The ACCC now appears to have consumer law powers that could force Tiger and Jetstar to abandon some of their obnoxious practices.

These powers are canvassed in an advisory note to aviation and travel sector clients of law firm HLW Ebsworth on the new Australian Consumer Law (ACL) came into full effect on January 1, authored by its partner Richard Davis.

In the note Davis says:

Most consumer protection laws are no longer set out in the body of the Trade Practices Act / Competition and Consumer Act or in the state Fair Trading Acts.  Instead, they are found in the ACL, which is set out as a schedule to the Competition and Consumer Act.  The ACL applies at both a national level, enforced by the ACCC, and as a law of each state and territory, enforced by the respective state fair trading agencies.

Since April last year, contraventions of most consumer protection provisions now carry potential new penalties of up to $1.1 million per offence.  These penalties are far easier for the ACCC to obtain than the old penalty regime, as the ACCC no longer has to take lengthy and expensive criminal investigations and prosecutions to secure the penalties.

ACCC can now also issue an “infringement notice” for many alleged contraventions.  These notices, likened by some to a large ‘speeding fine’, can be up to $66,000 (depending on the contravention) and can be paid without an admission of guilt.

With these new weapons in its armoury, we are already noticing a more aggressive approach from the ACCC to enforcement of consumer protection provisions.  Minor matters that may have previously resulted in an informal warning are now attracting infringement notices.  For more serious contraventions, court prosecutions are being instituted and penalties sought far more frequently.

However the section of the note that might give heart to those who feel cheated by Jetstar or Tiger taking months to grudgingly refund fares for cancelled flights when they could simply reverse the electronic payment in a few seconds concerns unfair contract of carriage terms.

Davis says, “Since July last year, any term in a standard form consumer contract that is found to be ‘unfair’ is void and unenforceable.  In addition, since January, consumers in any state or territory can use these new laws to challenge any terms that they think are ‘unfair’ in their local consumer or small claims tribunal.

“This has particular implications for contracts such as airlines’ conditions of carriage, and is another area where the ACCC has been active.  The ACCC has recently been writing to a range of airlines to ask about their terms of carriage and discuss whether any may be ‘unfair’.”

Davis says areas where the ACCC has raised concerns include:

·         overbooking and denied boarding policies;

·         the availability and processing of refunds;

·         limitation of liabilities; and

·         limitation of time periods for customer claims.

David says that in addition to ACCC scrutiny, those operating in the sector should expect to see an increase in challenges by disgruntled consumers who want to challenge a contract term or policy that they think has operated unfairly against them.

He gives as an example, a consumer who launched a challenge against Jetstar’s fare rules under similar laws in the Victorian Civil and Administrative Tribunal in 2008.  The Tribunal found in favour of the consumer, although the decision was eventually reversed by the Supreme Court.  Airlines should expect similar challenges to become common in the coming years.

What might this mean? For a start, it implies that the days of airlines or other goods and services providers laying down their rules on a take it or go away basis are over.  An airline condition is only binding if it doesn’t offend the fairness test in the new consumer law, and the arbitrary penalising of passengers being late in checking in when for example, the flight is already running late, is one nonsense that needs to be stopped.

The insistence of airlines in giving vouchers, or in some cases, credits for use only on their services, instead of instant refunds for cancelled flights is also totally unacceptable.  When a customer exercises choice in selecting an airline, and that airline fails to deliver, the customer surely has a right to continue to exercise choice in making alternative arrangements, with all the monies spent on the cancelled flight, including security levies and airport charges, immediately available.

Remember, those levies and fees are collected by the airline on behalf of an airport or the government. No travel, no fees. It’s a matter of simple equity. Similarly I would expect the arbitrary determination of a counter clerk that a customer still owes money on arrival at an airport because of a tricky procedural requirement will be overturned.

Overseas experience also shows that such sharp practices by airlines are not confined to low cost outfits. The US ‘full service’ carriers are far more aggressive than Southwest or JetBlue in levying extra charges. The resolve of the ACCC in pursuing the airlines for unfair practices shouldn’t be underestimated but in large part it will need Australian consumers to stop copping it sweet and putting up with them.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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