The Australian Competition and Consumer Commission (ACCC) administers the Trade Practices Act 1974 (Cth). The purpose of the Trade Practices Act is to enhance the welfare of Australians by promoting competition and fair trading and providing for consumer protection.
The Trade Practices Act applies to corporations as well as sole traders and partnerships whose activities cross state boundaries or take place within a territory. Part V of the Trade Practices Act (the consumer protection provisions) also applies to sole traders and partnerships whose activities are conducted by telephone or post, or use radio or television.
What kind of conduct does the Trade Practices Act prohibit?
The Trade Practices Act (the Act) applies to corporations carrying on business in Australia (nationally or across state borders) and to international corporations carrying on business in Australia or with Australian residents.
The Act covers a range of conduct and industries, but the parts of the legislation that are directly relevant to scams fall mostly within Part V (including misleading and deceptive conduct, false representations and pyramid selling).
Section 52 of the Trade Practices Act is designed to stop corporations engaging in conduct which is misleading or deceptive, or which is likely to mislead or deceive. Generally, sellers are required to tell the truth or refrain from giving an untruthful impression.
This provision is the one most likely to apply to scams in general. However there are some more specific sections of the Trade Practices Act which could apply.
Section 53 of the Act prohibits making false or misleading representations. This includes claims about the age, quality, sponsorship, approval, price or benefits of the good or service. For instance, many scams trying to sell ‘miracle cures’ may make false representations about the benefits of their product. This would be likely to breach the Act.
For certain scams, such as prize or merchandise offers, online auction scams, ‘free’ offers on the internet, betting scams and some office supply scams, section 51A of the Act might apply. This section relates to representations about the happening of any future event, where the corporation does not have reasonable grounds for making the representation. For instance, a betting scam that offers you guaranteed winnings might breach the Act as it is not possible to accurately predict the outcome of an event that is based on chance.
Some scams, like office supply scams, some psychic scams and online pharmacy scams might breach section 58 of the Act. This section makes it unlawful to accept payment for goods or services if there is no intention to supply them.
A prize scam might also breach section 54 of the Act, as it is unlawful to offer gifts, prizes or other free items in connection with the supply of goods or services if the company does not intend to, or does not, provide them as offered.
Section 53B of the Act prohibits misleading conduct in relation to the availability, nature or the terms and conditions of employment. In particular, in relation to work from home scams, section 59 of the Act prohibits making false or misleading representations about the profits or risks of home-operated businesses. This section might apply in relation to an activity that requires performance of work at or from home. Or it might apply in relation to a scheme that requires investment of money and associated work by the investor. Many of the ‘work from home’ scams or ‘business opportunity’ scams that come your way may breach this section of the Act by guaranteeing you an impossible income, or by misleading you about what is involved in the ‘job’.
Unsolicited goods and services (including directory listings)
Section 64 of the Act prohibits corporations from asserting a right to payment for unsolicited goods or services, unless they have reasonable cause to believe there is a right to payment. This means, for example, that a company cannot demand payment for advertising that you did not request. Section 64 also bans companies from demanding payment for directory listings or advertisements that have not previously been authorized in writing (false billing).
Part IVA of the Trade Practice Act (sections 51AA, 51AB and 51AC) prohibits unconscionable conduct. This Part applies to conduct between businesses and consumers, and between businesses (however, it only applies to goods or services worth up to $3 million). Unconscionable conduct can include serious misconduct or something clearly unfair or unreasonable, conduct which ignores conscience or conduct that is not right or reasonable. Conduct can also be unconscionable in relation to the bargaining power of the parties involved in a transaction, or if someone is clearly under a "special disadvantage" (which has included a disability, a lack of English skills, a chronic illness or poor literacy and numeracy skills).
Scams that are targeted at a particular group of people who may suffer a special disadvantage may breach this law (for example, some miracle cure scams). Other conduct that scammers may participate in—such as exerting unfair pressure on you to buy their product or selling products that are exorbitantly priced—might also breach this law.
Many scams, if tested in court, may be breaches of the above laws. However, due to the ‘fly by night’ nature of many scammers, it is extremely difficult to track them down and take action against them. Also, the ACCC may not be able to take action against the many scammers that are based outside of Australia, as they are unlikely to be within the ACCC's jurisdiction. For these reasons, Australian authorities may not be able to take action against many scams. The purpose of SCAMwatch is to help you recognise a scam and avoid it where possible. Self-defence is the best defence.
If a scammer is found to have breached the Trade Practices Act, there are several courses of action that can be pursued. For instance, the court may impose monetary penalties of up to $220 000 for individuals and $1.1 million for companies. The court may grant injunctions to prevent the prohibited conduct continuing or being repeated or to require that some action be taken. The court may also award damages or make other orders of various kinds in favour of persons who have suffered loss or damage because of the conduct. These can include orders requiring the other party to do what they promised, cancellation and variation of contracts, damages, provision of repairs and spare parts, probation orders, community service orders and corrective advertising orders.
A consumer may be able to bring a private action in the Federal Court or in a state or territory Supreme Court. If the action is successful, the remedies sought could include damages, injunctions and other orders.
The states and territories have laws which mirror the consumer protection parts of the Trade Practices Act, in the form of Fair Trading Acts. These acts also apply to individual traders. States and territories also often have more specific acts, such as those regulating certain areas (eg door-to-door sales).
Some scams may also be criminal offences, as well as breaching the Trade Practices Act and the various Fair Trading Acts. Someone who commits fraud has acted dishonestly or by omission to deliberately deceive someone. Fraud is regulated under various acts, including state and territory criminal legislation and under Australia’s common law. There may be overlap between misleading and deceptive conduct under the consumer protection laws, and fraud in criminal law.