Consumer law penalties set to increase

By tenfold for companies.

The ACCC has welcomed legislation that passed Federal Parliament to increase maximum financial penalties under Australian Consumer Law (ACL).

In its final report on the ACL Review, Consumer Affairs Australia and New Zealand (CAANZ) recommended penalties for a breach of the ACL be raised from $1.1 million for companies to the greater of $10 million, three times the value of the benefit received, or where the benefit cannot be calculated, 10% of annual turnover in the preceding 12 months. Penalties against individuals under the ACL will also increase from $220,000 to $500,000 per breach.

“Companies will now face more serious financial consequences for breaching consumer law that align with competition law breaches,” ACCC chair Rod Sims said.

“We have strongly advocated for higher maximum penalties to enable courts to impose more substantial penalties. Penalties need to hit the bottom line so they are not simply seen as the cost of doing business. Perhaps more importantly, penalties need to be high enough to be noticed by boards and senior managers so that compliance with the law is a higher priority. ”

Sims said increased penalties will help to deter large companies from breaching consumer laws and is a profound change that he believed will improve corporate behaviour significantly, and also improve the Australian economy and how it works for consumers.

The highest penalty the Federal Court has ordered for breaches of Australian Consumer Law is $10 million (in ACCC actions against Coles and Ford). The highest penalty the Federal Court has ordered for breaches of competition law is $46 million (in an ACCC action against Yazaki Corporation for cartel conduct in the supply of wire harnesses for Toyota Camry cars).

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