ACCC Crackdown on Unfair Terms Following Review of Standard Form Contracts

ACCC Crackdown on Unfair Terms Following Review of Standard Form Contracts

Following a review of standard form consumer contracts in the airline, telecommunications, fitness and vehicle rental industries, as well some used by online traders and travel agents, the Australian Competition and Consumer Commission (ACCC) recently released their findings in its report “Unfair contract terms – industry review outcomes”.

The review was conducted in the context of the national unfair contract terms laws, introduced as part of the Australian Consumer Law which came into effect on 1 July 2010. Under these laws, a court may determine that a term of a standard form consumer contract is unfair and therefore void. However, it is important to note that these laws have not yet been tested in the courts.

In most cases, businesses amended or deleted terms identified by the ACCC as ‘operating unfairly’, were terms that:

  1. allow the business to change the contract without consent from the consumer
  2. cause confusion about agency arrangements and seek to unfairly absolve the agent from liability
  3. unfairly restrict the consumer’s right to terminate the contract
  4. terms that suspend or terminate services being provided to the consumer under the contract
  5. make the consumer liable for things ordinarily outside of their control
  6. prevent the consumer from relying on representations made by the business or its agents
  7. seek to limit consumer guarantee rights and
  8. remove a consumer’s credit card chargeback rights when buying the service through an agent.

The ACCC is considering whether further actions are warranted against businesses that did not change their standard form contracts to address problematic terms, with the possibility of court action. ACCC Chairman Rod Sims said the report marks the end of the compliance emphasis and the transition to a more enforcement focused approach dealing with unfair contract terms.

Hunt & Hunt can assist businesses undertake a comprehensive review of their standard form consumer contracts to ensure that the contractual arrangements in place with their customers are consistent with the new national unfair contract provisions.