But in Germany, Amazon’s <a href="https://www.nasdaq.com/article/how-important-is-germany-for-amazon-cm735034">second-largest market</a> after the US, Dash Buttons have been deemed illegal.</p>
<p>There’s a good chance they would suffer the same fate in Australia.</p>
<h2>German ruling</h2>
<p>In January 2019 <a href="https://www.reuters.com/article/us-amazon-com-germany-court/court-says-amazon-dash-buttons-violate-german-law-idUSKCN1P42HW">a German court ruled</a> that Dash Buttons violated a law based on European Union consumer rights directives. </p>
<p>The relevant <a href="https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32011L0083&from=EN">directive</a> requires pre-contractual disclosure of details about goods being sold. It says an online vendor must make the consumer aware of basic information – such as product characteristics, price and terms of sale – immediately before they place their order.</p>
<p>The directive is not binding and so must be implemented through a nation’s domestic law. The <a href="http://www.gesetze-bayern.de/(X(1)S(2ruc2ezgence0mlc2am3uipx))/Content/Document/Y-300-Z-BECKRS-B-2018-N-2468?hl=true&AspxAutoDetectCookieSupport=1">Higher Regional Court of Munich</a> ruled that the German law implementing the directive requires “buttons” that can process orders to be labelled with the words “order to pay” or “similarly unambiguous” wording. </p>
<p>Amazon Dash Buttons are marked solely with the brand name and/or logo they order. As such, they have been banned from sale and use in Germany.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/259664/original/file-20190219-121738-12fxecb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/259664/original/file-20190219-121738-12fxecb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=323&fit=crop&dpr=1 600w, https://images.theconversation.com/files/259664/original/file-20190219-121738-12fxecb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=323&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/259664/original/file-20190219-121738-12fxecb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=323&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/259664/original/file-20190219-121738-12fxecb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=406&fit=crop&dpr=1 754w, https://images.theconversation.com/files/259664/original/file-20190219-121738-12fxecb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=406&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/259664/original/file-20190219-121738-12fxecb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=406&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">More than 300 different Dash Buttons are available for consumable products you might want to restock regularly.</span>
<span class="attribution"><span class="source">www.shutterstock.com</span></span>
</figcaption>
</figure>
<h2>Consumer law in Australia</h2>
<p>Dash Buttons are yet to made available in Australia. There’s a strong case they would also contravene Australian consumer protection laws. </p>
<p><a href="http://classic.austlii.edu.au/au/legis/cth/consol_act/caca2010265/sch2.html">Section 18</a> of Australia’s Competition and Consumer Act (2010) prohibits people (including companies) engaged in trade or commerce from misleading or deceiving others, intentionally or otherwise.</p>
<p><a href="http://classic.austlii.edu.au/au/cases/cth/FCA/1982/136.html">According to the Federal Court of Australia</a>, whether a person has breached Section 18 requires an objective analysis of all the relevant facts and circumstances. The person’s conduct only needs to be <a href="http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA/1984/180.html?context=1;query=global%20sportsman;mask_path=">reasonably capable</a> of misleading or deceiving someone – evidence that a member of the public has actually been misled is relevant but not conclusive.</p>
<p>As mentioned, Dash Buttons provide no information about the nature of a product or its pricing when pushed. Consumers could potentially be stung by sudden price hikes for specific products or increases in delivery charges. They might be unaware of sudden and significant changes to products (such as Cadbury’s <a href="https://www.news.com.au/finance/business/retail/cadbury-to-reduce-the-size-of-its-chocolate-bars/news-story/601eca5010a1d2ef91ea3bdc0689886a">announcement earlier this month</a> it is reducing the size of its chocolate blocks). </p>
<p>Pushing a Dash Button one day might deliver something different than pressing it the day before. Any of these changes will be invisible. You will know nothing until the sale is processed. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/i-studied-buttons-for-7-years-and-learned-these-5-lessons-about-how-and-why-people-push-them-110084">I studied buttons for 7 years and learned these 5 lessons about how and why people push them</a>
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<h2>Is Amazon affected?</h2>
<p>Amazon is an American company, headquartered in Seattle, Washington. The company’s <a href="https://www.amazon.com/gp/help/customer/display.html/ref=footer_cou?ie=UTF8&nodeId=508088">conditions of use</a> state that you subscribe to US federal and Washington state laws when using the Amazon Dash service. </p>
<p>At first glance, this means Australian consumer laws do not apply to sales processed in the US. Indeed, <a href="http://www.worldcourts.com/pcij/eng/decisions/1927.09.07_lotus.htm">international law</a> prohibits a country from applying its law in another country without permission. Australia can’t force its consumer laws to apply in the US or vice versa. </p>
<p>However, where a company sells products in another country, it voluntarily subscribes to that country’s laws. </p>
<p><a href="http://www5.austlii.edu.au/au/legis/cth/consol_act/caca2010265/s131.html">Section 131</a> of
Australia’s Competition and Consumer Act 2010 purports to apply <a href="http://consumerlaw.gov.au/the-australian-consumer-law/">Australian consumer law</a> to foreign corporations. But for years it was uncertain if consumer laws applied to online sellers with no physical presence in Australia.</p>
<p>In 2016, however, the Federal Court <a href="http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/2016/196.html?stem=0&synonyms=0&query=title(%222016%20FCA%20196%22)">ended lingering doubt</a> by confirming that Australian consumer laws can bind foreign companies selling products online in Australia, even where they operate predominantly outside of Australia and stipulate the laws of another country apply to their transactions.</p>
<p>In this case the ACCC took Valve Corporation, a US video game distributor, to court for refusing to refund a Tasmanian man for games he bought that did not work. The company had refused the refunds on the grounds it was not bound by Australian consumer laws.</p>
<p>What this means is that Amazon could indeed be caught by Australian consumer laws. Its Dash Buttons could be deemed misleading or deceptive under Section 18. </p>
<h2>Potential consequences</h2>
<p>It would take a test case from the Australian Competition and Consumer Commission (ACCC) to decide the issue.</p>
<p>If the competition watchdog did successfully challenge the legality of Dash Buttons, the Federal Court could then ban their sale in Australia. It might require Amazon to change how it markets products with Dash Buttons. </p>
<p>The consequences of the buttons being deemed illegal in different countries could be very significant for Amazon, now the world’s <a href="https://www.afr.com/markets/equity-markets/amazon-beats-becomes-most-valuable-company-in-world-with-11trn-market-cap-20190108-h19tve">biggest public company</a> with a market capitalisation of about US$800 billion. </p>
<p>Although official figures haven’t been released, the company <a href="http://fortune.com/2017/04/25/amazon-dash-button-growth/">claimed</a> in April 2017 that four orders a minute – about 5,760 a day – were placed using Dash Buttons. </p>
<p>Even if the sales lost as a result of an unfavourable court ruling comprise only a fraction of the company’s revenue, Dash Buttons have other great value to the company. They are a crucial way to <a href="https://www.fastcompany.com/3061546/amazon-dash-buttons">gather the consumer information</a> the company wants to increase its market share.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/amazon-poses-a-double-threat-to-australian-retailers-78534">Amazon poses a double threat to Australian retailers</a>
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</em>
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<p>Amazon has unsurprisingly <a href="https://www.reuters.com/article/us-amazon-com-germany-court/court-says-amazon-dash-buttons-violate-german-law-idUSKCN1P42HW">slammed</a> the German ruling as “hostile to innovation”, and is planning to challenge it.</p>
<p>But it’s possible it might just end up pushing the wrong buttons.</p>
<hr>
<p><em>Correction: this article was amended to remove an incorrect statement that Amazon’s Dash Buttons have been available in Australia since June 2018. Dash Buttons are not available from Amazon Australia. The text and original headline have been changed to reflect this.</em></p><img src="https://counter.theconversation.com/content/111632/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mark Giancaspro does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Dash Buttons have been ruled illegal under Germany’s consumer rights law. They might also contravene Australian consumer law.Mark Giancaspro, Lecturer in Law, University of AdelaideLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/951542018-05-02T20:20:47Z2018-05-02T20:20:47ZWhy your app is updating its privacy settings and how this will affect businesses<p>You may have suddenly started receiving privacy updates from all the internet sites, apps and services you use. That’s because the <a href="https://www.eugdpr.org/">European Union’s General Data Protection Regulation</a> becomes law on May 25, 2018. It’s the clearest statement yet from any regulator on what consequences companies could face in dealing with their customers’ personal data. </p>
<p>The regulation has been introduced to counter the power and prevalence of data collection and online surveillance techniques. It contains strict new rules of data protection, and severe penalties for breaches. </p>
<p>The regulations apply to the data processing activities of any business that is a data processor (like US based Amazon Web Services or India based Habiledata) or data controller (like Ebay and Facebook) with an establishment in the EU. </p>
<p>It also applies to any processor or controller, wherever they are located, that is processing the personal data of EU residents. This is regardless of where that data is processed and is irrespective of whether payment is required. </p>
<p>By forcing non-EU companies to comply, the EU is ensuring that EU and non-EU businesses compete on the same terms. </p>
<h2>How it will effect businesses</h2>
<p>Australian businesses will not be forced to comply with or fall foul of the new data regulation merely because they maintain websites accessible in the EU. However, those with an office in the EU, or whose website is aimed at or tracks the data of EU residents, will be affected. </p>
<p>These include businesses with an EU footprint, for example retailer Harvey Norman operates in Ireland, Croatia and Slovenia. It also covers data processors in Australia whose business includes EU or EU based clients, and startups which trade globally.</p>
<p>Australian businesses may benefit from the fact that the new rules are consistent with the <a href="https://www.oaic.gov.au/privacy-law/privacy-act/australian-privacy-principles">Australian Privacy Principles</a>. Both promote transparency and accountability in information handling and require businesses to notify of any privacy breaches. </p>
<p>By contrast, businesses in countries where data handling requirements are less comprehensive (notably the US) will have to make changes to become compliant.</p>
<p>Nevertheless, the new EU law will impose new burdens on Australian businesses. For example, the EU laws specify encryption and pseudonymisation - where personally identifiable information is replaced by one or more pseudonyms - to ensure data is not identifiable. </p>
<p>The new EU law will also change the standard practices of online businesses by outlawing pre-ticked boxes, required consent and bundled consent. Businesses must now seek (in clear and plain language), and individuals must give, active, specific, free and informed consent to each purpose for which their data is collected. </p>
<p>The data law also require all businesses to demonstrate that they have procedures for notifying regulators and customers of data compromises: within 72 hours in the case of high risk breaches and without undue delay in all cases.</p>
<h2>How it will effect consumers</h2>
<p>The EU law includes new or enhanced rights for individuals. Many have no equivalents in other jurisdictions, including Australia. </p>
<p>People have a right to demand that businesses erase and cease disseminating personal information, and to halt its processing. However, this “right to be forgotten” is balanced against the public interest in the information remaining available.</p>
<p>The right to data portability in the legislation enables individuals to obtain personal information they have given by consent to one controller in a “structured, commonly used, machine-readable format” and transfer it to another. This will make it easier for customers to switch between businesses.</p>
<p>However these rights impose regulatory burdens on businesses. It may be technically and organisationally difficult without sophisticated and expensive data handling processes. </p>
<p>For businesses that rely on things like cloud backup and third party customer support, deleting or making copies of transferable data will be difficult.</p>
<p>The commercial value of data is such that some companies may simply try to avoid the consequences of the new EU laws by processing information outside the EU, and applying different standards of data protection to customers depending on their location. Facebook <a href="https://www.reuters.com/article/us-facebook-privacy-eu-exclusive/exclusive-facebook-to-put-1-5-billion-users-out-of-reach-of-new-eu-privacy-law-idUSKBN1HQ00P">has done this.</a> </p>
<p>On the other hand, given how complex double standards can be to apply in practice, they may simply make the EU rules the new normal of global privacy. In that case businesses should be using it as an opportunity to build more sustainable business models in the emerging era of respect for privacy.</p><img src="https://counter.theconversation.com/content/95154/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Claudio Bozzi does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australian businesses will not be forced to comply with or fall foul of the new data regulation merely because they maintain websites accessible in the EU.Claudio Bozzi, Lecturer in Law, Deakin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/918312018-02-20T19:10:12Z2018-02-20T19:10:12ZAustralia’s consumer laws still don’t cover e-books and many other digital products<figure><img src="https://images.theconversation.com/files/207037/original/file-20180220-116365-1tkqbl9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">E-books, downloaded music and other digital products aren't covered by Australian consumer law. </span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Australia’s consumer laws aren’t adequately protecting Australians who buy digital products such as e-books and digital music. If a TV doesn’t work, or an iPod or computer is faulty, the law provides a remedy. The same is true for physical books and music media – but not for their online counterparts.</p>
<p><a href="https://www.accc.gov.au/consumers/consumer-rights-guarantees/consumer-guarantees">Under Australian law</a> consumers are entitled to receive goods that are of acceptable quality and fit for their purposes, and that correspond with their description, among other legally enforceable consumer guarantees. But these guarantees apply only to “goods” and “services”.</p>
<p>How digital products fit (or don’t fit) into the goods and services categories <a href="http://www.cisg.law.pace.edu/cisg/biblio/green-saidov.html">has been debated for decades</a>, and the law still hasn’t properly accommodated them.</p>
<p>Australia’s consumer laws went through <a href="https://www.accc.gov.au/about-us/australian-competition-consumer-commission/legislation">a major update in 2010</a>, but remain out of date. The digital world moves fast, but our consumer laws remain rooted in a system that assumes “goods” and “services” are the only types of trade. These laws still owe much to sale of goods legislation passed in the United Kingdom <a href="https://www.legislation.gov.uk/ukpga/1893/71/contents/enacted">all the way back in 1893</a>. </p>
<h2>What are consumer laws?</h2>
<p>The law generally expects that people and companies entering into contracts are able to look after their own interests. Consumer laws exist to provide additional legal protection to consumers, who are usually in an unequal bargaining position compared to the companies they deal with. </p>
<p><a href="https://www.legislation.gov.au/Details/C2017C00375/Html/Volume_3#_Toc499717716">A consumer</a> is someone who acquires goods or services that are ordinarily bought for personal, domestic or household use, or for a price of A$40,000 or less.</p>
<p>Consumer purchases include a range of items – TVs, iPods and computers are just some examples. Where a consumer purchases goods, the law requires that those goods comply with particular consumer guarantees, no matter what the terms and conditions of sale say.</p>
<p>If a new “smart TV” won’t connect to wifi, or if an iPod or computer’s battery doesn’t last as long as it should, the consumer guarantees provide a remedy.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/australian-consumer-law-is-failing-beer-drinkers-85260">Australian consumer law is failing beer drinkers</a>
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</em>
</p>
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<p>It was during the 1980s and through to the 2000s that initial questions arose over how the law treated software. The question at <em>this</em> time was whether <em>software</em> counted as “goods”. A <a href="http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/nsw/NSWSC/2010/267.html">series of court cases</a> found that software was considered goods only if it was supplied within a tangible object – for example, on a disk (later, on a CD or DVD). </p>
<p>Because of this, when consumers started downloading software over the internet they were left without many protections. If software downloaded directly from the internet didn’t do what it was supposed to do, they might have no effective legal rights at all.</p>
<p>In 2010, with the <a href="https://www.legislation.gov.au/Details/C2017C00375">Competition and Consumer Act</a>, the definition of goods was finally amended to include “computer software”. But this still excludes many common digital products, such as e-books and digital music. These do not constitute “computer software” as the law understands it.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/so-you-bought-the-new-iphone-here-are-your-rights-if-it-breaks-83875">So you bought the new iPhone? Here are your rights if it breaks</a>
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</em>
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<p>Recent court proceedings highlight the large gap in the Australian consumer law.</p>
<p>In 2016, the Australian Competition and Consumer Commission <a href="http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/2016/196.html">brought a Federal Court case</a> against Valve Corporation, alleging it misrepresented consumers’ rights concerning content bought through the Steam video game platform. </p>
<p>Justice Edelman found that Valve Corporation had supplied “goods”, being “computer software”, but <a href="http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/2016/196.html">also found</a> that “non-executable data was not computer software”, and that such non-executable data could include “music and html images”.</p>
<p>In other words, the computer games were “goods” (attracting the law’s protection) because they were <a href="https://techterms.com/definition/executable_file">executable programs</a>. This part of the Federal Court’s decision was not challenged in the Full Court of the Federal Court, which <a href="http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCAFC/2017/224.html">dismissed Valve Corp’s appeal in December 2017</a>.</p>
<p>If this definition of computer software is applied in future cases, then there is a legal gap when it comes to other types of digital products. E-books and digital music (among others) require executable files to work, but aren’t themselves executable files, so would not constitute computer software.</p>
<p>If they don’t constitute computer software, they also aren’t goods under the law. And if they aren’t goods, consumers who acquire these digital products don’t obtain the protections and guarantees of Australia’s consumer laws.</p>
<h2>The wider consequences of inequality in the law</h2>
<p>Beyond this problem for consumers, this legal gap also creates an inequality for retailers. Retailers that deal in physical books and music (whether they are “bricks and mortar” or online) <em>are</em> required to comply with the guarantees and protections under Australian consumer law.</p>
<p>This means that businesses dealing in physical goods incur costs that those that sell only digital equivalents (apart from software) can avoid. Australia is in effect subsidising those who sell only digital products (many of them foreign companies) by not subjecting them to the same legal liabilities.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/like-it-or-not-youre-getting-the-nbn-so-what-are-your-rights-when-buying-internet-services-85904">Like it or not, you're getting the NBN, so what are your rights when buying internet services?</a>
</strong>
</em>
</p>
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<p>A simple legislative amendment can easily solve this problem. Rather than providing that goods includes “computer software”, <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3083776">a legal provision</a> stipulating that goods include “computer software and other types of digital products” would capture the broader range of products we see in the marketplace today.</p>
<p>We can learn from the United Kingdom, where digital products are given their own dedicated consumer rights regime. The United Kingdom has a series of consumer rights applicable to the supply of goods, the supply of services, <a href="http://www.legislation.gov.uk/ukpga/2015/15/part/1/chapter/3">and also to the supply of digital content</a>. </p>
<p>Australia doesn’t necessarily need to move this far – yet. But the <a href="http://www.legislation.gov.uk/ukpga/2015/15/contents">British legislation</a> could be an interesting model for <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2885523">longer-term consumer law reform in Australia</a>.</p><img src="https://counter.theconversation.com/content/91831/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Benjamin Hayward does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The digital world moves fast, and when it comes to digital products, Australia’s consumer laws haven’t kept up.Benjamin Hayward, Senior Lecturer, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/885602017-12-05T05:17:40Z2017-12-05T05:17:40ZWhat consumers need from the ACCC inquiry into Google and Facebook<figure><img src="https://images.theconversation.com/files/197708/original/file-20171205-22989-1s184cx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Sometimes it's not clear to the consumer how Google search results come about, and what they show. </span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/bangkok-thailand-dec-152016-google-app-536806483?src=s-OT0ceQIWOxiMGUbAOL-A-1-4">from www.shutterstock.com </a></span></figcaption></figure><p>Yesterday the Australian Competition and Consumer Commission (ACCC) <a href="https://www.accc.gov.au/media-release/accc-commences-inquiry-into-digital-platforms">launched</a> an inquiry into digital platforms including Google and Facebook. </p>
<p>Chairman of the ACCC <a href="https://www.accc.gov.au/media-release/accc-commences-inquiry-into-digital-platforms">Rod Sims</a> said:</p>
<blockquote>
<p>The ACCC will look closely at longer-term trends and the effect of technological change on competition in media and advertising. </p>
<p>We will also consider the impact of information asymmetry between digital platform providers and advertisers and consumers </p>
</blockquote>
<p>The inquiry is overdue. To be useful, it should recognise that consumer protection law can play a larger role than it does currently in addressing platform power in the digital economy. Those leading it need to ensure its outcomes are truly beneficial for consumers, and not just the media companies and businesses using online advertising. </p>
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<p><em><strong>Read more:</strong> <a href="https://theconversation.com/confusion-over-googles-paid-services-could-land-it-in-trouble-again-57662">Confusion over Google’s paid services could land it in trouble, again</a></em> </p>
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<h2>How Google presents information</h2>
<p>To date, limited attention has been given to the issues faced by Australian consumers in internet markets, and particularly internet search. </p>
<p>Our research focuses on what consumers see and experience when they use Google.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/197724/original/file-20171205-22982-1v66gz0.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/197724/original/file-20171205-22982-1v66gz0.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/197724/original/file-20171205-22982-1v66gz0.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=1119&fit=crop&dpr=1 600w, https://images.theconversation.com/files/197724/original/file-20171205-22982-1v66gz0.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=1119&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/197724/original/file-20171205-22982-1v66gz0.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=1119&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/197724/original/file-20171205-22982-1v66gz0.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1406&fit=crop&dpr=1 754w, https://images.theconversation.com/files/197724/original/file-20171205-22982-1v66gz0.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1406&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/197724/original/file-20171205-22982-1v66gz0.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1406&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">A search for ‘coffee adelaide’ produced the following results - but which are ads, and which are organic content? <strong>CLICK TO EXPAND AND VIEW</strong></span>
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<p>In the early days, Google’s search results page was essentially a combination of organic search results (those that result from Google’s algorithm that ranks according to relevance) and ads (a pay-per-click model of advertising). This provided for a relatively clean page with each of the two main elements delineated by labels and shading. </p>
<p>As Google has grown and its services evolved, Google’s search results page has become increasingly complex, with several competing elements. Many of these search results elements are derived from Google’s subsidiary “vertical search” services which provide users with a specific category of online content, such as Google Maps, Google News and Google Shopping.</p>
<p><a href="https://link.springer.com/article/10.1007/s10603-017-9349-9">Our research</a> shows this creates confusion. We found that: </p>
<ul>
<li><p>Australian consumers have a limited understanding about the operation and origin of different parts of the search results page</p></li>
<li><p>consumers were best able to understand and identify paid advertisements, as compared to results that were organic or linked to subsidiary services</p></li>
<li><p>there was particular confusion about the operation and origin of Google’s Shopping service, but also the origin of organic search results</p></li>
<li><p>confusion seems to be more pronounced among older users and those without higher education qualifications. </p></li>
</ul>
<p>These findings point to a gap in consumers’ digital literacy about Google search that should be addressed by this ACCC inquiry.</p>
<h2>Past ACCC focus on Google</h2>
<p>In 2011, the ACCC brought proceedings against Google for breaches of the then Trade Practices Act 1974 (Commonwealth). </p>
<p>The ACCC alleged that by publishing or displaying several misleading sponsored links, Google was liable for misleading and deceptive conduct, as the maker of those advertisements (the claim against the advertiser was settled). The ACCC also claimed Google had engaged in misleading and deceptive conduct by failing to distinguish sufficiently between its organic search results and sponsored links. </p>
<p>The case went all the way to the <a href="http://eresources.hcourt.gov.au/showCase/2013/HCA/1">High Court</a>, who dismissed the case against Google. They found the evidence against Google never rose so high as to prove that Google personnel, as distinct from the advertisers, had chosen the relevant keywords, or otherwise created, endorsed, or adopted the sponsored links. As such, Google was not liable as the maker of misleading and deceptive advertising content. </p>
<p><a href="http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA/2011/1086.html">Justice Nicholas in the Federal Court at trial</a> also found against the ACCC’s allegation that Google had failed to distinguish its organic search results and sponsored links. He said reasonable members of the public would have understood sponsored links were advertisements that were different from Google’s organic search results.</p>
<p>As shown above, our research suggests otherwise. Despite its <a href="http://eresources.hcourt.gov.au/showCase/2013/HCA/1">win against the ACCC in the High Court in 2013</a>, Google should consider taking simple steps to label the different parts of its search results page more clearly, or risk legal action once more. </p>
<h2>A guide for the future</h2>
<p>In <a href="https://cdn.tspace.gov.au/uploads/sites/60/2016/07/Daly_Angela_and_Scardamaglia_Amanda.pdf">our recent submission</a> to the Australian Consumer Law Review Issues Paper, we advocated for an evidence-based approach to all regulatory action under Australian consumer law.</p>
<p><a href="https://link.springer.com/article/10.1007/s10603-017-9349-9">We have also argued</a> that agencies such as the ACCC should consider introducing “best-practice” guidelines for online search providers and comparison shopping services in relation to the use of labelling and disclaimers to clearly identify source and affiliation, in order to minimise consumer confusion. </p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/yes-your-doctor-might-google-you-74746">Yes, your doctor might Google you</a>
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<p>In the United States, the <a href="https://www.ftc.gov/news-events/press-releases/2013/06/ftc-consumer-protection-staff-updates-agencys-guidance-search">Federal Trade Commission issued similar guidelines</a> about how these services should operate, and stated that failure to adequately distinguish between these different kinds of results may constitute a deceptive practice in violation of consumer protection laws. These guidelines provide a good starting point for regulatory agencies in Australia.</p>
<p>We also think further research is warranted that focuses on how different factors influence display of search results. We know this can vary depending on region, user preferences and settings, browsing history and devices used (PC, laptop, tablet or mobile phone). </p>
<p>We believe there is the potential for a more active role for consumer law in the digital ecosystem to address problems emanating from large and powerful platform providers such as Google than it previously has occupied. Perhaps this inquiry is the first step towards that. </p>
<p>However, it will be important for the ACCC to separate out the interests of consumers from the interests of businesses using Google to advertise, and media companies. Sometimes these interests converge, but not always. This can be seen in the recent European Commission investigation into Google’s alleged abuse of a dominant position in the search and advertising markets. These proceedings have resulted in <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3012437">an outcome which may benefit Google’s competitors more than consumers</a>. </p>
<p>The ACCC should be wary about producing the same outcome in its own inquiry, which <a href="https://www.accc.gov.au/media-release/accc-commences-inquiry-into-digital-platforms">is expected to</a> produce a preliminary report in December 2018, and a final report in June 2019.</p><img src="https://counter.theconversation.com/content/88560/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Amanda Scardamaglia received an internal grant from Swinburne's Faculty of Business & Law and Faculty of Health, Arts and Design to fund this research.</span></em></p><p class="fine-print"><em><span>Angela Daly received internal grants from Swinburne’s Faculty of Business and Law and Faculty of Health, Arts and Design to fund this research. She is a member of Digital Rights Watch Australia’s board of directors and is chair of the Australian Privacy Foundation’s International Committee.</span></em></p>The ACCC’s inquiry into digital platforms should make it easier for users to identify advertising on Google.Amanda Scardamaglia, Senior Lecturer, Department Chair, Swinburne Law School, Swinburne University of TechnologyAngela Daly, Vice Chancellor's Research Fellow, Queensland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/859042017-10-22T19:03:50Z2017-10-22T19:03:50ZLike it or not, you’re getting the NBN, so what are your rights when buying internet services?<p><a href="http://www.tio.com.au/publications/news/2017-annual-report-released">Complaints</a> about the national broadband network (NBN), involving connection delays, unusable internet or landlines and slow internet speed are on the rise.</p>
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Read more:
<a href="https://theconversation.com/when-it-comes-to-the-nbn-we-keep-having-the-same-conversations-over-and-over-85078">When it comes to the NBN, we keep having the same conversations over and over</a>
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<p>Most Australians will be <a href="https://www.accc.gov.au/consumers/national-broadband-network/moving-to-the-nbn-for-consumers">forced to move onto the NBN</a> within 18 months of it being switched on in their area, and that means navigating what can be confusing new contracts.</p>
<p>So, what are your rights regarding landline and internet connections?</p>
<h2>Landlines</h2>
<p>Many consumers can and do manage without a landline. But particularly for those without a reliable mobile service, a landline can be essential. It is included in many phone and internet “bundles” offered by internet service providers.</p>
<p>Standard telephone services (primarily landline services) are subject to a <a href="https://www.acma.gov.au/Citizen/Phones/Landlines/Phone-connection-and-repair/customer-service-guarantee-for-phone-users-faqs">Customer Service Guarantee</a> enshrined in law under the Telecommunications Act 1997. </p>
<p>This means that standards apply to common services such as connection of a phone line, repairs of that line and attending appointments on time. The provider will have to pay compensation to the customer if the Customer Service Guarantee standards are not met. </p>
<p>Despite this, some providers suggest a customer waive his or her customer service guarantee rights. There are <a href="https://www.acma.gov.au/Citizen/Phones/Landlines/Phone-connection-and-repair/waiver-of-rights-under-the-csg-standard-fact-sheet">safeguards</a> for this waiver to be effective, primarily in that the provider must explain the nature of the rights to the customer before asking for the waiver. </p>
<p>The idea behind allowing providers to request a waiver of the Customer Service Guarantee is that it will allow customers to obtain cheaper services than would otherwise be the case. However, we might question the integrity of the consent typically given to such waivers, given consumers generally don’t read contracts and may have little understanding of the value of the Customer Service Guarantee or the likelihood of having to claim under it.</p>
<p>In any event, providers cannot ask for a waiver for <a href="https://www.acma.gov.au/Industry/Telco/Carriers-and-service-providers/Obligations/universal-service-obligation-obligations-i-acma">Universal Service Obligations</a>, which ensure accessible services for all customers, including those with a disability and those who live in remote areas. </p>
<h2>Internet</h2>
<p>The Customer Service Guarantee does not apply to internet connections – although the <a href="https://accan.org.au/our-work/1167-reliability-broadband-performance-and-affordability-are-telco-consumer-priorities">Australian Communications Consumer Action Network</a> has argued that it should. </p>
<p>So there are no statutory obligations for internet providers, or NBN Co, to connect customers within a particular time frame or respond promptly to complaints.</p>
<p>The main safeguard for customers for internet services is in the Australian Consumer Law (ACL). </p>
<p>If an internet service provider promises a particular broadband speed and does not provide that speed, the provider may have engaged in <a href="http://www.abc.net.au/news/2017-07-20/accc-warns-big-four-telcos-over-failure-to-deliver-on-nbn-speeds/8726268">misleading conduct</a> contrary to the ACL. Damages and even penalty payments could be awarded against it. And <a href="https://blogs.unimelb.edu.au/opinionsonhigh/2014/01/06/paterson-wong-tpg/">fine print</a> qualifications to the headline statement about internet speeds will not necessary protect the provider. </p>
<p>In addition, the Consumer Guarantees under the ACL (not to be confused with the Customer Service Guarantee under the Telecommunications Act) ensure that any equipment provided with an internet service must be of acceptable quality, and services be provided with due care and skill. </p>
<p>If these standards are not met, the consumer has a right to certain remedies under the ACL and damages for losses that result from the failure. These rights should go some way to protecting telecommunications consumers, although of course they do not directly guarantee that the provider will arrive on time for a scheduled appointment. </p>
<p>So while you may wish to charge your internet service provider for not turning up to an installation appointment, you wouldn’t get far under current Australian law.</p><img src="https://counter.theconversation.com/content/85904/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jeannie Marie Paterson receives funding from the Australian Research Council.</span></em></p>Complaints about the NBN are growing quickly, but there’s limited options for recourse under Australian consumer law.Jeannie Marie Paterson, Associate Professor, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/852602017-10-10T19:12:47Z2017-10-10T19:12:47ZAustralian consumer law is failing beer drinkers<figure><img src="https://images.theconversation.com/files/189480/original/file-20171010-25606-176qf2r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Do you know where your beer comes from?</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>If you’ve bought a “foreign” beer lately you might have noticed it wasn’t actually brewed in the country associated with the brand. Instead, it may have been brewed “under supervision of” or “under license from” the original creator, often using “imported and <em>local</em> ingredients”.</p>
<p>Yet, the branding often emphasises the link to other countries and traditions, such as the famous “Anno 1366” on a bottle of Stella Artois. This means very little when it is <a href="http://cub.com.au/beer/#stella-artois">brewed and bottled in Australia</a>. In fact, such references can be rather misleading.</p>
<p>This is more than a little quibble about branding, as major ingredients like yeast and water taste differently in different places. Can beer truly taste the same when it is brewed in Australian instead of, for example, Germany, Belgium or Japan?</p>
<h2>How do you know what you are buying?</h2>
<p>When you buy beer in a shop, you can theoretically see where it has been brewed. But this is not always clear, and is often overwhelmed by branding. </p>
<p>For instance, some years ago I bought a carton of Asahi beer. The text “Japan’s No. 1 Beer” appeared prominently on the box, and at two different locations was written: “Imported by Asahi Premium Beverages a division of Independent Distillers (Aust) Pty Ltd”. </p>
<p>Taken together, these two statements will most likely lead an ordinary consumer to believe the beer in question was brewed in Japan. But a quick check of the <a href="https://www.asahibeer.com/worldwide/">Asahi website</a> shows the company has breweries in numerous countries, including Thailand, Malaysia and China. </p>
<p>Once the box had been opened, the fine print on the bottles revealed that the beer was brewed in Thailand under licence from Asahi. So, yes, it was imported as the box promised. But not quite from the place I expected.</p>
<p>The problem is worse when it comes to ordering beers at a restaurant or pub. The likes of <a href="http://cub.com.au/beer/#peroni-nastro-azzurro">Peroni</a>, <a href="https://www.lionco.com/our-brands/alcohol-beverages-au/international-beer">Heineken</a> and <a href="http://premiumbeverages.com.au/news">Carlsberg</a> are often listed as “imported beers”, even when they are brewed in Australia. </p>
<p>When the beer is on tap, where is the fine print to read? </p>
<h2>What about consumer law?</h2>
<p>In theory, Australian law contains several provisions that should resolve the issues described above. Most importantly Section 18 of the <a href="http://www.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/caca2010265/sch2.html">Australian Consumer Law</a> states that a “person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive”.</p>
<p>And section 29 of the <a href="http://www.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/caca2010265/sch2.html">Australian Consumer Law</a> seeks to tackle, among other things, situations where a person “make[s] a false or misleading representation concerning the place of origin of goods”.</p>
<p>In addition to these classical provisions, Australia’s <a href="https://www.accc.gov.au/consumers/groceries/country-of-origin">Country of Origin Food Labelling Information Standard</a> commenced in 2016. These are meant to give consumers more information about where products are manufactured and where the ingredients are sourced from.</p>
<p>But in practice, these rules don’t always work so well. And the country of origin labelling standards do not apply to restaurants and cafes. </p>
<p>I even lodged a complaint with the <a href="https://www.accc.gov.au/">Australian Competition & Consumer Commission (ACCC)</a> in relation to my Asahi experience. I argued that the labelling on the box was misleading and deceptive (Australian Consumer Law s. 18) and constitutes a misrepresentation under the Australian Consumer Law (section 29). The result? Nothing whatsoever.</p>
<h2>What to do about it</h2>
<p>It is of course possible to argue that the foreign beer brands that have their products brewed in Australia take sufficient steps to make their beer taste similar enough to the original product. And if the beer tastes the same to the average beer drinker, what is the big deal?</p>
<p>However, even if the taste is the same, the place of origin still matters. If you buy an expensive Swiss watch, surely it matters that it was made in Switzerland and not in China. Can’t we feel the same about beer? </p>
<p>On a practical level, the answer may be to only drink the beers of Australian brands as you essentially will be drinking Australian beer anyhow. But as far as the law goes, we need clearer guidance and stronger enforcement of consumer rights. To achieve that, those charged with enforcing our consumer rights may need more resources. </p>
<p>The difficulty is to design regulatory responses that actual help consumers make informed decisions, without unnecessarily burdening the industry. </p>
<p>One idea would be to insist on clearer labelling - such as a prominent standardised sticker - indicating when beer is brewed under license. This could be combined with requiring similar markings on drinks menus. Such an approach seems to fit nicely with the move towards a clearer <a href="https://www.accc.gov.au/consumers/groceries/country-of-origin">Country of Origin Food Labelling Information Standard</a> applied to food in <a href="http://www.foodlabels.industry.gov.au/">some circumstances</a>.</p><img src="https://counter.theconversation.com/content/85260/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dan Jerker B. Svantesson does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Do you know where your beer was brewed?
Many “imported beers” are actually made locally. Should we have clearer labelling for the origins of beer?Dan Jerker B. Svantesson, Co-Director Centre for Commercial Law, Bond UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/829762017-08-24T19:19:44Z2017-08-24T19:19:44ZBusiness Briefing: the ‘get rich quick scheme’ influencing what you buy<figure><img src="https://images.theconversation.com/files/183242/original/file-20170824-6606-v0pdoj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Advertising through online influencers is shaping consumer law, business models and people's careers.</span> <span class="attribution"><span class="source">Nico Aguilera/Flickr</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>It sounds like a get rich quick scheme. Amass huge numbers of followers on a social media platform like Instagram and you can get paid like a celebrity to mention or feature products in your posts.</p>
<p>But this <a href="http://www.newyorker.com/magazine/2017/04/24/vanlife-the-bohemian-social-media-movement">industry of “online influencers” was worth</a> US$500 million in 2015, and is expected to grow to be worth US$5 billion by 2020, according to Sandra Peter from the University of Sydney. There’s a well documented business model behind it. </p>
<p>Even though these online influencers might not be overtly endorsing a product, advertisers will still pay a lot to have something featured, even subtly, in their posts.</p>
<p>The relationship online influencers form with their followers is different to a regular celebrity because they have more leeway to talk about their own experiences. When the influencer industry was at it’s peak, about five years ago, the content was more about using your body or life to sell something, says Crystal Abidin from Curtin University. But this is now changing.</p>
<p>“Today it’s expanded so much that even in the influencer scene there are hierarchies,” she says.</p>
<p>“Big name influencers may not spend as much time investing their own narratives in these products, but they may just do a shout out, that is so impactful that advertisers don’t mind.”</p>
<p>This is indicative of a broader change to professionalism in the industry, where big internet companies like Amazon, Reddit and Youtube are starting influencer offshoots, says Abidin.</p>
<p>With this growing industry consumers are starting to cotton on to the potential of being led astray. For example online influencers were mentioned in a lawsuit <a href="https://consequenceofsound.net/2017/04/12000-luxury-fyre-festival-is-basically-a-disaster-zone/">against a festival in the United States</a>, where consumers felt their expectations (including those set by prominent online influencers) weren’t met.</p>
<p>“What we saw with the Fyre Festival really does highlight the dangers of the influence that these people wield on social media and if it’s not absolutely made clear that they are promoting something…that has a material effect on consumers,” says David Glance from the University of Western Australia.</p>
<p>While there are laws in Australia to protect consumers in Australia from misleading advertising, Glance says social media platforms need to make it clearer when someone is paid being to promote. He says this should go beyond a hashtag to something written on the post, pointing it out to consumers.</p><img src="https://counter.theconversation.com/content/82976/count.gif" alt="The Conversation" width="1" height="1" />
Even though online influencers might not be overtly endorsing a product, advertisers will still pay a lot to have something featured, even subtly, in a post.Jenni Henderson, Section Editor: Business + EconomyJosh Nicholas, Deputy Editor: Business + Economy, The ConversationNadia Isa, Editor, University of South AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/816412017-08-14T16:26:28Z2017-08-14T16:26:28ZThere’s still a gap between consumer protection and sustainability in Africa<figure><img src="https://images.theconversation.com/files/181345/original/file-20170808-22982-13wuvw4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Across the globe consumers are increasingly realising their power. In many countries this consumer consciousness, which marries consumer rights to sustainability issues, has been greatly helped by dynamic consumer protection policies. </p>
<p>In Africa, the rise of the middle class is fuelling a consumer economy and countries have begun to beef up their consumer protection policies. But they tend to be disconnected from sustainability issues.</p>
<p>South Africa, which leads the continent in terms of consumer protection regulations, showcases this limitation. The country has a good <a href="http://www.gov.za/documents/consumer-protection-act-regulations">consumer protection policy regime</a>, benefiting consumers and providing them with rights and redress possibilities. But it’s not linked to sustainability concerns.</p>
<p>The South African situation is not helped by the location of consumer affairs and sustainability in two separate government departments. Consumer protection policy is the responsibility of the Department of Trade and Industry. For its part, sustainability is primarily located in the Department of Environmental Affairs. As a result there’s a disconnect between the two.</p>
<p>South Africa – and other African countries suffering from this disconnection – need to develop a new framework. Our <a href="http://unctad.org/en/Pages/DITC/CompetitionLaw/ResearchPartnership/Sustainable-Consumer-Protection.aspx">study</a> identifies key areas countries should focus on to get to an integrated approach.</p>
<h2>International experience</h2>
<p>In recent years many countries have amended their consumer protection laws to connect them more closely with sustainability concerns. We looked at a number of international experiences to identify key aspects that could make up a comprehensive consumer protection framework. </p>
<p>Brazil provided helpful insights. It established the <a href="http://thebrazilbusiness.com/article/consumer-rights-in-brazil">National Consumer Bureau</a> in 2012. It was designed to plan, prepare, coordinate and implement the country’s national policy on consumer affairs.</p>
<p>Brazil’s system runs on a model that actively pursues an integrated approach to consumer protection and sustainability. It connects a number of government departments to work together. Departments and agencies in sectors like tourism, health, transport, aviation, municipalities. Together with business representatives they cooperate to ensure consumers rights.</p>
<p>Chile has implemented a <a href="http://en.unesco.org/greencitizens/stories/education-sustainable-consumption">national initiative</a> titled education for sustainable consumption. It was designed to provide consumers with information about the environmental and social impact of their daily choices. The underlying policy premise is encouraging responsible consumption.</p>
<p>In Europe, <a href="http://www.lexology.com/library/detail.aspx?g=4612ce31-735e-4c76-a832-46b65a22cb6e">Germany</a> aligned its consumer protection law with European Union consumer rights <a href="http://ec.europa.eu/consumers/consumer_rights/rights-contracts/directive/index_en.htm">directive</a>.
The emphasis is on giving consumers balanced and independent information so that they can make comparative choices.</p>
<p>China unveiled <a href="http://www.chinalawtranslate.com/consumer-protection-law-including-2013-amendments/?lang=en">new</a> consumer protection laws in 2014. Critical changes included raising penalties for false advertising, including false statements about human health or safety. But the law is silent on measures retailers must take to ensure the accuracy of product information.</p>
<p>While many countries are <a href="http://unctad.org/meetings/en/Contribution/CCPB_ADHOC_JAN15_CONT_BEST_en.pdf">incorporating</a> some elements of sustainability into their consumer protection legislation, it isn’t happening fast enough on the African continent.</p>
<h2>Lagging behind</h2>
<p>Our study showed that consumer protection policies in many African countries tend to be narrow. This is partly dictated by economic conditions. In poorer countries the basic needs of consumers are given precedence over sustainability considerations. </p>
<p>In addition, poverty limits consumer choices. Products that are produced in a way that doesn’t damage the environment tend to be more expensive. </p>
<p>Ideally, there should be a mix of policy instruments to enable consumers to make more sustainable consumption choices. These must touch on product safety regulations, product information provision and consumer information standards.</p>
<p>South Africa’s Consumer Protection Act has gone some way to closing the gap. The act provides for industries to voluntarily implement minimum sustainability compliance requirements. In addition, the government has powers to prescribe minimum industry sector standards.</p>
<p>But little has been done to put in place mechanisms to enforce these provisions. This also limits the insertion of sustainability goals into consumer protection policy. </p>
<p>On top of this the act should be amended with a view to:</p>
<ul>
<li><p>improving the definition of key concepts of sustainability and sustainable consumption</p></li>
<li><p>making the link between consumer protection and sustainability explicit</p></li>
<li><p>and setting down minimum requirements for self-regulation.</p></li>
</ul>
<p>Because sustainability straddles multiple policy domains, there needs to be joined-up implementation across government. </p>
<p>Consumer education and stakeholder engagement are important because individual’s choices and behaviour also have an impact.</p>
<h2>The way forward</h2>
<p>Sectoral self regulation is an immediate starting point. To trigger this, the business community should review business processes. They must find ways to integrate sustainability and consumer protection.</p>
<p>Debates among policymakers in regional bodies such as the African Union can play an important role. The advances that have been made in the EU provide <a href="http://ec.europa.eu/consumers/consumer_rights/index_en.htm">a good example</a>. </p>
<p>But these debates must be underpinned by the knowledge that poverty limits consumer choices. Basic needs of poor consumers need to be protected. South Africa has made a head start and can lead the way.</p><img src="https://counter.theconversation.com/content/81641/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Laura Best is the Deputy Chairperson of the National Consumer Tribunal</span></em></p><p class="fine-print"><em><span>Miemie Struwig and Sibongile Muthwa do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The rise of the middle class in Africa is fuelling consumer economies and protection policies. But they tend to be disconnected from sustainability issues.Miemie Struwig, Professor, Department of Business Management, Nelson Mandela UniversityLaura Best, Special Assistant to the Vice-Chancellor of the Nelson Mandela University, Nelson Mandela UniversitySibongile Muthwa, Deputy Vice-Chancellor: Institutional Support Nelson Mandela University, Nelson Mandela UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/787652017-06-07T20:11:51Z2017-06-07T20:11:51ZSix things every consumer should know about the ‘Internet of Things’<figure><img src="https://images.theconversation.com/files/172362/original/file-20170606-16849-1uprbhi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">What happens if your smart kettle is hacked?</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>At least <a href="https://www.telsyte.com.au/announcements/2017/9/5/iothome-market-set-to-soar-with-more-than-300-million-connected-devices-in-australian-homes-by-2021">40% of Australian households</a> now have at least one home <a href="https://theconversation.com/explainer-the-internet-of-things-16542">“Internet of Things” device</a>. These are fridges, window blinds, locks and other devices that are connected to the internet.</p>
<p>While the Internet of Things (IoT) may lead to more efficiency in our daily lives, <a href="https://kayleenmanwaring.wordpress.com/2017/05/18/consumer-challenges-for-the-internet-of-things-and-associated-technologies/">my research</a> shows that consumers are exposed to many risks by the use of IoT devices, ranging from disclosure of private information, to physical injury and problems with the devices themselves. </p>
<p>Australia has no specific laws aimed at addressing IoT issues, and current laws intended to protect consumers have <a href="http://www.austlii.edu.au/au/journals/CommsLawB/2016/2.html">gaps and uncertainties</a> when dealing with IoT devices.</p>
<h2>1) Your devices can spy on you (and your kids)</h2>
<p>Many IoT device manufacturers and suppliers show little regard for customers’ privacy. Some even make money from customer data.</p>
<p>Consumer electronics company Vizio recently <a href="https://www.ftc.gov/system/files/documents/cases/170206_vizio_stipulated_proposed_order.pdf">agreed to pay</a> US regulators US$2.2 million, after allegedly failing to get appropriate consent from users to track their TV viewing habits.</p>
<p>Late last year, the <a href="https://www.forbrukerradet.no/siste-nytt/connected-toys-violate-consumer-laws/">Norwegian Consumer Council found</a> that a children’s doll recorded anything said to it by children and sent the recordings to a US company. The company reserved the right to share and use the data for a broad range of purposes.</p>
<h2>2) Many IoT devices are vulnerable to hacking</h2>
<p>The same doll was <a href="https://www.forbrukerradet.no/siste-nytt/connected-toys-violate-consumer-laws/">also found</a> to have a security flaw that allowed strangers to talk and listen through the doll. Security vulnerabilities such as these can be exploited to cause damage in both the physical and virtual worlds.</p>
<p>IoT devices were recently involved in some of the largest “<a href="https://theconversation.com/from-botnet-to-malware-a-guide-to-decoding-cybersecurity-buzzwords-77958">distributed-denial-of-service</a>” attacks - flooding websites with traffic until they crash. The recent huge attacks on <a href="http://dyn.com/blog/dyn-statement-on-10212016-ddos-attack">internet company Dyn</a> and on the <a href="https://krebsonsecurity.com/2016/09/krebsonsecurity-hit-with-record-ddos/">security researcher Brian Krebs</a> were in large part fuelled by hacked IoT devices. </p>
<p>But hacked IoT devices can also be dangerous by themselves. In 2015 Fiat Chrysler <a href="http://media.fcanorthamerica.com/newsrelease.do?id=16849">recalled 1.4 million vehicles</a> when security researchers proved they could break into smart cars’ systems remotely and control brakes, steering and transmission.</p>
<h2>3) Your devices are never really yours, even after you pay for them</h2>
<p>Most IoT devices come with some form of embedded software, and the devices won’t work properly - or sometimes at all - without it. This software is usually licensed, not sold, and the conditions imposed through licence agreements can hinder users’ repairing, modifying or reselling their devices.</p>
<p>This can be anti-competitive, as individual users are effectively “locked in” to one brand and one supplier. </p>
<p>For several years now, <a href="https://motherboard.vice.com/en_us/article/why-american-farmers-are-hacking-their-tractors-with-ukrainian-firmware,">US farmers have been in a dispute</a> with agricultural machinery manufacturers such as John Deere, over their rights to repair tractors that contain embedded software. </p>
<p>The farmers were granted a <a href="https://www.copyright.gov/fedreg/2015/80fr65944.pdf">three-year exemption</a> to certain copyright laws in 2015. However, John Deere is fighting back. </p>
<p>In October 2016, the company <a href="https://www.deere.com/privacy_and_data/docs/agreement_pdfs/english/2016-10-28-Embedded-Software-EULA.pdf">issued a new licence agreement</a> which prohibits almost all software modification on its tractors. This action appears to be an attempt to ensure all repairs are done by John Deere contractors.</p>
<h2>4) Your devices know your weaknesses</h2>
<p>IoT devices have the potential to collect more intimate data about individuals than was possible with previous devices. This data can then be used to create profiles that give incredible insight into consumers, and can even predict their behaviour. </p>
<p>For a number of years now we’ve known that the embedded technology in <a href="https://www.ftc.gov/system/files/documents/reports/federal-trade-commission-staff-report-november-2013-workshop-entitled-internet-things-privacy/150127iotrpt.pdf">smartphones can be used to detect</a> users’ mood, stress levels, personality type etc. </p>
<p>But some IoT devices can collect even more intimate and personalised data. This was evident after a <a href="http://www.sicclassactionsettlement.com/DocumentHandler.ashx?DocPath=/Documents/Settlement_Agreement.pdf">recent out-of-court settlement</a> by a wireless vibrator manufacturer allegedly collecting data without consent. </p>
<p>The consumer profiles that can be built with all this data can then be used to <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2353115">sell us products at times when our willpower is lowest</a>. Retailers are currently <a href="https://www.facebook.com/beaconnectedapp/">using technology</a> to track consumers through stores and send customised messages to mobile phones. This may be linked to our purchase history and what is known about our mood.</p>
<h2>5) It’s almost impossible to know what you’re getting yourself into, or how long it will last</h2>
<p>Many IoT products are complex hybrids of software, hardware and services, often provided by more than one supplier. What your rights are when things go wrong, and who best to fix it for you, can be hard to figure out.</p>
<p>A <a href="http://ejlt.org/article/view/450/658">recent investigation</a> of the Nest thermostat system revealed that if consumers wanted to understand all of the rights and obligations of those in the supply chain, they needed to read a minimum of 13 different contractual documents. </p>
<p>Even if you know and trust your supplier, they may not be around forever. And when they go, services essential to their products working may disappear as well. </p>
<p>Revolv, a maker of home automation devices, was <a href="https://www.theverge.com/2016/4/4/11362928/google-nest-revolv-shutdown-smart-home-products">shut down</a> after the company was acquired by Nest, which was itself <a href="https://abc.xyz/investor/news/releases/2014/0113.html">acquired by Google</a>. Nest refused to support Revolv’s products, and they <a href="https://web.archive.org/web/20160301002424/http://revolv.com/">stopped working</a> less than two years after being released. </p>
<h2>6) The law may not protect you</h2>
<p>Many IoT devices put consumer privacy at risk, but the Privacy Act has significant limitations, as the definition of “personal information” is <a href="http://www.austlii.edu.au/au/cases/cth/FCAFC/2017/4.html">very narrow</a>. The Act doesn’t even apply to many Australian companies, as they do not meet thresholds such as having A$3 million in annual turnover.</p>
<p>Consumers and regulators may attempt to pursue device suppliers under the consumer guarantees in the Australian Consumer Law. But there are grey areas here too. <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2833663">We don’t know</a> what “acceptable quality” is when it comes to some of these devices, for instance. Is an internet-connected kettle that boils water perfectly well, but can be easily hacked, of acceptable quality? </p>
<h2>Proceed with caution</h2>
<p>Consumers are exposed to significant risks from IoT devices, from predatory use of data, to security flaws and devices no longer being supported. Meanwhile Australia has no specific laws aimed at addressing these IoT issues.</p>
<p>The most recent <a href="https://cdn.tspace.gov.au/uploads/sites/86/2017/04/ACL_Review_Final_Report.pdf">review</a> of the Australian Consumer Law recommended investigating “emerging technologies” be made a priority. It is vital that a close examination of consumer protection relating to IoT devices be included front-and-centre in this project. </p>
<p>In the meantime, consumers should think long and hard about the risks they are taking on with IoT devices. Do you really need that <a href="https://theconversation.com/fruit-juicers-and-hair-brushes-are-now-part-of-the-internet-of-useless-things-76921">internet-connected hairbrush</a>?</p><img src="https://counter.theconversation.com/content/78765/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kayleen Manwaring does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>‘Internet of Things’ devices come with many risks, but current laws may not protect us. Until they do, it may be best to steer clear.Kayleen Manwaring, Lecturer, School of Taxation & Business Law, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/761372017-05-09T04:15:37Z2017-05-09T04:15:37ZData availability report presents compromised rights for consumers<figure><img src="https://images.theconversation.com/files/168492/original/file-20170509-20747-ywb9m3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Australians should be able to do more than just access and transfer their own consumer data.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/download/inline?url=http://download.shutterstock.com/gatekeeper/W3siZSI6MTQ5NDMxODQzOCwiYyI6Il9waG90b19zZXNzaW9uX2lkIiwiZGMiOiJpZGxfNTEwNzg0NTc2IiwiayI6InBob3RvLzUxMDc4NDU3Ni9odWdlLmpwZyIsIm0iOiIxIiwiZCI6InNodXR0ZXJzdG9jay1tZWRpYSJ9LCJOQm84d3JhVXNjRmpEcDhsbTAxYS9rZldhWnciXQ/shutterstock_510784576.jpg">www.shutterstock.com</a></span></figcaption></figure><p>A promising inquiry into how data is used in Australia has proved disappointing, with consumers being offered few new protections.</p>
<p>Released this week, the Productivity Commission’s <a href="http://www.pc.gov.au/inquiries/completed/data-access/report">final report</a>, titled Data Availability and Use, represents a major shift in the legal landscape of data rights. </p>
<p><a href="http://www.pc.gov.au/inquiries/completed/data-access/report">The report</a> makes a number of recommendations. Most importantly, it argues for the creation of a so-called “comprehensive right” for individuals or small businesses to access, correct and transfer data about themselves held by product or service providers. </p>
<p>In my assessment, the comprehensive right frames personal information as a commodity rather than as an inviolable attribute of our identity. It encourages us to share and sell it, rather than guard and protect it. It envisages individuals as walking data compilations. </p>
<p>If the government takes up the Productivity Commission’s recommendations, however, we would remain largely in the dark as to how and why our data is used to make commercial decisions about us, on issues such as our credit risk.</p>
<p>This shift shows we cannot continue to treat big data’s consequences for individuals as simply a matter of privacy. Instead, the increasing use of such tools implicates other areas of law, including competition and consumer law.</p>
<h2>Data is not just about privacy</h2>
<p><a href="http://www.pc.gov.au/news-media/speeches/data">In a speech</a> given in March, chairman of the Productivity Commission Peter Harris identified our lack of access to data about ourselves as one of the industry’s largest, un-addressed public policy issues. He said:</p>
<blockquote>
<p>Consumers give and give, but share so little in the opportunities – until this inquiry. </p>
</blockquote>
<p>The <a href="https://www.legislation.gov.au/Details/C2016C00979">Privacy Act</a> currently regulates the collection, accuracy, use, storage, security and disclosure of “personal information” by medium and large organisations. </p>
<p>It treats information as a private aspect of an individual’s identity via a regime of notice (the small print privacy policies none of us read as we log into websites) and choice (the boxes we tick in agreement). </p>
<p>But in his speech, Harris rightly stated that: </p>
<blockquote>
<p>There is a complete absence of rights outside the privacy space for individuals in relation to their data.</p>
</blockquote>
<p>The Productivity Commission’s report frames the consumer rights question in relation to “trust”. </p>
<p>As consumers, we provide social media companies, online shopping businesses and loyalty programs, among others, with tons of our information. But we also worry about what becomes of it, and sometimes we even deliberately mess with the process by using false names, for example. </p>
<p>This lack of “trust” concerns Harris. At some point “there must be a tipping point, where the balance of willingness tips from data supply towards data restriction”, he added in his remarks. </p>
<p>The Privacy Act appears to have been largely ineffective at increasing individuals’ trust in how their data is accessed and used, and the Productivity Commission hopes its reports will fix the situation.</p>
<h2>Comprehensive or compromised?</h2>
<p>Unfortunately, the “comprehensive right” recommended by the Productivity Commission is full of holes.</p>
<p><a href="http://www.pc.gov.au/inquiries/completed/data-access/thedraft">In the draft report</a>, released in November 2016, it recommended this new right enable consumers to:</p>
<ol>
<li><p>access and correct information held about them and to be informed when it is disclosed to others </p></li>
<li><p>have a new right for a copy of the data to be provided to them or a third party, such as a new service provider</p></li>
<li><p>“opt out” of collection of data in certain circumstances, and </p></li>
<li><p>appeal automated decisions, such as those based upon predictive algorithms.</p></li>
</ol>
<p>So far, so good. </p>
<p>But after further review, which included submissions from some of Australia’s most powerful private sector players, such as the <a href="http://www.pc.gov.au/__data/assets/pdf_file/0020/211286/subDR231-data-access.pdf">ANZ Bank</a>, the new comprehensive right is now fairly hollow. </p>
<p>Consumers have the right to access and correct their data (a right already conferred by the Privacy Act) and to be informed who it has previously been disclosed to. They can also direct one company to give it to another, so, for example, an energy company can give you an electricity quote more quickly.</p>
<p>But that’s it. Consumers won’t be able to stop a company collecting information about them, nor can they challenge automated decisions made using that data, including credit worthiness or insurance risk.</p>
<p>In its report, the Productivity Commission justified its decision by explaining that because consumers will have the right to access and edit some of the data held about them, they do not need to know the methods by which this data is transformed into decisions about whether they qualify for a loan or the cost of a health insurance policy.</p>
<p>This is akin to saying that if we know the evidence admitted in a court case, we do not need to know how a judge arrives at a sentence. The weight given to specific information is obscured and the scene is set for possibilities of unfair stereotyping, bias and discriminatory practices – something that is already <a href="https://www.theguardian.com/technology/2017/jan/27/ai-artificial-intelligence-watchdog-needed-to-prevent-discriminatory-automated-decisions">reportedly occurring</a> in this space. </p>
<p><a href="https://digital.law.washington.edu/dspace-law/bitstream/handle/1773.1/1318/89WLR0001.pdf?sequence=1">As legal commentators</a> in the United States have pointed out:</p>
<blockquote>
<p>Predictive algorithms assess whether we are good credit risks, desirable employees, reliable tenants, valuable customers — or deadbeats, shirkers, menaces, and “wastes of time.”</p>
</blockquote>
<p>The Productivity Commission’s draft report in 2016 was promising and attempted to balance the efficient and intelligent use of data in Australian markets and governments with new rights for consumers.</p>
<p>The final report, however, is underwhelming. For Australian consumers, the new right is better described as “compromised” and not “comprehensive”.</p><img src="https://counter.theconversation.com/content/76137/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jessica Lake does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Productivity Commission’s report on data availability and use is disappointing for consumers, who won’t be able to stop firms collecting their data or challenge automated decisions made using it.Jessica Lake, Lecturer in Law, Swinburne University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/728772017-03-15T23:39:25Z2017-03-15T23:39:25ZAustralian charities are well regulated, but changes are needed to cut red tape<figure><img src="https://images.theconversation.com/files/160623/original/image-20170313-9631-1pi3ve3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Charities that fundraise across Australia – even if just through a website – are burdened with complying with red tape.</span> <span class="attribution"><span class="source">shutterstock</span></span></figcaption></figure><p>Charities exist to benefit the public and do vital work across Australia. They therefore receive support from both governments and the community. </p>
<p>This leads to an expectation that they will be subject to some form of regulation to ensure they are transparent and accountable, and operating for charitable purposes.</p>
<p>Because of the high regard the community has for charities, there is often widespread anger when charities do the wrong thing. Effective regulation is therefore needed to preserve and enhance the community’s trust and confidence in charities.</p>
<p>Ireland is a good example of what happens when effective charity regulation is lacking. A <a href="http://blog.cfg.org.uk/index.php/why-the-role-of-the-charity-regulator-matters-a-look-to-ireland/">scandal</a> in 2014, which involved a major disability charity using donations to pay senior staff exorbitant salaries, prompted the fast-tracked establishment of an Irish charities regulator.</p>
<h2>Who is Australia’s charity regulator?</h2>
<p>The <a href="http://www.acnc.gov.au/">Australian Charities and Not-for-profits Commission</a> (ACNC) is the independent national regulator of charities. It was established in 2012.</p>
<p>Unlike in Ireland, the Australian regulator didn’t come about as a reaction to a scandal. Instead, it was a proactive reform that aimed to help prevent such crises in the first place. Its creation reflected a growing view globally that having an independent and dedicated charities regulator represents best practice.</p>
<p>The ACNC registers organisations as charities and helps them understand and meet their obligations. It also maintains a free and searchable <a href="https://www.acnc.gov.au/ACNC/FindCharity/QuickSearch/ACNC/OnlineProcessors/Online_register/Search_the_Register.aspx?noleft=1">public register</a>. This contains a <a href="http://www.acnc.gov.au/ACNC/FindCharity/About_Register/ACNC/Reg/Info_Reg.aspx">wide range</a> of information about registered charities. Anybody can access financial information and governing documents, as well as a record of any enforcement action the ACNC may have taken against a charity.</p>
<p>Charities registered with the ACNC have several <a href="https://www.acnc.gov.au/ACNC/Manage/Ongoing_Obs/ACNC/Edu/On_obgtns.aspx?hkey=f93bd0b9-82fe-4e58-84e1-02d57a20c8eb">ongoing obligations</a>, such as <a href="https://www.acnc.gov.au/ACNC/Manage/Reporting/ACNC/Report/ReportInformation.aspx?hkey=1c68676b-8be6-4fe8-965f-0ba204bbc793">annual reporting</a> and meeting <a href="https://www.acnc.gov.au/ACNC/Manage/Governance/ACNC/Edu/GovStds_overview.aspx?hkey=456b1d22-8869-4ad0-a0cd-48607244216e">governance standards</a>.</p>
<p>People can contact the ACNC when they have concerns about charities. It also receives referrals from other government agencies. In addition, it identifies systemic risks, such as charities being used to <a href="http://www.acnc.gov.au/ACNC/Manage/Protect/ProtectingTF/ACNC/Edu/ProtectTF.aspx">finance terrorism</a>.</p>
<p>The ACNC examines all concerns raised with it and can investigate charities further and take <a href="http://www.acnc.gov.au/ACNC/About_ACNC/Regulatory_app/ComplianceDecisions/ACNC/Regulatory/ComplianceDecisions.aspx">compliance action</a> if needed. It released its most recent <a href="http://www.acnc.gov.au/ACNC/Publications/Reports/ComplianceRpt2015-2016.aspx">compliance report</a> this week: this examined the ACNC’s compliance activities in 2015-16 and outlined its compliance focus for the year ahead.</p>
<p>Various compliance actions <a href="http://acnc.gov.au/compliancereport">have been undertaken</a>. So far, 28 charities have had their charitable status revoked.</p>
<h2>Further reform is needed</h2>
<p>Federally, the ACNC regulatory framework is broadly working well. However, one issue that needs to be tackled is the limitation placed on what the ACNC can say about its compliance decisions.</p>
<p>Under the <a href="https://www.acnc.gov.au/ACNC/About_ACNC/ACNC_leg/ACNC/Legal/ACNC_leg.aspx?hkey=b3d40228-24a5-41d2-8873-cb577d565182">existing legislation</a>, the ACNC may revoke an organisation’s charitable status or take some other form of compliance action – but secrecy provisions mean it can’t explain why it did so. </p>
<p>The ACNC’s secrecy provisions were based on those used by the Australian Taxation Office to protect taxpayers’ privacy. But what may work in the case of taxpayer information doesn’t transfer well to charity regulation.</p>
<p>Australians’ confidence in charities will be strengthened if they know why the ACNC takes compliance action. The ACNC should be able to confirm or deny whether it is investigating a charity, and to provide a statement of reasons for decisions resulting from investigations.</p>
<p>The ACNC legislation must be reviewed within five years of its commencement; this review is due in 2017. This will provide an opportunity to examine the secrecy provisions and other issues, and hopefully pave the way for the necessary amendments to be made.</p>
<p>More broadly, charity regulation in Australia is complicated because of the federation. Two reforms could greatly simplify matters for charities in this regard.</p>
<p>First, more than 40% of charities are <a href="https://www.consumer.vic.gov.au/clubs-and-not-for-profits/incorporated-associations/become-an-incorporated-association/what-is-an-incorporated-association">incorporated associations</a>. These are organisational structures that create a separate legal identity for the charity, and are regulated by the states and territories. </p>
<p>As has happened in <a href="https://probonoaustralia.com.au/news/2016/05/new-law-cuts-red-tape-sa-charities/">South Australia</a>, other states and territories should no longer require charities that are incorporated associations to report separately to them as well as to the ACNC. State and territory regulators will still have access to the reports they need from the ACNC, but the duplicated reporting by charities will end.</p>
<p>Second, <a href="https://www.nfplaw.org.au/fundraising">fundraising regulation</a> is a <a href="https://probonoaustralia.com.au/news/2016/09/regressive-fundraising-regulations-time-change/">major irritation</a> for Australian charities. Some form of regulation is necessary, but it is very complicated and varies considerably across every state and territory. Charities that fundraise across Australia – even if just through a website – are burdened with complying with this red tape.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/160379/original/image-20170311-19226-1613ofg.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/160379/original/image-20170311-19226-1613ofg.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/160379/original/image-20170311-19226-1613ofg.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/160379/original/image-20170311-19226-1613ofg.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/160379/original/image-20170311-19226-1613ofg.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/160379/original/image-20170311-19226-1613ofg.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/160379/original/image-20170311-19226-1613ofg.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/160379/original/image-20170311-19226-1613ofg.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Note: The NT has no specific fundraising regulation.</span>
<span class="attribution"><span class="source">Community Council for Australia</span></span>
</figcaption>
</figure>
<p>A <a href="https://www.justiceconnect.org.au/fixfundraising">coalition of organisations</a> is calling for reform to this situation. It wants fundraising to be regulated consistently across Australia under the <a href="http://consumerlaw.gov.au/the-australian-consumer-law/legislation/">Australian Consumer Law</a>, with the inconsistent state and territory laws repealed.</p>
<p>A <a href="http://consumerlaw.gov.au/review-of-the-australian-consumer-law/about-the-review/">review</a> of the Australian Consumer Law is being finalised. This review is an opportunity to tackle a complicated and outdated fundraising regulation framework, and to ensure donors are protected but charities aren’t burdened with unnecessary red tape.</p>
<hr>
<p><em>You can catch up on other pieces in our Charities in Australia series <a href="https://theconversation.com/au/topics/charities-in-australia-36414">here</a>.</em></p><img src="https://counter.theconversation.com/content/72877/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Krystian Seibert was an adviser to a former Australian Assistant Treasurer, and in this role he was responsible for overseeing the establishment of the Australian Charities and Not-for-profits Commission and the development and passage of the Charities Act 2013 (Cth). He is currently a Member of the Australian Charities and Not-for-profits Commission's 'Sector Advisory Group' which is a consultative body comprising representatives from a broad range of charities. He works for Philanthropy Australia, which is a member of the #fixfundraising coalition seeking to reform fundraising regulation in Australia.</span></em></p>Australians’ confidence in charities would be strengthened if any compliance action taken against them was made public.Krystian Seibert, Adjunct Industry Fellow, Centre for Social Impact, Swinburne University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/694732016-11-28T05:26:39Z2016-11-28T05:26:39ZCooling-off periods for consumers don’t work: study<figure><img src="https://images.theconversation.com/files/147697/original/image-20161128-22751-nbhmvf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">"Cooling-off" periods for purchases made in high-pressure selling situations like door-to-door sales don't help consumers, research shows. </span> <span class="attribution"><span class="source">image from shutterstock.com</span></span></figcaption></figure><p>When customers are offered a “cooling off” period, they don’t change their minds, even when the alternative is considered subjectively better, our <a href="http://consumeraction.org.au/wp-content/uploads/2016/11/161104-Headline-findings.pdf">research</a> finds. We also found that some consumers (around 30%) only responded when contacted by the seller and asked if they would still like to opt in.</p>
<p>Under current Australian consumer law, Australians have a 10-day cooling-off period on any sale that was unsolicited – usually through door knocking or telemarketing. The idea of a cooling-off period exists partially because external forces, such as high-pressure selling, can have a significant influence on the choices that consumers make. </p>
<p>It’s not simply a case of telling consumers to read the terms and conditions, and then leaving them to their own devices, particularly when business (and their salespeople) use tried and true methods to get customers to buy products that may not necessarily be the best option for them. </p>
<p>The problem with the current cooling-off periods is that they operate after a customer has taken ownership of something or signed an agreement. Our research finds cooling-off periods simply don’t overcome many of the inherent biases of human behaviour.</p>
<p>Dr Josh Newton and I, from Deakin University’s <a href="https://www.deakin.edu.au/business/research/centre-for-employee-and-consumer-wellbeing">Centre for Employee and Consumer Wellbeing</a>, tested how 759 consumers responded when presented with cooling-off and opt-in alternatives as part of an online survey. </p>
<p>A number of behavioural theories, such as the <a href="https://www.princeton.edu/%7Ekahneman/docs/Publications/Anomalies_DK_JLK_RHT_1991.pdf">endowment effect</a>, the <a href="https://www.hks.harvard.edu/fs/rzeckhau/SQBDM.pdf">status quo bias</a> and <a href="https://www.researchgate.net/profile/Robert_Cialdini/publication/232541029_Preference_for_Consistency_The_Development_of_a_Valid_Measure_and_the_Discovery_of_Surprising_Behavioral_Implications/links/0a85e53b2ea96b5713000000.pdf">consistency theory</a>, show that once a person “owns” something, they value it more and are less likely to give it up – at least in the short term. This is particularly the case if they have put mental, physical or social effort into their decision. </p>
<p>Similarly, many agreements require customers to “imagine” what the service will be like. This is simply because when we buy something from a unsolicited sales process, we haven’t really had time to process what the purchase actually means. We all tend to imagine that our lives will be better with something new, because our current reality is real, whereas the future is abstract. </p>
<p>There’s also a power imbalance between a customer who has been targeted in an unsolicited context and a salesperson who has had training, significant sales experience and sometimes a <a href="https://www.moneysmart.gov.au/borrowing-and-credit/borrowing-basics/avoiding-sales-pressure">script</a> to anticipate our responses. </p>
<p>In the context of cooling-off periods (and thus changing our minds), <a href="http://s3.amazonaws.com/academia.edu.documents/38441488/Harrison_et_al_2014_-_Beyond_door-to-door.pdf?AWSAccessKeyId=AKIAJ56TQJRTWSMTNPEA&Expires=1480301401&Signature=G2ddWnsvc5L5us0uaLRHUuWo5%2FI%3D&response-content-disposition=inline%3B%20filename%3DBeyond_Door-to-Door_The_Implications_of.pdf">research shows</a> it takes a significant amount of cognitive resources to admit we made a mistake. Again, this is not a conscious use of resources, but happens regardless of how rational we think we are. The role of our ego is to protect us, so out of our conscious reach, our ego creates defences, including apathy, that restrict us from changing our mind after we have become endowed with something.</p>
<p>These behaviours were also shown <a href="http://consumeraction.org.au/wp-content/uploads/2012/04/Shutting-the-Gates.pdf">in my 2009 research</a> into in-home sales. I found once consumers had actually signed a large financial contract for a pretty poor educational software package, their likelihood of cancelling that contract within ten days (which until recently was the cooling-off period in Victoria) was remote. </p>
<p>In early 2017, Australia’s consumer protection agencies will deliver a review of the current laws, including these cooling-off periods. However, what should get more attention under these laws is the idea of an opt-in clause. This would give consumers a real chance to change their minds after they’ve had time to think.</p>
<h2>How an opt-in clause works</h2>
<p>The opt-in clause works in two parts. It’s based on the principle that we should give consumers, under certain circumstances, more time and resources to think about the consequences of a purchase. </p>
<p>We suggest that after a consumer has signed a sales agreement in their home, it does not take effect until the consumer then “opts in” (confirms) some time between 24 to 48 hours after first signing the agreement, by contacting the company and confirming that they wish to continue. If the consumer does not opt in, the contract lapses. </p>
<p>Our research shows that an opt-in clause would work most effectively if the seller is unable to contact the consumer during the opt-in period. The consumer would then be able to make their choice free of pressure-selling technique. The opt-in approach would empower Australians to make purchases free of predatory sales tactics — the contract is only final when you re-contact the trader after two days.</p>
<p>This approach would help to overcome the <a href="https://faculty.washington.edu/jdb/345/345%20Articles/Baumeister%20et%20al.%20(1998).pdf">pressure and the psychological biases</a> during the sales process. And the idea makes logical (and perhaps, business, sense) – if the product is good and the customer wants it badly enough, they will opt in. The sales process does not rely on predatory tactics, but on good products and good communication between the seller and the customer. </p>
<p>What this approach will do is force businesses to target the right consumers, design better products and undertake more honest sales processes, rather than relying on the high-pressure selling techniques – often targeting vulnerable people – that are common in some of these sectors.</p><img src="https://counter.theconversation.com/content/69473/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Paul Harrison receives funding from Consumer Action Law Centre, Australian Communications Consumer Action Network, Australian Securities and Investment Commission, and Monash Health. He is a director of the Telecommunications Industry Ombudsman (TIO), and advisory panel member of the Essential Services Commission. </span></em></p>Customers who make purchases under pressure don’t use the usual 10-day cooling-off period given under law, new research finds.Paul Harrison, Senior lecturer, Deakin Business School; Director, Centre for Organisational Health and Consumer Wellbeing, Deakin UniversityLicensed as Creative Commons – attribution, no derivatives.