COVID-19 Update: Know Your Consumer Rights This Easter

With our world turned upside down by the COVID-19 pandemic in just a few frantic weeks, many Australians are struggling to come to terms with their new way of life.

In this time of uncertainty and fear, the Australian Competition and Consumer Commission (ACCC) has stepped up to provide clear guidance to local businesses and consumers in respect of how to manage their rights and obligations in compliance with the Australian Consumer Law (ACL). After taking a “stick” approach in the lead-up to Christmas 2019, with multiple fines being issued for non-compliant conduct by businesses (see here for more), the ACCC has now softened its approach and is focusing on “early intervention” to educate rather than penalise businesses where possible, to support the overall community.

In our earlier paper (click here), we took you through the ACCC’s formal response to the COVID-19 situation. This has included measures such as setting up an internal COVID-19 task force and revisiting enforcement priorities for 2020 to ensure that any competition and consumer issues arising from the impact of COVID-19 are properly addressed.

In this paper, we focus on key areas where the ACCC is seeking to educate businesses and actively manage the extent of COVID-19 disruption on consumers.1

1. Cancelled or rescheduled travel and accommodation bookings

Strict travel restrictions have been implemented across Australia, with warnings in place for non-essential domestic travel and a ban on overseas travel.2 In recent weeks, all States and Territories in Australia other than NSW, Victoria and the ACT have closed their borders to essentially prohibit entry by non-residents. But what does this mean for families who have already booked and paid for their interstate and overseas holidays over the Easter period?

Unfortunately, there are no hard and fast rules around whether and, if so, how you can claim a refund if your holiday has been cancelled, as your rights will depend heavily on your particular circumstances. In particular, it will be necessary to consider how the trip was booked (e.g. directly through the airline or via a travel agency or booking platform), whether flights and accommodation were booked via the same provider, the reasons for cancelling the trip (e.g. as a precautionary measure or as a direct response to government regulations), and who initiated the cancellation. As a starting point however, customers should review closely the terms of their contract and then broaden their search to see whether the relevant service provider has updated its policies in light of COVID-19.

Some recent activities undertaken by the ACCC in relation to these issues include:

  • Change fees: Where flights have been cancelled, the ACCC has taken the view that travel agencies should not be charging customers change fees to rebook their holidays. After being contacted by the ACCC, one travel agency agreed to offer a fee free travel credit to its customers and to refrain from charging for changes to existing bookings.
  • Updated T&Cs: Even if a business has recently updated its standard T&Cs, it may still be required to assess customer claims for refunds or credit vouchers against the former contract terms which were in place when the customer entered the agreement. This is because making unilateral changes to standard form contracts which disadvantage the other party or subject them to any financial detriment (e.g. by making it harder for customers to claim a refund) may contravene the unfair contract terms regime under the ACL. The ACCC has flagged that it is following up several businesses which sell package tours in relation to this issue.

2. Price gouging on COVID-19 protective equipment

Products such as face masks, hand sanitiser, antibacterial wipes, and even toilet paper have seemingly quadrupled in value overnight as suppliers struggle to keep up with demand. Unfortunately, the ACCC has limited powers to stop excessive pricing under the ACL, as it has no role in setting prices. The ACCC has indicated that it will continue to monitor customer complaints in relation to excessive pricing to determine whether such practices may be “unconscionable” in a legal sense. In addition, it will continue to intervene where businesses appear to be making false or misleading claims about the reason for price increases, for instance by claiming supply shortages due to COVID-19 where this is not the case.

Recently however, the Australian Government has acted directly to clamp down on excessive pricing of COVID-19 protective equipment. The Australian Federal Police (AFP) has been given new powers under the Biosecurity Act to prevent persons from engaging in “price gouging” in relation to “essential goods” during the COVID-19 pandemic period.3 A person will be engaging in price gouging if they supply or offer to supply goods at a greater than 20% mark-up on the price at which they initially purchased the goods. Essential goods include disposable face masks, disposable gloves, disposable gowns, protective eye wear (e.g. goggles), alcohol wipes, and hand sanitiser. Persons who are suspected of having engaged in price gouging can be ordered to surrender their goods to the AFP.

To support the work of the AFP in this area, the ACCC has been engaging with online platforms Amazon, Facebook, eBay and Gumtree to understand the measures these businesses have in place to prevent the sale of products at excessive prices. The ACCC notes that it has received some assurances that appropriate mechanisms are in place, but is encouraging increased vigilance and will continue to monitor the situation closely.

3. Suspended gym and health club memberships

Since 30 March 2020, all gyms, health studios (e.g. yoga, pilates, barre), and other “indoor recreation facilities” in NSW have been ordered to close and remain closed until 30 June 2020.4 But what does that mean for consumers who have signed up for gym memberships?

In its enforcement response, the ACCC has been focusing on two key issues: ongoing membership fees and “freeze” fees.

In relation to ongoing membership fees, the ACL strictly prohibits businesses from taking payment for goods or services where there are reasonable grounds to believe that such goods or services will not be supplied within a reasonable time. This is a statutory right which applies even if your contract does not expressly provide for the suspension of payments. Quite simply, businesses are not entitled to charge you for gym membership fees during this lockdown period if they are unable to provide the relevant services in this time. An exception to this may be where the business can offer virtual classes, and this type of substitution has been agreed between the parties.

Next, freeze fees are often provided for in standard gym contracts and can be charged when customers elect to pause their membership at any time. However, where the postponement of membership is not at the customer’s election but rather due to government restrictions which prevent businesses from performing their obligations under the contract, then the ACCC is of the view that freeze fees should not be deducted.

In a world of businesses and clients, lawyers and regulators, it’s important not to lose sight of the big picture. We are all members of a broader community with a critical role to play in preventing the spread of COVID-19 and protecting those around us.

Stay home and stay safe this Easter.

3. Biosecurity (Human Biosecurity Emergency) (Human Coronavirus with Pandemic Potential) (Essential Goods) Determination 2020 (dated 30 March 2020).
4. Public Health (COVID-19 Restrictions on Gathering and Movement) Order 2020 under the Public Health Act 2010 (NSW) (dated 30 March 2020).

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© ADDISONS. No part of this document may in any form or by any means be reproduced, stored in a retrieval system or transmitted without prior written consent. This document is for general information only and cannot be relied upon as legal advice.

Liability limited by a scheme approved under Professional Standards Legislation.
© ADDISONS. No part of this document may in any form or by any means be reproduced, stored in a retrieval system or transmitted without prior written consent. This document is for general information only and cannot be relied upon as legal advice.