ACCC Infolink 2003-2008 infolink 2003-2008.pdf · ACCC InfoLink February 2003 E-commerce: ... Be...

Protecting yourself To avoid problems businesses should familiarise themselves with the Internet environment and the main elements that actually ‘put them on-line’. The ACCC receives many complaints from businesses regarding Internet Service Providers (ISPs), hosting ser-vices and domain name re-newals. Hosting services and ISPs These keep the site ‘live’. You should shop around for the service best suited to your business. Some points to look out for: - Is there a limit to the

size of the website? - Is prompt technical

assistance available? - Does the service in-

clude domain name registration and who will hold the licence for the domain name?

What is a Domain Name? A domain name is your

Internet address. In Australia domain names are registered (not ‘bought’) for two years at a time. The ACCC receives many complaints regarding domain name resellers trying to get new customers by sending letters that look like invoices. In some cases businesses have paid only to find out later that they have had no dealings with the company. In 2002, the ACCC took successful legal action against two such companies for misleading conduct in domain name renewal services. To protect your business, you should know the exact name of who you are registered with (especially if using the services of a re-seller), and when the renewal is due. If registration lapses the do-main name can be registered by another business/person. For detailed information

about the domain name system in Australia go to the au Do-main Administration website www.auda.org.au or the A u s r e g i s t r y w e b s i t e www. ausre gis t r y. com.au What are search engines? They are important to busi-nesses as they are a significant way that consumers look for businesses and information on the Internet. However, search engines use different criteria or policies for ranking sites found through a search. For example, some search engines include websites in their list-ings that use keyword adver-tisements or paid placements. This is a policy which allows individual websites/businesses to pay for a higher ranking in a search results list even though they might not be the most relevant.

Most search engine home pages provide advice to on-line businesses on how to access their services.

Internet Trading and the Trade Practices Act It is important to remember that the same consumer pro-tection laws which apply ‘off line’ apply online. Your web site needs to comply with the Trade Practices Act in the same way that a classified ad you put in the newspaper or a representation you make to a customer does. In addition to the usual good practices for advertising (as outlined in the ACCC’s

publication Advertising and Selling), there are some things which are unique to the Internet and should also be taken into account. The use of framing, linking and disclaimers are examples of techniques which need to be used carefully to ensure that consumers make fully informed decisions about entering into transactions online. It is also important to

r e m e m b e r that you can not guarantee that consumers will follow every link and read every page in your web site. If important informa-tion, such as terms and con-ditions of a contract or dis-claimers, are buried deep within your site, the site may risk being inadvertently mis-leading about the nature of your goods or services.

ACCC InfoLink

February 2003 E-commerce: Tips for good business

Did you know???

From July 2001 to June 2002, the ACCC received more than 3,300 complaints regarding e-commerce related incidents.

Don’t be a statistic! Be Internet savvy and do your homework.

The Internet Environment Many Australian businesses are developing an online presence, either to complement their ‘bricks and mortar’ operations or as their main ‘shopfront’. As in all business environments it is important to know as much as you can about your business and to do the best for your customer. The same rights and obligations that apply to offline trading apply on-line.

A Consumer Friendly Site

Include: - Clear information about

who, and where, you are (physical address; ABN)

- Display clear policies on refunds; warranties; delivery and complaints handling

- Include a clear & accu-rate description of your goods or services

- Clearly explain how you will treat personal information

- Display and explain the level of security your site h a s f o r o n - l i n e transactions

The Consumer Affairs Division, Treasury has produced a com-prehensive guide to good on-line trading practices called Building Consumer Sovereignty in Electronic Commerce: A Best Practice Model for Business. It is avai lable on-l ine at www.ecommerce.treasury.gov.au.

How do I find out more? See the ACCC publications: ACCC Update Issue 6 May 2000 – the e-commerce edition. (Available from the publications link of the ACCC website www.accc.gov.au) Advertising and Selling. Avail-able for $10 from ACCC offices or download it FREE from the ACCC website. For general enquiries call the ACCC Infocentre on 1300 302 502.

Vehicle Jacks—Safety Non-compliant vehicle jacks have been the subject of an ACCC product safety crack-down over the past few months.

‘Proton Cars Australia, Audi Australia and Daewoo Auto-motive Australia have all pro-vided court-enforceable un-dertakings to the ACCC set-ting out the steps the compa-nies are taking to remedy their failure to meet fully with the mandatory product safety standard for vehicle jacks’, ACCC Chairman, Professor Allan Fels said.

‘The mandatory safety stan-dard fixes mandatory per-formance criteria and requires specified warnings and safe usage instructions to be pro-vided with vehicle jacks.

‘A product safety survey con-ducted by the ACCC dis-closed that the vehicle jacks supplied with a range of mod-els of new Proton and Audi motor vehicles failed to com-ply with the jack warning labelling and safe usage in-

structions contrary to section 65C of the Trade Practices Act. The same survey also disclosed that a range of new Daewoo vehicles failed to comply with the jack warn-ing labelling requirements of the same mandatory stan-dard.

‘Consumer safety is a matter of paramount importance. The ACCC regularly reviews goods subject to mandatory safety standards’.

The three companies recalled the non-compliant jacks. All affected Proton and Audi vehicle owners have been contacted, provided with replacement warning labels and safety instructions, and in Audi’s case the company will rectify jack performance problems. All affected Dae-woo vehicle owners have been contacted and provided with replacement warning labels.

Additionally Proton, Daewoo and Audi have published notices in major national daily newspapers and are

ACCC InfoLink

June 2003 Product Safety

Children’s dart gun sets banned under the TPA

In March 2003 the Parliamen-tary Secretary to the Treasurer, Senator the Hon. Ian Campbell issued an interim ban order pro-hibiting the sale of children’s dart gun sets, with or without a target, consisting of a firing gun and suction tipped darts of a size that fit entirely into the small parts test cylinder when tested in accordance with clause 5.2 (small parts test) of the Aus-tralian/New Zealand Standard Safety of Toys, Part 1 (AS/NZS ISO 8124.1:2002).

The interim ban order was intro-duced as it has been found that small darts used in some dart gun sets may choke children if the darts lodge in the throat.

Each year many people are injured as a result of goods that are defective, unsafe or fail to meet prescribed con-struction, performance and design standards.

Mandatory safety standards are declared when products have been shown to present undue hazards. Information standards are introduced when there is potential for consumer detriment in the absence of information about a product. In declaring man-datory standards the govern-ment provides protection for consumers by specifying

minimum requirements that must be met before products are sold.

The ACCC enforces manda-tory product safety stan-dards, information standards and bans of unsafe goods declared under the Act. It actively enforces safety stan-dards and bans with manu-facturers, importers and re-tailers by undertaking ran-dom market surveys, re-sponding to complaints and acting promptly against of-fending suppliers. The ACCC does not inspect or approve goods. Responsibil-

ity for compliance with the mandatory standards and bans rests with suppliers.

The product liability provi-sions of the TPA allow per-sons who suffer injury or loss as the result of a defective product to take legal action for compensation against the sup-plier of that product. When defective products have (or may) cause widespread detri-ment, the ACCC can take rep-resentative action on behalf of one or more people who have suffered injury.

issuing a service bulletin to all authorised dealers. The undertaking also provides for each company to implement a trade practices compliance program. Further, Proton and Audi agreed to post a safety warning notice on their web-sites for 30 days.

‘It is good that Proton, Audi and Daewoo cooperated to resolve this important matter’, Professor Fels said. ‘But it is disappointing that such a high level of non-compliance with a mandatory standard was detected’.

In October 2002 the ACCC instituted legal proceedings in the Federal Court Melbourne against BMW (Australia) alleging that BMW had sup-plied vehicles equipped with a vehicle jack and a vehicle owner manual which did not comply with the mandatory safety standard for vehicle jacks. The proceedings are being contested and continue.

Did you know? There are currently 26 manda-tory standards and 12 banning orders administered by the ACCC. Goods subject to mandatory standards include:

- vehicle jacks;

- cots for household use;

- fire extinguishers;

- disposable cigarette lighters; and

- sunglasses and fashion spectacles.

How do I find out more? Supplying products that are safe for consumers makes good business sense. The ACCC places emphasis on helping business comply with the law. For more information on man-datory safety standards call the ACCC Infocentre on 1300 302 502 or visit the website at www.accc.gov.au.

Product Safety and the ACCC

ACCC InfoLink

July 2003 Commercial Contract Conditions Is your removal contract rubbish?

What should you do? The ACCC receives many complaints from businesses and consumers who have signed contracts without reading them. The most com-mon reasons are that the con-tract was too long, not easily understood or they fell for the line “it’s just a standard con-tract”. Regardless of the type of contract you are entering into, make sure you read it over. If possible, have a busi-ness advisor, your accountant or lawyer look over it with you. Remember: It is much easier to ask the right questions before you sign a contract than to try and rectify the problem once you’ve signed on the dotted line.

There are many things to watch out for when enter-ing into a new contract. Protect your interests and read the contract carefully. Watch out for: Excessively Long Con-tracts Commercial rubbish re-moval contracts are often for a fixed and extended period, such as 5 years. This condition is some-times only disclosed in fine print. Some business com-plainants later allege that no effort was made to bring such clauses to their atten-tion. The result is that some businesses which have contracts in place are under the mistaken belief they can vary or cancel the

service contract any time they like, such as when the contract is no longer needed or when a cheaper supplier is found. Automatic Renewal Clauses Some contracts include a clause that imposes an onus on the business op-erator, just prior to expiry of the contract, to notify if they wish to terminate. Otherwise the contract is automatically renewed. Again, it has been alleged this clause is often in fine print and, whilst binding, is not clearly brought to the business consumer’s attention. In one example a clause stipulated that notice of termination must be given within 90 days of the expiry of a 5-year con-tract. If not, a 5-year ex-tension was created. Early Termination Pen-alties Some contracts reserve the right for the contractor to claim for losses in the event that a contract is terminated prior to the expiry date. This could entail a fixed fee, or a for-mula based on the ex-pected profits the contrac-

tor has ‘lost’ over the re-maining time. It is impor-tant to remember that the right to assert payment for such losses is usually a legitimate means of recov-ering the reasonable costs sustained as a result of a breach of contract, pro-vided the amount recover-able is just. Compliance in Action Protects Small Business - An Adelaide Example In 2002, the ACCC investi-gated a rubbish removal company in Adelaide which allegedly failed to adequately disclose that its contracts included clauses such as those described above, namely allowing for extended terms, automatic renewal, and early termina-tion penalties. The company agreed, as part of an administrative resolution with the ACCC, to ensure better disclosure of these particular clauses by placing a clear and prominent reference to them on the front of the service contract. The company has in-structed sales staff that the signatory to the contract must be authorised to agree to the terms of the contract. Also, it has reviewed and changed the formula used to calculate losses in the event of a breach of con-tract so as to reflect justifi-able compensation.

Did you know?

The ACCC has a publication called Small Business and the Trade Practices Act which is a practical guide for Australian small business. The booklet is available by calling the ACCC Infocentre on 1300 302 502 or log onto the Inter-net at www.accc.gov.au and download it for free!

How do I find out more? If you are offered a con-tract with terms you do not like, or are unsure of, get advice or shop around for a better offer. To find out more, contact the ACCC Infocentre on 1300 302 502 or visit the A C C C w e b s i t e a t www.accc.gov.au.

The Australian Competi-tion & Consumer Commis-sion (ACCC) receives nu-merous complaints from small businesses in relation to contract conditions im-posed by commercial ser-vice contractors such as rubbish removal, equip-ment hirers, or hygiene services. The ACCC recently inves-tigated complaints from small businesses in relation to alleged harsh or mis-leading conditions imposed on them by rubbish re-moval contractors, so in this edition of InfoLink, we’ve taken a rubbish con-tract as an example.

But wait… there may be a catch!

ACCC InfoLink

August 2003

Who’s in your corner? Alternative Dispute Resolution

Franchise If you are a franchisee in a dis-pute with a franchisor, bear in mind that the mandatory Fran-chising Code of Conduct requires both parties to a dis-pute to attend mediation and try to resolve the dispute if either party has told the other in writ-ing:

1. the nature of the dispute

2. the outcome the complainant wants and

3. what action the complainant thinks will settle the dispute

AND The parties must have failed to resolve the dispute within three weeks of the complainant giv-ing the other party notice as above and the complainant must have asked the mediation adviser to appoint a mediator.

G o o d r e l a t i o n s h i p s

with suppliers, customers or landlord are essential for the smooth running of your busi-ness. But what happens when it all goes sour?

Even in relationships that work hard to avoid disputes, they sometimes happen—whether from simple misun-derstanding, communication breakdown or as the result of a legitimate grievance. Unre-solved disputes can be costly and damaging to your busi-ness, especially when they land you in a long and expen-sive court process. So what other options are available?

Alternative dispute resolution (ADR) is a convenient label for a range of methods by which people involved in a dispute can be helped to re-solve it cost effectively, fast and efficiently. Common ADR processes include:

N e g o t i a t i o n If you can’t work it out among yourselves, there is an option for assisted negotia-tion whereby an independent third party (a go-between) will help the parties to prepare for and undertake the negotia-tion process.

C o n c i l i a t i o n Similar to negotiation or me-diation, a conciliator will help the parties to reach agreement by making various recommendations. The rec-ommendations are not bind-ing unless the parties agree that they should be.

M e d i a t i o n An independent person helps the parties to find a mutually acceptable solution. The process focuses on the par-ties’ resolving the disputes themselves using the skills of the mediator.

What are the advantages of ADR?

Generally speaking, the par-ties are given the opportunity of finding their own solution to the dispute rather than having a decision made for them by a court. The proc-esses can also offer:

A confidential approach In contrast to a court process, some ADR processes such as mediation and arbitration are conducted in private and

the results remain private. No business needs adverse pub-licity arising from litigation. ADR can help keep the dis-pute out of the limelight and therefore maintain a busi-ness’s good image. Significant savings in l e g a l c o s t s A dispute can mean one trip to your lawyer or it can mean several. Often, disputes ‘blow out’ a legal budget and the only person to benefit is your lawyer. Significant savings in time If a business is involved in litigation or a complex dis-pute, the business focus is diverted away from making a profit and the business bottom line may suffer. C o n v e n i e n c e The parties have more control over the ADR process, which can be held at relatively short notice. It also allows for crea-tive solutions such as the ‘lemon’ example. R e t a i n i n g b u s i n e s s r e l a t i o n s h i p s ADR encourages businesses to develop business solutions themselves. It puts the onus on all parties to participate, which decreases the potential for animosity.

Did you know? The Office of Small Business produces a publication outlin-ing steps to the ADR process Resolving Small Business Disputes—six steps to suc-cessful dispute resolution. It is available on their web site at <www.industry.gov.au>.

How do I find out more? Some industries have codes of conduct that have specific ADR requirements. Check the details of your code for more information. Eg. the franchis-ing industry should contact the Office of Mediation Adviser at www.mediationadviser.com.au. Participants in the retail gro-cery industry can find our more at Mediate Today www.mediate.com.au. For further information, contact the ACCC Infocentre on 1300 302 502 or visit the ACCC website at www.accc.gov.au.

Two parties are fighting over an orange. If they go to court, one will end up with the or-ange, the other will lose out completely, and both will have been caught up in a lengthy, costly court process.

If they choose an ADR proc-ess such as mediation, the

mediator, as a neutral party, finds the common ground and can help the parties reach an agreement that will benefit both.

The argument has made the parties blind to the obvious, that together they can work out a way to share the or-ange. During mediation they

realise that one party wants the orange to make orange juice and the other needs the rind for mixed peel.

And the great news is, media-tion was not only cheaper and faster than going to court, it’s kept the business relationship intact.

Alternative dispute resolution

ACCC InfoLink

December 2003

Competing Fairly Forum Growing good business relationships

What’s a Competing Fairly Forum? The Competing Fairly Fo-rums (CFF) are an integral part of the ACCC's Small Business Rural and Regional Program. They aim to provide relevant information to small businesses and regional com-munities about their rights and obligations under the Trade Practices Act 1974. The first CFF took place in November 2000 with a Sky Television broadcast of a panel discussion covering the basics of the Trade Practices Act. Since then, the forum has evolved and the latest forum, the seventh in the series, is now available. You may choose to attend one of the many forums to be presented by ACCC staff, in-dustry organisations and com-munity groups across the country. Or, view the forum from your own home or office by ordering a video cassette from the ACCC infocentre ($10), or watch the video s t r e a m o n l i n e a t www.accc.gov.au.

The horticultural industry is a major sector within the food industry, with a gross production value of $5.5 billion. According to the Commonwealth Depart-ment of Agriculture, Fish-eries and Forestry, the in-dustry employs around 60 000 people. Whilst some of the con-cern expressed from those involved in the horticul-tural industry arise from the relationship between big and small business; between price setters and price takers; others arise from the relationship be-tween growers and the cen-tral wholesale markets to which they consign their produce. A traditional culture of trust exists with verbal and handshake agreements in which selling prices are not pre-determined and details of costs and margins are not always known or un-derstood by growers. This has led to some perception of irregular and even unfair conduct. The ACCC is committed to ensuring that businesses throughout the horticultural supply chain remain viable and competitive. The fresh produce supply chain is the focus of the ACCC's Octo-ber 2003 Competing Fairly Forum. The forum, Growing good business relationships is the seventh in the CFF

series. It brings together industry and business rep-resentatives to discuss trade practices and busi-ness issues arising in the fresh produce supply chain.

The supply chain consists of: - growers - processors - p a c k i n g s h e d

operators - wholesalers - transport operators - exporters - retailers The presentation is hosted by Emma Alberici from the ABC's Business show and discusses supply chain relationships in the horticultural industry, looking at three main themes: - important issues fac-

ing various partici-pants in the supply chain;

- trade practices issues that may arise and how best to deal with them; and

- steps industry partici-pants can take to im-prove commercial re-lationships.

Find a forum near you The forum will be hosted at various venues across the country. To find infor-mation on your nearest venue, or for information on how your organisation can host a forum, contact

the ACCC Infocentre on 1300 302 502. View the forum online View the forum via video s t r e a m i n g a t www.accc.gov.au. The video stream allows view-ers with different internet connection speeds to choose the stream most appropriate. It is available in three web connection formats and plays on Win-dows media player. An audio only version is available for visually im-paired persons and a tran-script of the forum for hearing impaired persons is also available. Who’s on the panel? - Graeme Samuel,

ACCC Chairman - John Rogers, stone

fruit farmer and Chair of the Horticultural Com-mittee for the NSW Farmers Association

- Bob Gaussen, Retail Grocery Industry Om-budsman

- Stan Moore, CEO of the Australian Retailers Association

- Bill Chalk, whole-saler and President of the Australian Chamber of Fruit and Vegetable In-dustries

Did you know?

Previous forums are available on video for $10. Phone the infocentre for more details.

How do I find out more? To find out more, contact the ACCC infocentre by: Phone: 1300 302 502 Email: [email protected] or visit the ACCC website at www.accc.gov.au.

ACCC InfoLink

February 2004

Accommodation Small Business

2004—What’s in store? The ACCC is looking for-ward to a further challeng-ing but productive year un-der Chairman Graeme Sam-uel and newly appointed Deputy Chair Louise Syl-van. The ACCC is often referred to as the Watchdog - barking and if necessary biting, to stop anti—competitive, unfair or mis-leading business practices. The ACCC’s priority is to ensure business players keep within the "rules of the game". We take strong enforcement a c t i o n w h e n c o n -vinced "rules" have been broken. However our main aim is to have businesses and consumers understand their obligations and rights. The ACCC will continue to put effort into providing information and support to assist understanding and compliance with the law. Any queries or complaints may be directed to the ACCC Infocentre on 1300 302 502. John Martin ACCC Commissioner for Small Business

If you own, run or have ever booked into a hotel, some of the issues in this Infolink will affect you. The ACCC receives com-plaints concerning accommo-dation both from and about small businesses. This month, regardless of which side of the registration desk you’re standing on, we’re looking at some common hotel and mo-tel issues, and your rights and responsibilities under the Trade Practices Act (the Act). Association membership John, a hotel owner, is told that he cannot join a local association unless he removes the sign outside his hotel dis-playing prices for single and twin share accommodation. The association’s terms and conditions prohibit members from advertising accommo-dation rates on signage out-side their premises. Can the association set terms such as these to exclude po-tential members? In the circumstances de-scribed above, yes. While Part IV of the Act prohibits anti-competitive agreements, agreeing not to display prices on a billboard when they are available elsewhere (i.e. at the hotel office or on the ho-tel website) is unlikely to amount to an anti-competitive agreement, or to have the purpose or effect of substan-tially lessening competition in the local market for ac-commodation. However a range of other agreements between competitors, includ-ing those fixing a price, will breach the Act.

It is John’s choice whether or not to display accommo-dation rates. Doing so is likely to help consumers make informed decisions but it means he cannot join a particular local Associa-tion. Perhaps John could find another association more attuned to the needs of his business and custom-ers. Short notice Kelli runs the Quality Rest Stop Motel. When business is slow, she puts unsold rooms on a travel website getINNquick.com.au which generally brings in extra guests at a lower budget rate. Kelli is happy to ac-cept a lower room rate from customers and pay get-INNquick.com.au a com-mission rather than have the rooms vacant. A full—rate paying guest of the hotel is now com-plaining about being misled and deceived about the prices at the motel. The guest booked over the phone and was quoted, and agreed to pay, the full rate. The guest is now demand-ing a refund of the differ-ence between the full rate advertised on the motel’s own website and the price advertised online at get-INNquick.com.au. Does Kelli have to provide a refund or tell guests about special rates that may be available online? Misleading or deceptive conduct in trade or com-merce is prohibited by the Act and silence can be mis-

leading when there is a duty to reveal relevant facts. For instance, if a restaurant owner selling the business stated that the restaurant seated 150 people but was silent on the fact that it was only licensed to seat 50, si-lence about the licensed ca-pacity is likely to be mis-leading because it distorted an important fact that was relied on. However consum-ers buying hotel rooms and airline tickets are aware that a number of price structures might apply. Kelli does not have a duty to provide her guest with the best bargain in town, just a Motel room at a price she has offered and the guest has accepted. Credit card Chris and Phillip run the Sunny Hills Motel. They place a "pre-authorisation" debit of $100 on guests credit cards when they check—in to ensure any breakages, or mini—bar bills will be paid. Are Chris and Phillip within their rights to obtain a hold on a guest’s credit card? Yes. The key to avoiding problems is disclosure. If the policy is disclosed to the guest before the hold on the credit card takes place, and the guest agrees, the conduct is unlikely to breach the Act.

How do I find out more? To find out more contact the ACCC infocentre by:

Phone: 1300 302 502 Email:[email protected] or visit the ACCC website at www.accc.gov.au.

Did you know? The ACCC has a new web-site. The address is the same www.accc.gov.au but this one is bigger and better than ever! Log on and let us know what you think of the new look!

ACCC InfoLink

April 2004

Protecting your business from cyberscams

What is spam? Spam is unsolicited electronic junk mail. It is estimated that approximately 50 per cent of all emails are spam. Australia has joined other countries in intro-ducing legislation to try to com-bat spam. The Australian Spam Act 2003 became effective on 10 April 2004 and is enforced by the Australian Communications Au-thority (the ACA).

Under the Act it is illegal to send or cause to be sent ‘unsolicited commercial electronic messages’ that have an Australian link. The Act covers emails, SMS (mobile phone text messages) and instant messaging but it does not cover fax or telemarketing. For details of the new Spam Act: www.aca.gov.au.

Spam is often used to promote scams. While the ACCC does not regulate the sending of unsolic-ited commercial electronic mes-sages it has powers under the Trade Practices Act to take action against misleading content in spam.

How to report spam or cyberscams Australian online scams ACCC Infocentre 1300 302 502 ACC C’s on l i n e s l am -a -cyberscam at www.accc.gov.au

International online scams w w w . e c o n s u m e r . g o v

Banking and financial scams ASIC at www.asic.gov.au

To report spam The Australian Communications Authority at www.aca.gov.au

Online banking scam Picture this: you are in the office of a small business. The BAS for this quarter needs to be finalised, someone needs an adjustment to their pay, new forms on changes to super have arrived, the supplier has changed his delivery dates so the month’s schedule needs re-adjusting and to top it all off the photocopier has given up! An email arrives from the bank. They are updating their security information and they ask you for personal information and direct you to log into the website link attached. You log on and confirm your details. Done—one less thing to do! Unfortunately this small business has just been taken in by a scam. The bank account is now open to fraudulent activities as not only were the email details provided but also other banking security information through a very au-thentic-looking sham bank web-site. Such scams target the small busi-ness with its busy office, tight schedule and often overworked staff. These banking scams known as ‘phishing’ (as in angling for a catch) are currently one of the most publicised email scams. Watch out for scam emails pre-tending to be from the Australian Taxation Office! If in doubt log onto www.ato.gov.au. The ACCC uses its educative role to inform businesses about such scams so that they can be alert and avoid getting caught! Fake invoices Fake invoices requesting payment for domain name renewals, regis-trations and associated services are still very prevalent. Businesses do get tricked into paying inflated prices for domain name renewal or pay for unnecessary additional domain names such as .com or .net. Some of these domain name reseller scammers are now so well known that they can find it hard to register a .au and now tend to offer .com sites. On 27 April 2004, following ACCC action, the

Federal Court restrained Domain Names Australia P/L and its director for a three-year period from sending out misleading and deceptive notices inviting the recipient to register a particular domain name. Modem jacking Is the email with an attachment that you’ve just received an order from a new client or spam? Sometimes spam can contain a program that copies itself onto your computer once you open the attachment. In rare cases the program causes your modem to dial a premium or overseas number that can add significant costs to your phone bill. Stealing a business name Cybersquatting occurs when someone buys up domain names that they think might be valuable to someone else and then try to sell it for large sums of money. In Australia the regulatory au-thority AuDa offers protection from these occurrences. Where a domain name is in dispute, your right to use it can be assessed by your previous use of the name. Many businesses have used the Trade Practices Act prohibition against ‘passing off’ to protect their business name from others using similar names. Handy tips Avoid accessing banking sites from email links—use book-marked links or type in the ad-dress yourself. Check emails with your bank first. A little extra effort could protect the money in your account. Domain name registrations (.au) are renewed every two years. Keep a good record of domain name registration details, includ-ing the name of the registrar and the renewal date. Read the terms and conditions when buying online. Time spent here could save you money and heartache. Check the trader’s contact details: Do they have a street address? An email ad-dress? Can you contact them with any questions? Do they

have security and privacy poli-cies? If the web address does not end in .au the trader may be located overseas and it may be difficult to get a refund or discuss a problem. Typing the name of a trader or a business scheme into a search engine can sometimes provide extra information. There are also several sites that list scams and bogus traders. Office of Fair Trading websites will sometimes have consumer alerts about trad-ers and FIDO the ASIC con-sumer site has information on financial scams. A business search can also be useful to confirm a trader’s de-tails although this is not an indi-cator of the trader’s behaviour in the marketplace. Australian busi-ness searches can be done on ASIC’s ‘National Names Index’ at www.asic.gov.au. You can find out some basic informa-tion—for example a business’s ABN and location for free. A ‘whois’ search can tell you who has registered the website. These can be done at a number of places e.g. www.samspade.org o r f o r ‘ . a u ’ s i t e s www.ausregistry.com.au. Delete all spam—never reply as this confirms your email address to the spammer. Also some spam will download unwanted attach-ments that could cause problems with your computer or redirect your modem to premium num-bers. If spam is a problem, filtering software may help. Check if your ISP or email service/application provides a filtering option.

Publications S c a m s a n d s p a m a t www.accc.gov.au Spam Act 2003: an overview for business at www.aca.gov.au Spam Act 2003: a practical guide for business at www.aca.gov.au Staking your claim on the web at www.noie.gov.au

Did you know?

Today’s cyberscammers don’t only rely on bogus websites and scam emails. They also produce computer programs and attach-ments that can spy on you as you type in your banking password or disable your computer resulting in lost productivity and revenue.

How do I find out more? Contact the ACCC Infocentre Phone: 1300 302 502 Email:[email protected]

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www.aca.gov.au

www.econsumer.gov

www.asic.gov.au

www.aca.gov.au

www.ato.gov.au

www.asic.gov.au

www.samspade.org

www.ausregistry.com.au

http://www.accc.gov.au/content/item.phtml?itemId=489414&nodeId=file40513e23574e8&fn=If it sounds too good to be true.pdf

www.aca.gov.au

www.aca.gov.au

www.noie.gov.au

www.accc.gov.au

ACCC InfoLink

August 2004

The franchising industry is an extremely successful component of Australia’s small business sector. It is now worth $80 billion, and employs over 480, 000 people. In fact, Australia has the most franchising systems per capita in the world. Australians are running franchise systems in di-verse sectors of the econ-omy such as fast food, lawn mowing, carpet cleaning, petrol retailing, real estate and beyond. For persons looking to run a business, franchising is often viewed as a less risky option than starting their own business. Under a franchise many business matters such as advertising, signage, equipment, prod-uct and customer service standards are usually taken care of by the franchisor. However, franchising car-ries its own risks. Having effective communication and good relationship be-tween franchisee and fran-chisor is essential. With the rapid success and expansion of franchising it is not surprising that the industry has attracted a few unscrupulous traders. In 1998 a mandatory Code of Conduct was enshrined in the Trades Practices Act, the first of its kind. Contra-ventions of the code now amount to a breach of the Act and can result in legal action by the ACCC or by franchisees and franchi-sors.

The Franchising Code of Conduct The code establishes various rights and obligations for franchisors and franchisees. Disclosure Documents Under the code the franchi-sor is obliged to give fran-chisees a disclosure docu-ment at least 14 days before the signing of a franchise contract or the payment of any non-refundable money. The document must cover such factors as whether the franchise is for an exclusive territory, the franchisor’s current liquidity position, background to the franchi-sor’s business experience, its policy on site selection, a history of the site, details of other franchises, including those terminated, details of any establishment costs and details of any future com-pulsory marketing or co-operative fund payments. Cooling off periods When franchisees sign a contract to enter into a fran-chise agreement they may terminate the agreement within seven days of signing the contract or paying the money, whichever is earlier. Franchisees are entitled to a refund, less the franchisor’s reasonable expenses, within 14 days. Transferal & Termination The code sets out the cir-cumstances in which a fran-chise agreement may be transferred or terminated. Dispute Resolution As well as providing for internal dispute resolution

mechanisms, it also sets out requirements for me-diation. Under the Code of Conduct if one party to a dispute wants to try me-diation, then it is manda-tory that the other party firstly attends mediation and secondly attempts to resolve the matter in me-diation. The role of the ACCC The ACCC has the re-sponsibility of administer-ing the code and investi-gating potential breaches. It has also had success in facilitating discussion be-tween franchisees and franchisors to resolve problems, avoiding the potential for matters being escalated to a point where breaches of the Act arise. There does remains a sig-nificant imbalance be-tween the two sectors of the industry: franchisees and franchisors. While many franchisors could be described as small busi-nesses, they retain a supe-rior bargaining position over franchisees and this can raise problems if the superior party tries to ig-nore the code. Problems may also arise if the fran-chisor engages in mislead-ing or deceptive conduct or other TPA breaches in its dealings with franchi-sees. Enforcing the Code Some companies appar-ently seek to avoid breach-ing the Code by character-ising their operations as licensing agreements.

The ACCC recently took action against Synergy In Business Pty Ltd for code contraventions including a failure to provide adequate disclosure information or a cooling off period to pro-spective franchisees. The Court rejected Synergy’s claim that it ran a licensing scheme, declaring by con-sent that it was a franchisor and therefore had contra-vened the code.

Franchising

How do I find out more? The ACCC publishes a Franchisees Guide to the code of conduct. Copies can be ordered from www.accc.gov.au or by calling the ACCC Info-centre on 1300 302 502.

The ACCC has recently filmed a Competing Fairly Forum entitled Franchising: Is it right for you? which consists of a panel discussion be-tween leading franchising industry representatives.

It provides up to date in-formation and advice about becoming involved in the sector, key issues raised with the ACCC, dispute resolution mecha-nisms and the role of the ACCC in administering the code.

The forum is being screened at a number of locations in regional Aus-tralia from September. For information on your nearest venue contact the ACCC Infocentre on 1300 302 502. The forum will also be available via video streaming at www.accc.gov.au.

ACCC InfoLink

September 2004

Being able to set prices competitively and with some flexibility is a funda-mental need for all small business. The Trade Prac-tices Act contains a provi-sion to protect all busi-nesses from having other businesses dictating the prices at which they can sell their goods: the resale price maintenance provi-sion.

What is resale price maintenance?

Resale price maintenance is illegal and occurs when a supplier sets, or tries to set, a minimum price be-low which retailers cannot on-sell its products or brand. While it is not ille-gal for suppliers to specify an upper price limit, they cannot use any form of persuasion, pressure or influence to induce retail-ers to comply with a mini-mum price.

Consider this example:

Sandra runs a hardware store selling power tools. Lately her supplier has been putting pressure on her to sell its tools at set prices. They have sent her a contract to sign which states that she will follow the RRP of the supplier. She has been threatened that if she does not sign they will refuse to continue supplying products to her.

Suppliers are allowed to suggest a recommended re-tail price (RRP). However it must remain just that, a rec-ommended price. Sandra cannot be forced to adhere to an RRP or any other minimum selling or adver-tising price.

Pressure for resale price maintenance can also come from the other side of the supply chain. Other retail customers may threaten to stop buying a product unless the supplier forces their re-tail competitors to stop dis-counting it. Despite this, if a supplier tries to enforce a minimum price on a product once it has been sold to a retailer, they are breaking the law.

Why is it illegal?

When retailers are coerced into setting their prices at a particular rate both busi-nesses and consumers suf-fer. Resale price mainte-nance inhibits the ability of businesses, often small busi-ness retailers, to respond competitively to the market and to set prices as they see fit. If businesses cannot of-fer discounts to become competitive, artificially high prices are passed on to con-sumers or businesses further down the supply chain.

What to look out for

There are a number of ways in which suppliers may try to specify a minimum price on the goods they have sold to retailers.

They may:

• threaten to cut off supply

• supply on disadvanta-geous terms when com-pared with other similar resellers

• try to write a term into a contract specifying a minimum price

• state a price which is understood to be the price below which the product cannot be sold.

Importance of ownership

To clarify the circum-stances in which resale price maintenance can arise, consider this exam-ple:

John wants to buy a new vacuum cleaner. He has been to several stores and noticed that the price on a particular brand is the same wherever he goes. John reckons that the sup-plier might be engaging in resale price maintenance because no matter where he goes to buy the vacuum there is no competition on the price.

In addition to buying goods to on-sell, retail stores can also stock goods that are sold on commission, for which the supplier retains the owner-ship of the goods (the re-tailer has not actually bought them to on-sell). In such circumstances the retailer is an agent and never actually owns the goods.

Because the vacuum clean-ers are still owned by the supplier, not the retailer, the supplier is free to set their own prices and resale price maintenance does not occur. Whether it occurs depends upon who owns the product at the time of sale. Whoever owns the product is entitled to set the price. Resale price maintenance occurs when suppliers try to set the price on a product for which they do not have ownership.

Loss leader selling

A common response made by suppliers when retailers question resale price main-tenance conduct is that maintaining a certain price is important for a product’s prestige and reputation. While retailers cannot be prevented from selling goods below cost for a genuine clearance sale, suppliers may be within their rights to refuse to supply goods to retailers who have sold their goods at less than cost over the previous 12 months with-out permission or genuine clearance reasons. These retailers may not be genu-inely competing on price but are using the goods to attract customers to other products.

Resale price maintenance

How do I find out more? To find out more, contact the ACCC infocentre by:

Phone: 1300 302 502 Email:[email protected]

or visit the ACCC website at www.accc.gov.au.

ACCC InfoLink

November 2004

Debt Collection Small Business

Offering credit terms to your customers can be a great way to increase sales. However, this also opens your business to the risk of consumers not meeting their debts on time. Debt collection is an im-portant part of any business which trades on credit terms. Consumers who are legally bound to pay or repay money are expected to do so, unless they have a valid reason not to, such as bankruptcy or statute bar-ring of the debt. Your business is entitled to take reasonable steps to contact those owing you to make arrangements for repayment of the debt. The most common solution is to engage the services of a collection agency to re-cover the debt on your be-half. The Trade Practices Act (the TPA) places limits on the behaviour of collectors to protects consumers from misleading, unfair or in-timidating behaviour. Both ASIC and the ACCC have consumer protection roles in relation to debt collec-tion. In addition to the general prohibitions against mis-leading and deceptive

conduct, the Act specifically prohibits three main types of behaviour in relation to collecting debts; physical force, undue harassment and coercion. The maximum penalty for breaking these rules is $1.1 million.

What is undue harassment and coercion?

All businesses, including debt collection agencies, are forbidden from using physi-cal force, undue harassment or coercion in connection with obtaining payment for goods or services.

Undue harassment is behav-iour designed to intimidate or wear down consumers, rather than simply inform them of the existence of the debt and their obligation to repay it. Repeated contact is more likely to be viewed as undue harassment than one-off demands. Coercion is compelling someone to do something against their will, either through force or the threat of force. Some examples of conduct that may be considered un-due harassment or coercion are: - using, or threatening to

use, physical force - making unreasonably

frequent calls, especially if late at night

- disclosing or threatening to disclose information to others, such as family members, employers or

government agencies - using abusive or threat-

ening language.

So how can I recover money owed to me?

Consumers owing you money should be treated with courtesy and respect - there is no need for a busi-ness to resort to bullying and misrepresentation.

Contacting the consumer

Where a customer owes your business money, the most appropriate way to make initial contact is via the telephone. You should be prepared to provide details to the consumer of the debt, including the amount owing, and how/when it was incurred. You should also ensure that you do not mislead the consumer about the amount owing or conse-quences of non-payment. There may be particular rules in your State or Ter-ritory regarding the hours, places or frequency with which you may contact those owing money – your state Fair Trading agency can provide further infor-mation. As a general rule you should try to call at a rea-sonable time ie not too early in the morning or too late at night. You should be careful not to contact them at a place where they have requested not to be called, such as their workplace.

You can make reasonable efforts to make contact, but you should not make more than three calls a week—especially where you have successfully made contact.

Visiting in person

Visiting those owing you money in person should be a last resort. It is inherently risky, as people are more likely to feel threatened or intimidated in person. Therefore, it is essential that you take precautions to avoid this occurring. You should also make your visit as brief as possible, and not remain in the vi-cinity for an extended length of time to try to in-timidate or embarrass them, or to make them feel that they are being watched. You should im-mediately leave if re-quested to do so. As a general rule, you should not visit a debtor in person more than once a week. Remember, these rules ap-ply to any company pursu-ing a debt – including where a company is re-questing payment from your business.



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Did you know? The ACCC publication ‘Debt Collection and the Trade Prac-tices Act ‘ is available free of charge from the ACCC website at www.accc.gov.au, or by call-ing the ACCC Infocentre. Following public consultation, a revised version shall be launched in cooperation with ASIC in mid 2005.

ACCC InfoLink

April 2005

Product safety Small business

Many personal injuries involve the use of consumer products. To help reduce the risk of injury to consumers, the ACCC develops, maintains and enforces a range of mandatory consumer product safety and information standards.

As well as protecting consumers, these laws serve to ensure businesses cannot gain an unfair advantage over competitors by disregarding labelling and safety standards.

If an accident occurs, all businesses who took part in the manufacture or distribution of the product may be liable for any damage that results. That includes retailers, importers, manufacturers and distributors.

In addition, any businesses involved may receive substantial fines, ranging up to $1.1 million.

Therefore, it is in the interests of your business to make sure you have effective compliance measures in place. Lack of product familiarity is no excuse for selling incorrectly labelled or unsafe goods.

What kinds of standards are there?

The ACCC reviews mandatory consumer product standards. Comments from suppliers and the business community are welcome. The standards fall into two main groups:

Safety standards

Goods must comply with particular performance, composition, contents, methods of manufacture or processing, design, construction, finish or packaging rules (e.g. construction of toys for children under three years).

Information standards

Prescribed information must be given to consumers when they buy specified goods (e.g. labelling for cosmetics, tobacco products and care labelling for clothing and textile products).

If products do not meet these standards, they may be subject to a mandatory recall. At present, some common products which are subject to regulation are: bicycles and bicycle helmets

bunk beds

child restraints

cosmetics

cots and baby walkers

jacks, including trolley jacks and support stands for motor vehicles

motor cycle helmets

sunglasses

tobacco products

toys for children under three.

In addition, the responsible minister (the Parliamentary Secretary to the Treasurer) can declare a product to be unsafe, and temporarily ban it for 18 months. If the declaration has not been lifted at this point, the product is banned permanently. A number of products are banned under the Trade Practices Act as unsafe. These presently include: dart guns

mini jelly cups

tinted headlight covers

chewing tobacco

What happens if I don't comply?

The ACCC actively enforces product safety standards by: surveying the market responding to complaints

acting promptly against offending suppliers.

Suppliers of banned products, or products that do not comply with a mandatory standard, could be committing an offence under the Trade Practices Act and may be subject to fines of up to $1.1 million for corporations and $220 000 for individuals.

The ACCC often seeks immediate withdrawal of goods from sale and recall from consumers. The same fines for failing to comply with mandatory standards also apply for not complying with a mandatory recall order.

We aim to foster a culture of business compliance with the Trade Practices Act and have prepared a series of industry guides on many of the mandatory standards. These guides provide simple, easy to understand advice on what the standards require and how businesses can find more in depth information. They are available from ACCC offices and on the website. Australian Standards may be purchased from Standards Australia.



1

Did you know? The ACCC publication, Standards and Bans—A Compliance Guide for Suppliers, is available free of charge from the ACCC website at www.accc.gov.au or by calling the ACCC Infocentre on 1300 302 502.

ACCC InfoLink

February 2005

Scams Awareness Month Small Business

All these scams rely on you and your staff being busy and not thoroughly investigating every invoice which passes through your office. Scammers thrive on their victims’ uncertainty and lack of organisation. Keeping accurate records and insisting on written confirmation of transactions will not only minimise your chances of being scammed, but also makes good business sense.

Online scams The internet can be a cheap and efficient way to advertise and sell your products, keep in contact with your customers and suppliers, and even makes simple tasks like banking or paying bills quick and efficient. However, unscrupulous people may try to take advantage of the relative complexity and anonymity that the internet provides.

Many of the online scams which are targeted at small businesses are identical to those targeting consumers. Bank account fraud (phishing), ‘Nigerian’ scams and modem jacking are three of the most common online scams which target both small businesses and consumers.

Phishing scams have triggered a lot of media attention lately, however many consumers do not know exactly what it is. An email arrives from the bank—it claims to be updating their security information and asks you for personal information, directing you to log onto the website link attached. You log on and confirm your details. Unfortunately this a scam. The bank account is now open to fraudulent activities at your expense.

In coordination with International Consumer Fraud Prevention Month, February is national Scams Awareness Month at the ACCC. Complementing the existing programs to inform and protect consumers (including business consumers) about frauds and scams commonly targeted against them, this month the ACCC will launch some special initiatives, such as Internet Sweep Day and new publications.

Scams Small business owners and operators are usually very busy, and often do not keep track of all the government agencies, suppliers and customers they deal with.

Small businesses often get demands for payment for magazine advertising or entries in business directories that were never ordered or approved. On closer examination, some of these are merely offers to book a listing or an ad but are cleverly disguised to look like an invoice.

A similar scam you may come across involves an invoice arriving for common office supplies which you did not order. It may be an invoice for printer toner, fax paper or printer supplies from a supplier with a similar name to the company you actually use, with the perpetrators hoping that you will pay it without checking closely.

You have given your password to the scammer.

Nigerian schemes were one of the earliest internet scams. You receive a genuine-looking email from an official of some distant, war-torn country. The official pleads with you to help transfer his fortune out of the country, via your bank account. You stand to make a sizeable profit from the deal, but first must pay a ‘transfer fee’ to help move the money. Once you send the fee, you never hear from the so-called official again.

Modem jacking is the practice of redirecting an analogue modem to a premium number, such as a 1-900 number. Sometimes email attachments, internet downloads or even websites can contain a program that copies itself onto your computer once you open the attachment. The program then uses your modem to dial a premium or overseas number, at a significant per-minute charge.

As with traditional scams, these all target the small business with its busy office, tight schedule and overworked staff. Vigilance is the best way to avoid falling victim to unscrupulous online conduct. There are also a number of preventative steps you can take to secure your computer system:

• Keep anti-virus and anti-spyware tools up to date, and scan regularly.

• Do not open email attachments unless you trust the person sending them. Be especially careful where the attachment is a program ending with .exe, .com, .bat or .scr.

Most modern antivirus software will automatically scan incoming email attachments for you.

• Do not agree to website pop-ups or requests to install content on your computer unless you completely trust the source.

• Firewall software and hardware, while not generally designed to prevent viruses or spyware, can also help keep your computer safe.

There are antivirus, anti-spyware and firewall programs available freely online.

Scams and small business Some scams specifically target businesses. Mostly, these will be online versions of the traditional directory and fake billing scams described above. However, others revolving around domain names—your website address—are also becoming more prevalent.

The National Office of the Information Economy (www.noie.gov.au) has a guide specifically dealing with this topic, titled Staking Your Claim: a business guide to registering a web address.



Who to contact? Australian online scams ACCC infocentre 1300 302 502 International online scams www.econsumer.gov Banking and financial scams ASIC at www.asic.gov.au

ACCC InfoLink

October 2005

Misleading job ads Small business

Hiring staff is an important part of most businesses— having the right people can make or break a small business!

While it is important that your message reaches a wide audience, it is crucial that your advertisements do not mislead or deceive jobseekers. A carefully crafted advertisement can save time and money for your business and for prospective job seekers.

Section 53B of the Trade Practices Act 1974 (the Act) deals specifically with employment advertising. The section prohibits employers from misleading job seekers about employment, specifically about the availability, nature terms and conditions of employment.

Listed below are a number of simple steps that businesses can take to avoid inadvertently misleading job seekers.

Advertise in good faith

The most important step you can take is to always advertise in good faith. Being upfront and honest about the position avoids misleading people from the beginning, saving time for both you and the applicant.

Disclose all important information

While small businesses may not have the resources to place large, detailed advertisements, there are some key pieces of information that you should include:

• Nature of the work—what type of work is involved? People interested in childcare positions are unlikely to want to apply for a job as a mechanic!

• Employment type, such as fulltime, part-time or casual

• Remuneration basis—salary, contract, commission, piece rate (e.g. payment per 1000 catalogues delivered)

• The location

Other information, such as the name of the business or the industry you operate in can help ensure that only those interested in the position apply—saving you time dealing with inquiries.

Contract positions

Businesses are increasingly employing staff on a contract basis. If the position you are offering is non-ongoing, this should be disclosed in your ad, along with the expected length of employment.

Advertising the possibility of extension or becoming permanent may help attract applicants, but this should

only be advertised if there is a genuine possibility of this occurring.

Placement of your ad

The category that your advertisement is placed under is just as important as the actual wording. An ad for a commission-based position among offers of fulltime/part-time work can potentially mislead many job seekers.

When placing your ad, ask the operator what categories are available to which the position is most suited.

This is particularly relevant if you are offering a business opportunity rather than a genuine position vacant. Most publications have a section for business opportunities. You should ensure that your advertisement is placed under such a heading.

Recruitment businesses

If you operate a recruitment business, you should be careful to only advertise actual positions that you have available. Advertising expected vacancies (which may never materialise) can mislead job seekers and breach the Act—on top of the ill-will it generates among your applicants.

If your business is seeking to add applicants to a database of potential candidates, ensure that this is disclosed .

Training providers

If your business offers training services, you should make this clear in your advertisement.

Many training providers also offer a job placement service for successful graduates. While this can be a great draw card when advertising, always ensure that you are honest about future employment prospects. Statements like ‘guaranteed employment upon completion’ should only be used where you are certain that this can be offered.

Where can I find further information?

Initially, discuss your requirements with the staff member taking your ad—most newspapers have guidelines which may assist you to ensure your ad complies with the law.

The ACCC’s Advertising and selling guide explains your responsibilities under the Act when promoting and advertising your business. Hard copy ($10)

How do I find out more? To find out more, contact the ACCC Infocentre:


Did you know? The ACCC’s Advertising and selling publication is available free of charge from the ACCC website at www.accc.gov.au or by calling the ACCC Infocentre on 1300 302 502.

ACCC InfoLink

May 2006

Bait Advertising Small business

Special offers and sales can be a great way to draw customers into your store. However, the Trade Practices Act (the Act) requires that you give consumers a reasonable opportunity of actually purchasing the advertised goods.

If consumers aren’t given a genuine chance, you may have broken the law against ‘bait advertising’.

What is bait advertising?

Bait advertising occurs when a business advertises or offers goods for sale, knowing that it cannot supply them in reasonable quantities for a reasonable period of time.

Often this is an honest mistake, for example— demand is much higher than expected and the retailer genuinely runs out of stock.

However, unscrupulous retailers will sometimes advertise goods at a bargain price with the sole intention of attracting customers to their store knowing that they cannot supply the

advertised goods to a reasonable number of consumers. This is called a ‘bait and switch’ scam.

The ‘bait’ is the especially attractive offer designed to lure customers to a business. When they arrive, the bait is unavailable and the customer is encouraged to buy other, more expensive goods. That’s the ‘switch’

The bait might have been a single item sold to the first person or it might not have been a genuine offer at all.

Example

A car dealer advertises a certain vehicle at a very low price. The catch is that the dealer only has one of these vehicles in stock.

When interested consumers arrive, they are told the vehicle has been sold. The dealer then tries to sell the consumer a higher priced vehicle.

In this instance, the dealer may have mislead consumers by advertising the sale when it knew that it could not meet likely demand.

How can I avoid breaking the law?

Retailers should never use non-genuine special offers to attract customers and then try to sell higher priced goods instead of the advertised special.

Businesses should always make sure that when they advertise goods for sale that the offer is made with reasonable means of meeting the likely customer demand for the length of the promotion.

What can I do if I run out of stock?

When goods or services are part of a particular promotion or sales campaign, it can sometimes be difficult for businesses to determine how much stock they need. While acting in good faith, a business may misjudge demand and, faced with more customers than expected, sell out all supply.

The Act makes allowances for this kind of situation, but businesses must be able to show they were sincere when making the offer.

If demand exceeds supply, businesses should

respond quickly to ensure customers end up in essentially the same position they would have been in had stocks been adequate.

Offering rainchecks ensures that consumers may still get the special deal even though the current stocks have run out.

Where can I find further information?

The ACCC newsletter News for Business—Bait Advertising explains the relevant provisions of the Act and how you can ensure that your business complies.

The ACCC also produces Advertising and Selling, a small business guide explaining your rights and responsibilities when advertising your goods and services. This is available free of charge in electronic format from the ACCC website at www.accc.gov.au

How do I find out more? Contact the ACCC Info-centre by:


ACCC publications See the publications section of the ACCC website at www.accc.gov.au or call the ACCC Infocentre

1300 302 502.

ACCC InfoLink

July 2006

Warranty and Refund Small business

Warranty and refund rights are the most common topic raised by callers to the ACCC Infocentre from both small businesses and consumers. It is important that businesses know where they stand when answering questions about customers’ warranty and refund rights – the wrong answer could lose a customer or even break the law! Do I have to give refunds? Retailers do not have to give refunds simply because a customer demands one. Under the Trade Practices Act, consumers are not automatically entitled to a refund if they change their mind, find the product elsewhere for a cheaper price, or if there is a fault in the goods which they knew (or should have reasonably known) about prior to purchase. When do I have to give refunds? The Trade Practices Act

gives consumers a number of automatic warranties when they purchase goods or services . These statutory warranties allow consumers to seek a refund, repair or replacement if the goods are faulty fail to perform the job intended don’t match their description have hidden defects.

These warranties apply to all domestic and household items (even to second hand goods), and cannot be excluded in any way. Goods do not have to be returned with the original packaging to obtain a refund, and there is no set time within which consumers must return goods—it simply must be within a ‘reasonable period’, depending on the nature of the goods. Can I offer additional warranties? Retailers often provide consumers with voluntary warranties – additional guarantees, given free of charge which go ‘above and

beyond’ the protections offered under the law. Retailers are not obligated to give these additional warranties, however they must honour them when offered. These kinds of warranty are additional to statutory warranties, and do not overrule them. As an alternative, some retailers encourage customers to purchase an extended warranty which offers additional benefits – for extra cost. Retailers must ensure that the protection offered by these warranties is more than automatically available under statutory warranties. Retailers risk breaching the Act it they misrepresent the real benefits of these warranties, or the customer’s need for them. Signage Stores often have signs displayed to make customers aware of the store’s refund policies. If a store chooses to display such a sign, they should ensure that it accurately states the store policy,

and does not falsely represent the protections given by statutory warranties.

If you place signs in your shop stating things like “no refunds” or “no refunds after seven days”, you are in breach of the law. A legal sign would be “no refund unless goods are faulty, unfit for purpose or do not match the sample you were shown”. More Information. The ACCC has guides for both businesses and consumers explaining warranty and refund rights or obligations. For more information, call the ACCC Infocentre on 1300 302 502 or visit our website at www.accc.gov.au



Did you know? The ACCC publication News for Business—Warranty and Refund Signs, including printed ’refund policy’ signs, is available free of charge by calling the ACCC Infocentre on 1300 302 502.

ACCC InfoLink

September/October 2006

Refusal to deal Small business

Businesses of all sizes often complain to the ACCC that businesses have refused to supply them with goods or services, believing the Trade Practices Act 1974 (the Act) gives them an absolute right to be supplied.

Generally, no one has an absolute right to be supplied, and businesses may decide with whom they deal.

However, there are a few situations where a refusal to deal is illegal under the Act.

When refusing to supply is legal

There may be sound commercial reasons — legal ones — why a customer is refused supply of goods or services.

For example, a business may find it too costly or inconvenient to sell to retail customers, or may dislike supplying outlets located too close to each other.

Or perhaps the supplier believes a reseller is a bad credit risk, does not promote the goods properly or lacks particular skills relevant to the business.

Or the supplier may simply not wish to deal with someone due to personal reasons.

These are all legitimate reasons for refusing to supply someone, and will generally not be in breach of the Act.

However, suppliers should not attempt to use one of these ‘excuses’ as a front for anticompetitive conduct.

Businesses who have been refused supply should look at all the circumstances leading up to the refusal.

When can refusal to deal break the law?

Generally, refusal to deal will only be illegal in situations where the refusal has been made for anticompetitive reasons – thereby breaching some section of the Act.

Broadly, refusal to deal may breach the Act in the following situations:

Illegal Agreements - Agreements involving competitors that involve restricting the supply of goods are prohibited if they have the purpose or effect of substantially lessening competition in a market in which the businesses operate.

Boycotts - Agreements between competitors to refuse to deal, or limit dealings with other parties are illegal under the Act.

Misuse of market power - A firm with a substantial degree of power in a particular market cannot take advantage of that

power for the purpose of damaging other businesses, including by refusing to deal or by offering to do business on such unrealistic terms that it is tantamount to refusal to deal.

However, it is not enough that a business have significant power in a market—rather, they must use that power for one of the proscribed reasons (such as attempting to prevent entry to the market)

Exclusive dealing - Broadly, exclusive dealing involves one person imposing restrictions on the other’s freedom to choose with whom, or in what, it deals.

If it would result in a substantial lessening of competition, a supplier cannot refuse to supply goods or services because the purchaser will not agree to conditions placed on the sale.

This includes situations of third line forcing, where a condition is placed that the purchaser buys goods or services from a particular third party, or a refusal to supply because the purchaser will not agree to that condition.

Resale price maintenance - Suppliers may not specify to resellers a minimum price below which goods or services are not to be resold or advertised for resale, unless the retailer has been discounting below cost to

attract custom (loss leading).

What can you do if a business refuses to supply you?

If you think any of these fits your circumstances, the first step should be to approach the supplier to discuss the reason for the refusal. Perhaps changes can be made which would satisfy the supplier’s requirements.

Often, it may be more practical to seek another source of supply.

However, if these approaches are unsuccessful, and the refusal to deal falls into one of the illegal categories, you may be able to take private legal action, should you wish to.

If you believe you have been refused supply for an anticompetitive purpose, contact the ACCC Infocentre on 1300 302



Did you know? The ACCC publication, Refusal to Deal , is available free of charge from the ACCC website at www.accc.gov.au or by calling the ACCC Infocentre on 1300 302 502.

ACCC InfoLink

November/December 2006

SCAMwatch Small business

The ACCC launched its new look SCAMwatch website on 31 October 2006. The new website is available at www.scamwatch.gov.au.

SCAMwatch seeks to inform consumers and small business about how to recognise, avoid and report scams. The new SCAMwatch website lists 39 different types of scams, ranging from pyramid schemes to online auction scams, along with the warning signs to look out for.

The SCAMwatch website is easy to navigate and structures information in a very accessible form. It explains how scams operate and offers guidance to consumers and small business operators about what to look out for, and how to minimise their chances of being scammed.

SCAMwatch also identifies and discusses a variety of common scams currently targeting consumers and small business in areas such as internet shopping, mobile

phones, fake lotteries, online banking, investment opportunities, health and medical remedies.

In particular, SCAMwatch contains information and advice on scams that commonly target small business - fax back scams, office supply scams and false billing associated with directories or advertising.

The inclusion of new interactive initiatives will not only enhance the website’s appeal to users, but also enable the ACCC to be more responsive to community concerns about existing and emergent scams.

SCAMwatch will regularly publish the experiences of real victims who have been the target of a scam and are willing to share their story.

There is also the opportunity to subscribe to receive free email alerts from the ACCC about widespread or novel scams that have been reported to it (to be featured on the ‘SCAMwatch radar’).

Combating scams and promoting awareness in the community about

scams is a responsibility that the ACCC shares with various other Commonwealth, state and territory fair trading agencies and law enforcement bodies.

SCAMwatch outlines the roles and responsibilities of these organisations in respect of scam prevention and policing, and contains direct links via the ‘report a scam’ page. SCAMwatch features an online form which small businesses and consumers can use to report scams directly to the ACCC.

SCAMwatch also provides a comprehensive list of other websites from Australia and overseas that have useful information about scams and how to avoid them.

SCAMwatch was originally developed as a joint initiative between the Treasury, the ACCC, the Australian Securities and Investment Commission (ASIC) and state and territory fair trading agencies. The site was launched in October 2001 and was maintained by the Treasury until late 2005 when it was transferred to the ACCC.

SCAMwatch will continue to act as the website portal for the annual Scams Awareness Month campaign run by the Australasian Consumer Fraud Taskforce (ACFT).

Established in March 2005, the ACFT is composed of 18 government agencies and departments who have a remit for consumer protection in relation to frauds and scams.

Chaired by the Deputy Chair of the ACCC, the ACFT seeks to enhance the Australian and New Zealand Governments' enforcement activity against frauds and scams, to involve the private sector in the fight against frauds and scams, and to generate interest in research on consumer frauds and scams. SCAMwatch will continue to evolve and grow in the future, and the ACCC looks forward to adding new initiatives in the coming months.



Did you know? The SCAMwatch website is located at www.scamwatch.gov.au

ACCC InfoLink

June 2007

Environmental Claims Small Business

Environmental issues are increasingly important for consumers. In fact, many consumers regard environmental claims (such as energy or water efficiency) as a major factor they consider when evaluating appliances to purchase.

It is essential that consumers have accurate information on which to base their decisions. Not only is it good business practices, but it is law—the Trade Practices Act 1974 (the Act) states that businesses must not mislead or deceive consumers in any way.

Therefore, manufacturers and retailers should ensure that claims made regarding energy efficiency or environmental impact are accurate and will not mislead or deceive consumers.

There are a number of common environmental claims that businesses should closely examine when evaluating their advertising and sales practices in order to avoid breaching the Act.

Energy and water efficiency

Energy and water efficiency claims are of great import to consumers—particularly in whitegoods and appliance retailing, where they may form one of the major factors in the consumer’s purchasing

decision.

Where an energy or water efficiency rating is displayed in advertising or on the machine itself, it should be made clear which scale it is based on—a claim of ’4A water efficiency’, for instance, means little in isolation.

Environmental impact

Modern consumers have an increased awareness of the environmental impact that many modern goods may have, especially regarding ozone or carbon emissions.

It is important that manufacturers and retailers do not make claims regarding environmental impact lightly—any claims should be able to be ‘backed up’ with evidence of how the particular metric was measured. As discussed below, businesses should also not make vague claims such as ‘environmentally friendly’ without supplying further information.

Reference to standards

Often, manufacturers and/or retailers will make claims that their products meet some standard (either Australian or otherwise) for environmental impact or energy efficiency.

It is important that these claims are accurate—i.e., that the standard exists and the product in question actually meets that standard. Businesses should ensure that it is made clear which standard is being referred to,

to avoid confusion amongst consumers.

Ambiguous statements

Under the Act, the intent of the business placing the advertising will not determine whether it is considered misleading—rather, it is the perception of the consumer that is important. As such, it is important that your advertising does not inadvertently mislead consumers through vague or ambiguous wording.

These claims should either be explained in more detail, or avoided altogether.

Some phrases that may potentially raise problems are:

‘Green’ - This statement is very vague, and conveys very little information to the consumer – other than the message that your product is in some way less damaging to the environment than others.

‘Environmentally friendly’ - As above, this claim is vague and could potentially mislead consumers into thinking that the product causes no harm to the environment in its production, usage and disposal.

‘Energy efficient’ - Energy efficiency claims should be quantified by comparison to existing benchmarks or rating system, or otherwise explained in more detail.

‘Recycleable / biodegradeable’ - These claims can be potentially dangerous if the product is not recycleable or biodegradeable, or if the facilities to recycle them are not available in Australia. Manufacturers and retailers should verify that these can actually be recycled before using such claims..

Where can I find more information?

The ACCC’s new publication ‘Environmental Claims’ will be available in early July. This guide details the law regarding these kinds of claims, as well as giving examples of claims that may raise issues under the law, and how your business can avoid them.

If you require further information regarding the rules applying to environmental claims in advertising, contact the ACCC Infocentre on 1300 302 502.



Did you know? The new ACCC publication Environmental Claims is available free of charge from the ACCC website at www.accc.gov.au or by calling the ACCC Infocentre on 1300 302 502.

ACCC InfoLink

September/October 2007

Directory Scams Small business

Small business owners are always busy—there are suppliers to deal with, customers to keep happy, books to balance, stock to track and staff to look after—and that is just the staff. Unfortunately, this may make you a target for scam artists who prey on confusion, fear of authority or poor record keeping. One of the most common types of scam targeting small business is the ‘directory scam’, in which a scammer tries to convince you to pay for entries in a phonebook, trade journal or local publication that you never ordered—in some cases, the publication never even existed!

How does the scam work? The paperwork that a small business deals with can get pretty hectic at times. Most businesses will deal with a range of suppliers and partners—and unless you are on your toes, a scammer can try and take advantage of this confusion to scam you.

Usually, the scam involves an invoice—or a document disguised as an invoice - requesting payment for an entry in a particular publication. This could be

A local newspaper A trade journal A school or local sports newsletter A ‘government directory’ A business-to-business phone book A magazine that deals with your field

Usually, you will not have even heard of the publication before—if it even exists! The scammer might even send you copies of the advertisement in question, or even the publication itself… unfortunately, those who fell for the scam are usually the only ones who ever see it!

How can I recognise the scam? Increased awareness of business scams means that scammers are being forced to be increasingly clever to try and trick you out of your money. As a result, it can sometimes be difficult to spot the scams! Some of these, on closer

examination, are merely offers to order a listing but are cleverly disguised to look like an invoice to a casual reader or a busy accounts clerk. Make sure you carefully examine all advertisements—things like spelling errors, poor grammar or business names that are ‘not quite right’ can be signs of a scam. If you have not heard of the publication, or do not remember placing advertising with them, be especially cautious.

How do I protect myself? Regardless of the way you are contacted, a business organisation should not agree to pay for services or goods from an unknown source before doing the research. All offers should be

put in writing and details kept of who said what to whom. Have strong control

systems in place—make one person responsible for authorising advertising, and don't pay anything that has not been correctly authorised

Examine invoices carefully to ensure that they are from your suppliers Record dates, time,

names and other relevant points as they can be useful evidence Ask for

explanations if something is not understood. Seek professional

advice from an accountant or legal professional Be careful about

the information you give out. Sometimes that information can be passed on and used for other scams.

A little awareness goes a long way towards protecting your profit.

If you believe you have been scammed, contact the ACCC Infocentre on 1300 302 502.



Did you know? The Scamwatch website, www.scamwatch.gov.au, examines most common scams (including directory scams) and teaches you how to avoid being a victim.

ACCC InfoLink

January 2008

Warranty and Refund

Warranties and refunds are an important part of everyday business, yet the Infocentre receives thousands of calls every year from small businesses and consumers who are unsure of their rights when it comes to asking for (or giving out) refunds. This Infolink will explain your rights and responsibilities when a consumer approaches you for a refund. Do I have to give refunds? Retailers do not have to give refunds simply because a customer demands one. Under the Trade Practices Act, consumers are not automatically entitled to a refund if they change their mind, find the product elsewhere for a cheaper price, or if there is a fault in the goods which they knew (or should have reasonably known) about prior to purchase.

When do I have to give refunds? The Trade Practices Act gives consumers a number of automatic warranties when they purchase goods or services . These statutory warranties allow consumers to seek a refund, repair or replacement if the goods are faulty fail to perform the job intended don’t match their description have hidden defects.

These warranties apply to all domestic and household items (even to second hand goods), and cannot be excluded in any way. Goods do not have to be returned with the original packaging to obtain a refund, and there is no set time within which consumers must return goods—it simply must be within a ‘reasonable period’, depending on the nature of the goods. Can I offer additional warranties? Retailers often provide consumers with voluntary warranties – additional guarantees,

given free of charge which go ‘above and beyond’ the protections offered under the law. Retailers are not obligated to give these additional warranties, however they must honour them when offered. These kinds of warranty are additional to statutory warranties, and do not overrule them. As an alternative, some retailers encourage customers to purchase an extended warranty which offers additional benefits – for extra cost. Retailers must ensure that the protection offered by these warranties is more than automatically available under statutory warranties. Retailers risk breaching the Act it they misrepresent the real benefits of these warranties, or the customer’s need for them. Signage Stores often have signs displayed to make customers aware of the store’s refund policies. If a store chooses to display such a sign, they should ensure that it accurately

states the store policy, and does not falsely represent the protections given by statutory warranties.

Signs shop stating things like “no refunds” or “no refunds after 30 days”, risk breaching the law. A better sign might read “no refund unless goods are faulty, unfit for purpose or do not match the sample you were shown”. More Information. The ACCC has a range of guides for small businesses explaining your warranty and refund rights or obligations. For more information, call the ACCC Infocentre on 1300 302 502 or visit our website at www.accc.gov.au



Did you know? The ACCC publication News for Business—Warranty and Refund Signs, including printed ’refund policy’ signs, is available free of charge by calling the ACCC Infocentre on 1300 302 502.

ACCC InfoLink

March 2008

Email spam and scams

Anyone who uses email in their daily business has no doubt come across spam mail—unsolicited commercial messages urging you to purchase a range of questionable products, including non-prescribed medication, counterfeit university accreditation or even vast fortunes of the Nigerian Royal Family! At first glance, it might seem that these scams are relatively pointless—afterall, how could anyone fall for them? Unfortunately, research from the Australian Consumer Fraud Taskforce shows that an increasing number of Australians are falling victim to these scams in record numbers. So how can you protect yourself? Fortunately, there are some simple rules you can follow to protect yourself—and your money! 1. If it seems too good to be true - IT PROBABLY IS Scams almost always make

some kind of outrageous deal—send me $500 and you will make $50,000! It is important that you remain sceptical when weighing up any offer—in fact, the best defence against scams is to just ignore any uncolicited commercial offers. They are more than likely to be scams. 2. Don’t be a vulnerable target The most important thing to remember is that scammers are hoping to prey on a weakness of their target—greed, insecurity, loneliness, etc. The best way to fight scammers is to not give them a target to begin with. 3. Check all web addresses carefully One of the most common kind of scams targets your internet banking—you receive an email purporting to be from your bank, asking you to click on the enclosed link and update your security details. However, the page you go to will not be that of your bank—it may look similar, or have a similar

name, but it will be one set up by the scammer to capture your login and password, giving them full access to your bank account! The best way to combat this is to always enter the web address for your online bank manually—never follow a link in your email, no matter how ‘authentic’ it appears to be. 4. Never pay for unrequested goods and services Another type of ‘old’ scam which has evolved into an internet scam happens when a business requests payment from you for unsolicited goods or services. Generally, the invoice you receive will be for goods you never ordered, and never received! Other times, it will be for goods you ordinarily use—such as printer toner or paper– from a company whose name seems similar to your regular supplier. This scam relies on the fact that small business operators are always busy; the scammer hopes you will pay the invoice

without closer inspection. The best way to combat this scam is to ensure that there is one person in your business who is responsible for all ordering and payments, and making sure that they double-check all invoices to ensure that goods were both ordered and received. More Information. The Scamwatch website, www.scamwatch.gov.au lists the most common scams in operation, including internet scams, and teaches you some common-sense techniques to protect yourself. For more information, call the ACCC Infocentre on 1300 302 502 or visit our website at



Did you know? The ACCC publication The Little Black Book of Scams, is available free of charge by calling the ACCC Infocentre on 1300 302 502.

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