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Time to link penalties to profit

CHOICE reaffirms call to significantly boost penalties for breaches of the Consumer Law

12 April 2017

CHOICE is calling on the Federal Government to act on findings from the Productivity Commission,  which would see penalties for breaching Australian Consumer Law linked to company profits. 

“If implemented, these changes would act as a real deterrent to large companies, who currently see penalties for breaches of the Consumer Law as little more than a speed bump to huge profits,” says CHOICE CEO Alan Kirkland.

The findings, detailed in the Productivity Commission report Consumer Law, Enforcement and Administration,  show companies who are caught conning consumers currently face minimal penalties but should instead cop a fine of up to $10 million dollars, three times the profit they’ve made as a result of breaking the law or 10% of annual turnover. 

“We’ve seen examples where the profits from mis-selling products have far outstripped any penalty the regulators and courts were able to impose,” Mr Kirkland says.  

“In a recent example, Reckitt Benckiser gained about $45 million in revenue from misleading consumers with their Nurofen, targeted pain, products  but were fined just $6 million.[1] 

“It’s time to end the idea that breaking consumer law is simply the cost of doing business. The findings come in the wake of CHOICE’s call to increase penalties.”

The Productivity Commission has also recognised the role consumer organisations play in uncovering some of the worst behaviour by businesses and has supported giving consumer groups a super complaint power to fast-track issues directly with the regulator. 

“It’s encouraging to see the Productivity Commission welcome the role organisations like CHOICE play.We’ve seen the ‘super complaints’ power used to focus the attention of the regulators in the UK,” says Mr Kirkland.

“CHOICE has already successfully trialed a super complaint system with NSW Fair Trading to shine a light on misleading electricity switching websites and confusing ‘free range’ egg labeling. 

“Most recently we highlighted systemic problems in the airlines industry with the ACCC, which has know adopted these issues in its strategic priorities for 2017.”

For more information on CHOICE’s original submission to the Productivity Commission’s inquiry go to: choice.com.au/policy 

Media contact:

Tom Godfrey, CHOICE Head of Media: 0430 172 669

[1] Australian Competition and Consumer Commission v  Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181