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Consumer law penalties increase dramatically

The Treasury Laws Amendment (2018 Measures No. 3) Bill 2018 was passed in Federal Parliament on 23 August 2018, amending the Competition and Consumer Act 2010 to align the maximum penalties under the Australian Consumer Law (ACL) with the maximum penalties under the competition provisions of the Competition and Consumer Act.

The Bill increases the maximum penalty for a company for a contravention of relevant consumer laws from a body corporate from $1.1 million to the greatest of the following:

  1. $10,000,000;
  2. 3 times the value of the benefit obtained from the contravention or offence (where the value can be calculated); and
  3. If the value of the benefit cannot be determined, 10% of Australian connected group turnover.

Contraventions covered by the new penalty regime include false or misleading representations and unconscionable conduct.

These changes have the potential to dramatically increase the penalties faced by large organisations that breach consumer laws. The highest penalty ordered under the ACL to date has been $10 million. By contrast, the new ‘10% of group turnover’ measure of penalty creates the potential for large companies to be exposed to maximum penalties of billions of dollars.
Penalties for individuals increase from a maximum of $220,000 to $500,000 per contravention.

The changes will come into effect the day after the Bill receives Royal Assent.

This article was written by Richard Westmoreland, Partner.

Richard Westmoreland

P: +61 2 9334 8717

E: rwestmoreland@hwle.com.au

Important Disclaimer: The material contained in this publication is of a general nature only and is based on the law as of the date of publication. It is not, nor is intended to be legal advice. If you wish to take any action based on the content of this publication we recommend that you seek professional advice.