Consumer law penalties set to increase

The ACCC welcomes legislation that has passed Federal Parliament today to increase maximum financial penalties under the 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 per cent 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 important, penalties need to be high enough to be noticed by boards and senior managers so that compliance with the law is a higher priority. “

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“Increased penalties will help to deter large companies from breaching consumer laws. This is a profound change that I believe will improve corporate behaviour significantly, and so improve the Australian economy and how it works for consumers,” Mr Sims said.

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).