Small businesses look for guidance during pandemic

Total ACCC contacts from small businesses increased to more than 3,400 in the second half of 2020, and enquiries about those businesses’ legal rights and obligations jumped 30 per cent.

The ACCC’s latest Small Business in Focus report, released today, highlights the ACCC’s work from July to December 2020 in the small business, franchising and agriculture sectors.

Small business enquiries to the ACCC increased 60 per cent in 2020 compared to the previous year, in part due to businesses seeking information about their obligations to consumers during the COVID-19 pandemic.

The ACCC has recently brought a number of small business and franchising cases before the courts. In the second half of last year the ACCC instituted proceedings in the Federal Court against printing company Fuji Xerox Australia, food and beverage franchise Retail Food Group, and courier franchise Megasave.

“We currently have a number of important cases before the courts that highlight some of the problems the small business and franchising sector faces,” ACCC Deputy Chair Mick Keogh said.

Reports of potential misconduct were down slightly in July to December 2020 but the ACCC still received almost 2,000 total complaints from small businesses, about one-third of which were reports of misleading conduct and false representations by other businesses.

“The last 12 months have been incredibly difficult for many small businesses but it is pleasing that we have received fewer reports of misconduct from businesses and more requests for information about legal obligations and protections,” Mr Keogh said.

“70 per cent of all businesses that contacted the ACCC in the second half of last year were micro-sized businesses with four staff or fewer. Many of these businesses have limited resources and are vulnerable to misconduct from larger suppliers, so it is important that they understand they have certain protections under the Australian Consumer Law.”

The Australian Government is currently progressing reforms that will strengthen existing unfair contract term protections in the Australian Consumer Law. The proposed changes include prohibiting and imposing civil pecuniary penalties for including unfair contract terms in small business and consumer contracts, expanding the definition of ‘small business’, and removing the contract value threshold.

“The ACCC has been advocating for a number of years for changes to the current unfair contract term law as it has some major limitations,” Mr Keogh said.

“The business-to-business unfair contract term law is a very important law for small businesses and we hope to see new, stronger laws come into effect later this year.”

Background

The Small Business in Focus report is published twice yearly and provides a summary of the ACCC’s work and activities in the small business, franchising, and agriculture sectors.

The ACCC has also published a range of resources to support small businesses that are available on our website.

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