Unfair contract terms deleted following ACCC review

15 March 2013

Unfair contract terms used in standard form consumer contracts have been changed or removed following an industry specific review and engagement by the Australian Competition and Consumer Commission.

In a speech to the Consumer Congress in Sydney, ACCC Chairman Rod Sims announced the findings of the review which examined consumer contracts in the airline, telecommunications, fitness and vehicle rental industries, as well as some contracts commonly used by online traders and travel agents.

"The aim of the industry review was two-fold. First we wanted to evaluate compliance, and secondly work with business to achieve positive changes to standard form consumer contracts," Mr Sims said.

As part of the review and engagement process, the ACCC identified eight types of terms which are of concern and invited businesses to change or remove them.

"The ACCC found that in most cases, the businesses under review chose to make changes to their standard form contracts. Problematic terms were identified and either amended or deleted."

As one example, Jetset Traveland has now removed clauses which required consumers to waive their charge back rights through credit and debit cards. The Australian Competition and Consumer Commission considered these terms were unfair.

Mr Sims said, however, some businesses have not fully cooperated with the ACCC during the review or have chosen not to change their standard form contracts to address problematic terms.

"The ACCC is considering whether court action is warranted against businesses to deal with specific provisions still in use which it considers may operate unfairly."

Mr Sims said the report marks the end of the compliance emphasis with the ACCC’s unfair contracts terms work and the transition to a more enforcement focused approach.

The ACCC also called on all businesses to consider the terms and conditions of their own standard form contracts in light of the ACCC’s findings, and to make changes where necessary to ensure their contract terms are compliant.

Mr Sims said good contract terms offer an opportunity for businesses to deal up front with areas of consumer dissatisfaction and dispute, thereby reducing complaints.

National unfair contract terms were introduced as part of the Australian Consumer Law which came into effect on 1 July 2010.Under these laws, a court may determine that a term of a standard form consumer contract is unfair and therefore void.

At the Consumer justice now, advocating for consumer rights themed congress, Mr Sims also explained the challenges in taking unconscionable cases to court

"The ACCC has taken on a number of unconscionable conduct cases, some where we have been successful and few of late where we have been unsuccessful.

"While disappointing, these unsuccessful cases will not deter us in taking action in future cases as we must seek to protect disadvantaged consumers," Mr Sims said.

The chairman also updated the congress on some of the ACCC's priority areas including credence claims, consumer guarantees and consumer protection in the telecommunications and energy sectors.

The ACCC's report Unfair contract terms – industry review outcomes is available on the ACCC's website www.accc.gov.au

The chairman's speech, Championing the rights of consumers, is available on the ACCC's website.

Further guidance about the unfair contract terms laws is provided in the Australian Consumer Law publication A guide to the unfair contract terms laws, available on the Australian Consumer Law website at http://www.consumerlaw.gov.au/content/the_acl/downloads/unfair_contract_terms_guide.pdf

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Release number: 
MR 53/13
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