Contemporary Issues Concerning Consumers (HSC SSCE Legal Studies): Revision Notes

Contemporary Issues Concerning Consumers

Introduction

Contemporary consumer issues arise from the evolving nature of the marketplace and changing patterns of consumer behaviour. Four key issues demonstrate how Australian law responds to protect consumers: credit, product certification, marketing innovations, and technology. Each issue presents unique challenges requiring both legal and non-legal responses to ensure consumers are treated fairly and safely in domestic and international markets.

Issue 1: Credit

What is credit?

Credit refers to the purchase of goods and services with payment deferred to a future date. In modern Australian society, credit has become increasingly prevalent through credit cards, personal loans, and other financing arrangements. The 21st century has witnessed the emergence of what many describe as a 'cashless society', where credit providers readily extend loans to consumers.

Problems facing consumers

Many consumers experience financial difficulties related to credit arrangements:

• Overextension – Consumers frequently live beyond their financial means, accumulating debt they cannot service
• Exploitation by unscrupulous lenders – Some credit providers take advantage of vulnerable consumers
• Repossession – When consumers fail to meet repayment obligations, vehicles, household goods, or homes may be seized
• Unfair contract terms – Credit agreements may contain terms that disadvantage consumers
• Inadequate complaint handling – Credit providers may lack proper procedures for addressing consumer grievances
• Delayed complaint resolution – Time delays in processing complaints create additional stress for consumers
• Complex legal processes – The multiple steps required to seek legal redress mean only sophisticated consumers successfully navigate the system

Legal responses to credit issues

National uniform credit regulation

In 2008, the Council of Australian Governments determined that consumer credit regulation should transfer from state and territory control to Commonwealth jurisdiction. This resulted in the Trade Practices Amendment (Australian Consumer Law) Act 2009 (Cth), which amended the Australian Securities and Investments Commission Act 2001 (Cth) to create a separate framework for regulating financial services.

This standardisation established a single national law governing consumer credit, delivering enhanced consumer protection while providing stability for the credit sector. The legislation ensures consistency between general consumer protections and those specifically applying to financial services.

Benefits of national credit regulation

The uniform national approach provides substantial advantages:

• Robust licensing regime – Excludes unscrupulous and incompetent credit providers from the market
• Market integrity – Consumers gain confidence knowing government monitors credit providers
• Rigorous entry requirements – Credit providers must meet strict conditions before receiving an Australian credit licence
• Responsible lending standards – Credit providers must adhere to responsible lending practices when providing credit or credit assistance
• Consumer protection assurance – The credit market benefits from knowing consumers are well protected

All Australian jurisdictions implemented the full Australian Consumer Law by 1 January 2011 under the National Partnership Agreement to Deliver a Seamless National Economy.

The Uniform Consumer Credit Code (UCCC)

The Consumer Credit Code strengthens national consumer lending laws with the following objectives:

• Apply equally to all forms of consumer lending
• Apply to all credit providers across Australia
• Maintain uniformity across all Australian jurisdictions

The Code presents credit information in clear, easy-to-understand formats. Credit providers (banks, building societies, credit unions, finance companies, and businesses) must:

• Inform consumers of their rights and obligations in credit arrangements
• Truthfully disclose all relevant information in written contracts, including interest rates, fees, commissions, and other charges
• Avoid unconscionable contracts – Credit providers cannot enter agreements with consumers who may struggle with repayments, and courts can modify or rescind unconscionable contracts

Advantages of the UCCC

• Transparency – Credit obligations and liabilities are clear to all parties, improving consumer confidence as debtors know national legislation backs their contracts
• Flexibility for providers – Credit providers have more freedom to organise fees and charges provided they disclose them explicitly
• Strong penalties – Failure to comply can result in civil penalties up to $500,000 and/or criminal charges
• Plain English guidance – The Consumer Credit Code Business Checklist provides business owners with straightforward guidance for creating credit contracts
• Written contract requirement – Credit agreements between businesses and consumers must be in written form
• Pre-contractual disclosure – Consumers must receive both a Pre-contractual Statement disclosing mandatory fee and charge details, and an Information Statement explaining consumer rights and obligations

Non-legal responses to credit issues

Several organisations provide free assistance to consumers experiencing credit difficulties:

• NSW Office of Fair Trading – Provides free advice (phone, in-person, or online) regarding the Consumer Credit Code, covering topics such as loan repayments, default notices, and car repossession

• Community Justice Centres (CJCs) – Offer free mediation and conflict management services throughout NSW, funded by the Attorney General's Department, helping resolve disputes without costly court procedures

• Financial Ombudsman Service (FOS) – Provides free mediation specifically for resolving credit disputes between consumers and financial institutions, using independent dispute resolution processes for matters involving banking, credit, loans, insurance, financial planning, investments, stockbroking, and superannuation

• Consumer Credit Legal Centre (NSW) – Offers free telephone and financial counselling advice, particularly for low-income consumers, specialising in financial services matters and consumer credit policy issues

• Redfern Legal Centre (RLC) – Provides free legal advice, referral, and casework to disadvantaged people and groups in the Botany, Leichhardt, and City of Sydney areas, offering face-to-face and telephone advice about credit and debt

Effectiveness of legal responses to credit

The uniform laws protect consumers entering credit agreements and regulate credit providers appropriately. A national response ensures all Australian consumers receive equal protection from unconscionable credit contracts with consistent consequences for breaches:

• Criminal penalties – Licensee misconduct may result in imprisonment for up to two years for those lending contrary to responsible lending protocols
• Civil penalties – ASIC can levy fines up to $220,000 for individuals and $1.1 million for corporations
• Infringement notices – Enable ASIC to act quickly to penalise law breaches
• Compensation remedies – Aim to restore aggrieved consumers to their position before suffering financial loss

Issue 2: Product certification

What is product certification?

Product certification is the process of providing documented assurance that goods or services have passed performance and quality tests before being marketed. In a globalised world where trade crosses borders freely, it is vital that all products meet minimum safety and performance standards before sale to Australian consumers.

Without proper certification, consumers would face serious health and safety risks from inadequate quality assurance. Products manufactured in Australia can be sold worldwide, while goods made in countries with different quality standards can enter Australian markets.

Mandatory product standards

A standard becomes mandatory through statutory regulation or a notice published in the Commonwealth Gazette. The notice references a published Australian Standard and may contain variations. Suppliers must legally refer to both the gazette notice and its Standards Australia benchmark.

Two types of mandatory product standards exist:

Safety standards

These are legal requirements containing safety, labelling, and design specifications. They apply when clear consumer risk exists (for example, children's nightwear and flotation toys). Products failing to meet safety standards cannot be sold.

Information standards

These require prescribed information to be provided to consumers when purchasing specified goods. Examples include:

• Label information about contents and risks for cosmetics and tobacco products
• Label information about care for clothing and textile products

Product certification process

Consumer goods must pass performance and quality assurance tests according to industry codes and/or nationally accredited test standards. When a product gains certification, it has complied with regulations governing quality and minimum performance standards.

Certification indicates established suitability for specified purposes. For example, computers and software may require certification as compatible before marketing. The certification process has varying stringency levels—greater consumer injury risk demands more demanding certification processes.

Once certified, goods may display a certification mark or logo. In Australia, both domestic and imported consumer goods must meet safety benchmarks before sale. Certification marks serve as powerful marketing tools building consumer confidence.

Common certification marks

Several internationally recognised certification marks include:

• ETL SEMKO (Intertek) – Internationally renowned organisation specialising in electrical product safety and benchmark performance testing, operating over 1000 offices and laboratories in 110 countries

• CE mark – Indicates products can be legally sold within the European Union, requiring manufacturers to prepare a Technical File demonstrating compliance with essential requirements

• British Standards (BSI) – Produced by the British Standards Institution, the UK's National Standards Body, awarded to products and services meeting designated scheme requirements

• Japanese Industrial Standards (JIS) – Specifies standards for industrial activities in Japan, coordinated by the Japanese Industrial Standards Committee

• 'Five Ticks' StandardsMark – Well-known Australian and international product certification symbol recognised as representing safety and quality, proving products and production processes have been assessed to national or international standards (available only through SAI Global certification)

Legal assurance from certification marks

Certification marks provide consumers with legal assurance that:

• A product certification agreement exists between the manufacturer and an organisation with national accreditation for testing and certification
• The product was successfully tested against nationally accredited standards
• The accredited certification organisation guarantees the tested item is identical to the one offered for sale
• Successful testing resulted in a 'certification listing' setting out conditions of use and legal compliance (de-listing occurs for non-compliance)
• The manufacturer undergoes regular audits by the certification organisation to maintain original quality standards
• If manufacturers fail audits, all certified goods are immediately removed from the market with consumer compensation

Legal protections for consumers

Australian consumers are protected from unsafe or substandard goods through multiple legal mechanisms:

Competition and Consumer Act 2010 (Cth)

Part 31-13 of the Australian Consumer Law addresses unsafe products through:

• Mandatory safety and information standards
• Banning of unsafe goods
• Compulsory product recalls
• Warning notices to the public

The ACCC (Australian Competition and Consumer Commission) enforces these provisions, responsible for all consumer protection and safety areas except financial products and services. ACCC powers include:

• Conducting random national surveys of retail outlets to detect non-complying products
• Investigating consumer and supplier allegations about non-complying goods
• Investigating goods sold by direct marketing (internet and television)
• Conducting recalls
• Obtaining court-enforceable undertakings
• Initiating prosecutions
• Seeking proof of compliance from suppliers or arranging product testing
• Providing education and information to suppliers and consumers about mandatory product standards

Australian Securities and Investment Commission Act 2001 (Cth)

ASIC (Australian Securities and Investment Commission) enforces this legislation, protecting consumers by ensuring market participants act with integrity regarding loans, superannuation, and other financial products and services.

Fair Trading Act 1987 (NSW)

State and territory Fair Trading statutes have powers absorbed into or mirroring the Competition and Consumer Act 2010 (Cth) provisions.

Federal Treasury

Provides advice to government on consumer law provisions of the Competition and Consumer Act to promote safer markets.

Non-legal responses

Individuals can take action through independent consumer groups that:

• Advocate on behalf of consumers
• Lobby Parliament to influence legislation
• Act as consumer 'watchdogs' highlighting unsafe products in the Australian market

The media also serves as a powerful tool for highlighting and publicising consumer safety issues.

Effectiveness of legal responses

Federal and state governments enforce mandatory product safety and information standards through the ACCC and NSW Office of Fair Trading. Both organisations play central roles in:

• Educating businesses and consumers about product safety
• Publishing materials on safety and standards
• Conducting ongoing marketplace surveys to ensure products continue meeting acceptable standards
• Prosecuting suppliers who ignore statutory obligations

When product problems occur, both organisations have powers to remove unsafe goods from sale, including recalling dangerous products or issuing public warnings about defects.

Case study: Bindeez beads

Issue 3: Marketing innovations

What are marketing innovations?

Marketing is a process by which businesses create 'consumer interest' in their products. Over time, marketing has become increasingly sophisticated, especially with e-commerce development. Recent innovations in global marketing technologies pose particular challenges for lawmakers.

When a business website becomes operational, it immediately markets to the world. Combined with Australian consumers' increasing reliance on credit cards and online purchasing, consumer protection becomes problematic. Governments play a vital role in developing appropriate legislative responses facilitating fair marketplaces.

Problems posed by marketing innovations

Marketing innovation can be exploited for bogus purposes, posing new challenges to Australian law:

• Fraudulent overseas offers – Many Australian consumers routinely receive fraudulent offers via the internet
• Mass scamming capability – Scammers can obtain email addresses and contact millions of internet users very quickly
• Pyramid selling schemes – Overseas pyramid selling schemes proliferate
• Dubious investment advisors – Householders receive overseas phone calls promoting suspicious share deals
• Phishing attacks – Phishing is internet fraud aiming to steal valuable information (credit card numbers, user IDs, passwords) through forged websites requesting consumer information. Phishing scams often place links in email messages, on websites, or in instant messages appearing to come from trusted services (banks, credit card companies, social networking sites)
• Spam – Spam is unsolicited commercial messages sent via email, SMS, MMS, instant messaging, or other electronic communication. Despite the Spam Act 2003 (Cth) making it a civil offence to use address-harvesting software to construct distribution lists, spam use continues rising among e-marketing companies

Legal responses to marketing innovations

Consumer protection agencies such as the ACCC and NSW Office of Fair Trading regularly scan the internet, radio, and TV for illegal offers designed to exploit consumers. They also rely on consumers reporting deceptive marketing schemes.

The Australian Consumer Law strictly prohibits deceptive advertising and marketing practices. Key provisions relating to marketing include:

• Section 18 – Outlaws the deliberate misleading or deception of consumers
• Section 29 – Makes false or misleading representations when marketing/advertising goods or services illegal
• Section 32 – Makes offering gifts and prizes with no intention of providing them illegal
• Section 35 – Makes bait advertising illegal
• Section 39 – Makes sending unsolicited credit cards through mail illegal
• Section 40 – Prohibits sending unsolicited goods and then demanding payment
• Section 44 – Prohibits pyramid selling (selling the right to 'distribute' rather than the actual product)
• Section 49 – Outlaws referral selling (offering discounts or benefits to consumers for introducing other customers)
• Section 50 – Makes coercing consumers via aggressive marketing practices illegal

Non-legal responses to marketing innovations

Several 'consumer watchdog' organisations identify fraudulent marketing practices and scams:

• Choice – Publishes a consumer magazine reporting on various issues including deceptive marketing practices

• SCAMwatch – An ACCC-operated website providing information to consumers and small businesses about recognising, avoiding, and reporting scams

• Australian Communications and Media Authority (ACMA) – A government agency responsible for regulating broadcasting, the internet, radio communications, and telecommunications. Consumers can make complaints to ACMA regarding deceptive marketing and advertising practices

• Print and electronic media – Report on questionable marketing activity to increase consumer awareness of scam nature and prevalence

Effectiveness of legal responses

The legal system responds very well to domestic marketing issues. Australian consumers buying products in Australia are clearly protected. However, emerging problems relate to marketing originating from foreign countries via the internet.

Advances in electronic marketing allow fraudulent marketers to communicate easily with victims and transfer ill-gotten gains across borders. The transnational nature of scams makes catching perpetrators very difficult. Further, complicated and problematic questions arise regarding jurisdiction and foreign law.

Issue 4: Technology

What is technology?

Technology is the application of scientific knowledge to make life easier for humans. New technology in computing and global communication constantly changes the level and complexity of interaction between consumers and sellers. Technology has infiltrated all consumer transaction service levels, from Automated Teller Machines (ATMs) to Electronic Funds Transfer at Point of Sale (EFTPOS) and electronic home and office banking services.

The challenge for consumer law

Consumer law faces the problem that services now available over the internet operate in less regulated environments. These include:

• Email
• File transfer capability (FTP)
• Hyper Text Transaction Protocol (HTTP), which provides the World Wide Web basis

The web and telephony have facilitated electronic services including:

• Internet marketing
• Electronic service delivery
• Electronic lodgment services for official submissions (e.g., tax returns)
• Branchless banking from home
• Tele-shopping in 'virtual malls' worldwide
• Online reservation schemes for entertainment, travel, and accommodation
• Online ordering and payment for goods
• Telemarketing via telephone
• Interactive voice response (IVR) used by suppliers via answering machines, providing automated prompts for simple transactions
• Electronic service delivery (ESD) programs based on customer convenience (e.g., ACCC website providing consumer protection advice 24 hours a day, seven days a week)

Legal responses to technology issues

Technology use in the global marketplace makes Australian law difficult to enforce because it lacks international jurisdiction, and legislative strategies for meeting these challenges are still developing. However, some effective legal responses can achieve justice for consumers:

• Asset freezing – Foreign online marketer assets can be frozen if the Australian legal system has information about asset location. However, absence of international treaties and foreign bank privacy laws may make recovering consumer money difficult

• Domestic asset freezing – When an online marketer's assets are within Australia and their location is known, courts can impose orders freezing them for compensation purposes

• Arrest warrants – Can be issued in Australia, and if an extradition treaty exists with the foreign country, individuals breaching Australian consumer laws can be extradited to Australia for trial

• Website removal – It is technologically possible for 'government monitors' to seek out and remove fraudulent telemarketing sites from the internet, although governments are often reluctant to do this

• Telecommunications Act 1997 (Cth) – Part 20 gives the ACCC authority to administer Rules of Conduct governing dealings with international telecommunications operators. While this power has limitations, its inclusion demonstrates recognition of the scope of adaptations the law must continue making

Problems with domestic online transactions

Issues arising from online transactions, whether local or international, include:

• Fair dealing concerns – Need to ensure fair dealings between suppliers and consumers regarding sales contract terms and conditions. Where consumers once spoke with someone over a counter for product information, people increasingly must interact via telephone and internet. Not all consumers have requisite information technology (IT) skills, potentially leading to exploitation

• Computer-generated responses – Automated responses to consumer complaints (e.g., using IVR) act as barriers to self-help strategies

• Remote purchasing – The increasing trend can potentially compromise product quality, correct installation, adequate demonstration of operation, advice provision, and 'after-sales service'

• Privacy protection – Need to ensure identity data gathered about consumers via online transactions is protected and people's privacy maintained

• Consumer profiling – Information gathered about consumers can be used inappropriately by suppliers for 'consumer profiling' (e.g., collecting consumer purchase data for marketing 'like products' via telephone, internet, or direct mail)

• Biometric data protection – Important to ensure biometric data collected for consumer identification purposes (fingerprints, retina scans, voice recognition) are not transmitted digitally to other organisations without the person's consent

The Competition and Consumer Act empowers the ACCC to enforce its prohibitions and enforce Part 20 of the Telecommunications Act 1997 (Cth). The extension of trade and commerce into the online environment poses interesting challenges for law.

Non-legal responses to technology issues

Several organisations ensure technology is not misused:

• Australian Communications and Media Authority (ACMA) – A statutory authority within the federal Department of Broadband, Communications and the Digital Economy, responsible for regulating broadcasting, radio and television communications, and the internet

• Australian Direct Marketing Association (ADMA) – An industry body for direct marketing companies strongly committed to self-regulation. With other industry and consumer representatives, it formulated the 'eMarketing Code of Practice' (registered in 2005) to supplement the Spam Act 2003 (Cth), stipulating how direct marketers can and cannot use electronic messages (email, SMS, other online and wireless applications) to reduce spam volume

• Internet Industry Association (IIA) – A similar organisation for internet service providers that developed several codes of practice, notably the IIA Spam Code of Practice (registered in 2006), supplementing the Spam Act 2003 (Cth) by explaining its requirements and compliance methods

• Australian Securities and Investments Commission (ASIC) – Has the mission of regulating and enforcing laws relating to fairness and honesty in financial services, markets, and companies. In this context, it oversees regulatory issues posed by electronic communication developments. ASIC is also responsible for approving codes of practice in financial services industries, including the Electronic Funds Transfer Code of Conduct, which applies to banks and other financial institutions offering EFT services

Effectiveness of legal responses

Generally, the Australian legal system affords consumers adequate protection against technology misuse provided e-marketers are located within Australian borders. The Competition and Consumer Act 2010 (Cth) and Telecommunications Act 1997 (Cth) allow the ACCC to police consumer law domestically with an arsenal of criminal and civil sanctions.

However, cross-border e-marketing raises complex jurisdictional questions, and the law's evolution to adapt is ongoing. Future consumer remedies may depend on multilateral international treaty existence.

Summary