| Australian Consumer Law Reforms - firecracker or fizzle? |
| Author: Kearney, Madeleine |
It has been well over a year since the Australian Consumer Law (ACL) reforms were introduced. The ACL represented the endpoint of a comprehensive review of Australia's consumer laws and is the most
significant reform in the area of product safety since the introduction of the strict product liability regime for defective products in 1992. '
The ACL fully commenced on 1 January 2011, although some reforms were
already in force prior to that date. The reforms that were of significance for suppliers of consumer goods include:
• a supplier notification requirement where a consumer product has caused (or may have caused) a serious injury or illness or death;
• a new power for the Australian Competition and Consumer Commission (ACCC) to issue "substantiation notices";
• the replacement of the existing regime of statutory warranties with consumer guarantees, including a guarantee of "acceptable quality"
and
• enhanced enforcement and remedies provisions, including the power to issue infringement notices (AKA "speeding tickets") and warning notices.
• So have these reforms had a significant impact? The ACCC has certainly been making use of its new enforcement powers - a review of the ACCC’s web site reveals that the ACCC has issued a number of infringement notices for breaches of the ACL. At the time of writing the ACCC has also issued two public warning notices - one in relation to misleading representations made in relation to a potential business opportunity, and another in relation to misleading statements made in relation to the supply of workplace safety materials.
What about the impact of the reforms on product safety?
This is much harder to objectively assess. The injury reporting requirement, which requires that certain product
related injuries/illness be reported to the ACCC within 2 days of a supplier becoming aware of such injuries/illness, has imposed a significant compliance burden on all businesses involved in the supply of consumer products. However, it is not clear whether this has, or will, result in safer products being supplied to the market place.
In the author's view the injury reporting requirement is poorly drafted with the result that many trivial matters are required to be reported while other matters that suggest a serious safety hazard are not. By way of example if a clothes dryer catches on fire this will not be reportable if the subsequent fire does not result in injury. On the other hand if a consumer uses incorrect mounting fixtures to mount the same dryer and it falls on them, that will be reportable. This raises an issue regarding regulator resourcing and opportunity costs -
that is, whether the resources used to monitor complaints could be more effectively utilised elsewhere, such as
enforcement and/or product surveys.
In August 2011 the ACCC issued a press release which said that during the first 6 months of 2011 a total of 911 mandatory reports had been received and that 40 recalls had been "triggered" by the new reporting requirements. There is however a question regarding whether these recalls would have occurred regardless of the reporting obligation. The ACL requires that a report be made within 2 days of becoming aware of an incident, giving little time to investigate prior to notification to the ACL.
Accordingly, even if the ACCC actively followed up the report and negotiated the terms of the recall with the supplier, it is possible that in the absence of a reporting requirement that the supplier would have come to its own decision to conduct a recall.
In late 2011 and early 2012 the ACCC announced the recall of a number of
DIY tooth whiteners (including the compulsory recall of two products supplied by the one supplier) containing
unsafe levels of hydrogen peroxide following a market survey which was undertaken in response to reports of
injuries. However, it is not clear whether these reports were received from suppliers pursuant to the reporting
requirement or whether they were received direct from consumers, so it is not possible to assess whether the
reporting requirement contributed to the recall.
One real benefit has been harmonisation. Prior to the introduction of the reforms there existed mandatory product safety standards and banning orders at both the Federal level and in each State and Territory in Australia. This sometimes made it difficult to determine whether or not a particular product was subject to a safety standard, or even banned. Unfortunately there are some areas that
are not uniform - for example, State and Territory Ministers retain the power to temporarily ban products, and certain projectile toys are banned in the State of New South Wales. Nevertheless, the situation is a significant improvement on that which existed prior to the introduction of the ACL reforms.
Madeleine Kearney is Senior Associate at the law firm Clayton Utz
[email protected] |