Problem Identification
In February 2020, the ACCC identified potential consumer impacts from the initial travel restrictions and cancellations in response to the novel coronavirus. The declaration of a pandemic in March 2020 led to the mass-cancellations of all travel services, resulting in hundreds of thousands of consumers and businesses out of pocket. The COVID-19 related restrictions implemented also had a significant impact on the ability of a range of other sectors to supply goods and services, including gyms, events and retail. Some businesses also made misleading COVID-19 related claims about their products or services.
In 2020, approximately a quarter of all contacts to the ACCC were COVID-19 related. Travel contacts increased by over 450% compared to 2019. The ACCC received 26,412 travel contacts, which was 21% of all contacts to the ACCC in 2020. In other sectors including events, sport and recreation, and fuel retailing, contacts in 2020 doubled compared to 2019.
The ACCC quickly identified that consumer guarantee protections available under the Australian Consumer Law (ACL) that normally apply when consumers do not receive services they have paid for would likely not apply in this context. The application of the ACL consumer guarantees provisions is restricted where the supply of a business’s services is prevented due to the actions of a third party, such as the imposition of government restrictions. However, businesses were still at risk of contravening the ACL, for example by misrepresenting consumers’ rights under contract.
Whilst consumers were clearly suffering detriment from these cancellations, businesses were prevented from supplying through no fault of their own and were also suffering detriment from a lack of revenue, inability to recover costs paid to overseas suppliers, and reduced workforces. As such, a considered approach was required to balance these issues.
In response to the pandemic, the ACCC adjusted the focus of its compliance and enforcement activities toward prioritising competition and consumer issues arising from COVID-19, and publicly announced this change in focus. To facilitate this new prioritisation, the ACCC established a taskforce to address, to the extent possible, immediate harm to consumers and small business arising from the pandemic. The taskforce used several strategies to identify key problems – frequent review of complaints data, social and traditional media monitoring and engagement with government bodies and industry stakeholders. As the ACL is administered jointly by the ACCC and state and territory fair trading agencies, the ACL regulators established an Urgent Response Group to ensure there was a consistent and coordinated response to the consumer issues arising from the pandemic.
Integrated compliance approach
Rather than focusing on traditional enforcement processes and compliance through court-based outcomes, the ACCC’s taskforce sought to trade off lengthy and punitive court based action to achieve prompt changes in businesses’ behaviour and most importantly achieve financial redress for impacted consumers at a time when many consumers were under financial strain due to the pandemic. The taskforce quickly intervened on issues by engaging with businesses to seek resolution of problems, educating consumers on their rights, and adjusting broader business behaviour through various compliance and educative initiatives. A key part of the strategy involved a willingness to take quick and public court action against recalcitrant businesses.
The ACCC prioritised educating consumers and businesses about their rights and obligations. In March, Frequently Asked Questions guidance was published on the ACCC’s website. As new issues emerged, the FAQs were continually updated. This provided an alternate avenue for consumers and businesses to obtain information due to the high volumes of contacts our call centre was experiencing and assisted ACCC call centre staff in providing consistent guidance. After consultation with industry and consumer groups, the ACCC developed and released the best practice guidance for the travel industry, which reminds businesses of their legal obligations and outlines best practice approaches for dealing with consumers regarding COVID-19 cancellations to balance the concerns of both businesses and consumers. The guidance was influential in adjusting and changing business behaviour in the industry.
Where the ACCC identified businesses that were engaging in practices causing widespread consumer detriment, such as misrepresenting consumers’ rights on cancellations, the ACCC engaged with them in a collaborative manner and at an early stage, seeking to understand and resolve issues through pragmatic solutions. In many instances, this engagement resulted in the businesses changing their approach to ensure they were offering consumers remedies in accordance with their entitlements under their contract terms and conditions. Following the ACCC’s engagement with businesses, the ACL regulators would subsequently leverage off the outcome achieved by the ACCC by negotiating remedies on behalf of individual consumers with the business.
Leverage strategy
The ACCC used social media and responded to requests for information and commentary from traditional media outlets to provide guidance to consumers and businesses on their rights. Additionally many media outlets reported on a variety of consumer impact stories related to COVID-19. In responding to these requests, the ACCC was able to promote specific compliance messages for business, particularly where new issues emerged.
The ACCC also responded to thousands of contacts from consumers, business, and politicians. The communication approach in this context sought to not only provide information about their specific concerns, but also educate them more broadly about their relevant rights and/or obligations. The ACCC also produced a report outlining the impact of COVID-19 on consumers and fair trading, which was used for consumers, industry, media and politicians as part of the ongoing communication and engagement strategy to amplify the ACCC’s compliance messaging.