Department of Fair Trading Everything You Need To Know As A Business Owner
This article is designed to be a business owners guide to the department of fair trading. We also explore the department’s role and cover all the essential facts you should know as a business owner.
In this guide, we will refer to the NSW Department of fair trading; however, it is essential to note that each state has its own dedicated body that aims to achieve the same protections.
The department of fair trading is a governing body that ensures a fair marketplace and acts as a safeguard for consumers rights.
What Is The Department Of Fair Trading?
The NSW Department of Fair Trading (commonly known as Fair Trading) is a division of the Department of Customer Service, the New South Wales Government department.
The sole objective of Fair Trading is to promote fairness throughout the marketplace of New South Wales, safeguarding the rights of consumers, businesses, and other stakeholders.
They aim to achieve this through:
- Advising the public on their rights, responsibilities and legal obligations;
- Verifying that products sold to consumers comply with safety requirements and relevant safety standards;
- Licensing and registering certain businesses aim to set the industry standard (ranging from construction and property to automotive and charities) – you can see what licences are required in NSW for your industry here;
- Resolving disputes between customers and businesses (these can range from disputes in strata schemes to conflicts in the building industry);
- Working together with other regulators, representatives of industry and representatives of consumers to improve its services as a regulatory agency;
- Enforcing compliance with state laws by imposing sanctions, penalties, disciplinary action, and, if necessary, commencing prosecutions;
- Creating a policy that underscores the statutory framework; and
- Much more.
The Department of Fair Trading has put together a comprehensive ‘Road Map’: the NSW Fair Trading Roadmap 2019-2022, which sets out the division’s priorities over that period.
Why The Department Of Fair Trading Is Important To Your Business?
Because – as their name suggests – they can help you trade fairly.
By the following advice from the State Government agency responsible for promoting safety compliance (and accountable for prosecuting businesses for unfair trading practices), you’ll minimise the risk that your business breaks the rules.
By trading fairly, you’ll more likely be seen as a better business to deal with – leading to (hopefully) more paying customers and clients.
The department can help you do business better by:
- Educating you and your team on what rules and laws you need to comply with, and – more specifically – how to comply with them;
- Providing you with timely information you need to adjust to the rapidly evolving issues.
- Implementing regulations specific to your industry that’s easy for your business to understand.
- Helping you deal with customer complaints, protecting your business against scams and providing excellent service to your customers.
There is now a whole range of guides on the Australian Consumer Law that you can access that can help you steer clear of any consumer minefields.
These guides can provide you and your team with a whole range of valuable (and critical) information you need to be aware of when running a business – not just in New South Wales but across Australia.
Below we expand on the legal framework that these guides are based on, The Competition and Consumer Act.
These guides include:
Avoiding unfair business practices – this will explain to you what misleading and deceptive conduct is (including false and misleading representations and unconscionable conduct).
This guide is critical as it helps you steer clear of being unfair to your customers and potentially opening you up to legal liability;
Compliance and enforcement – this guide will help you understand how Australian consumer laws are enforced and what impact this enforcement has on you and your business.
Consumer guarantees – this guide educates you on precisely what consumer guarantee requirements exist in the Australian Consumer Law, in simple English.
Consumer product safety – this guide comprehensively discusses consumer product safety laws in Australia.
These laws include safety standards, recalls, bans, safety warning notices and other reporting requirements you’re required to follow.
Sales practices – this guide will educate you on a whole raft of sales practices you should be careful in when engaging in business, including unsolicited supplies and consumer agreements, lay-by agreements, pricing and pyramid schemes.
Unfair contract terms – this will teach you what exactly an ‘unfair contract term’ is and what role Australian regulators and courts play with such contract terms.
By mastering the content in all these guides, your business will be less likely to fall into the traps of servicing consumers and ultimately make your business a better, fairer one.
What Is The Competition and Consumer Act?
The Competition and Consumer Act 2010 (the Act) is a federal law regulating fair trading across Australia. This includes the Department of Fair Trading along with the other.
It’s one of the most critical pieces of legislation your business needs to know, as it regulates how to conduct business with customers, competitors and suppliers.
The Act also strictly regulates competition within markets whilst ensuring consumers are protected through the provisions of the Australian Consumer Law (which forms Schedule 2 to the Act).
The Australian Competition and Consumer Commission (ACCC) is the primary federal government agency that administers and enforces the Act and prosecute your business in a court of law.
Customers can make complaints about your business to the ACCC, who then have the discretion to take enforcement action against you.
How The Act Protects Comsumers
The Act creates several obligations that businesses must comply with and, in doing so, allows them to protect consumers.
The ACCC advises that:
- Any advertising material or statements you make should be truthful and accurate.
- This includes any impressions created by what you say or display. Generally, you won’t be able to rely on some sneaky small print or disclaimers to justify an overall message that’s in substance a misleading one.
Example. In 2012, the Full Federal Court of Australia found that Singtel Optus offered ‘unlimited broadband’ services for customers who signed up.
This was misleading – in reality, the plans had huge limitations. Namely, the speed of your internet would reduce when a certain amount of data was downloaded.
The word “unlimited” was critical here – because these limitations weren’t disclosed, the conduct was found to be deceptive.
The law places limitations on businesses that use direct marketing like door-to-door or telemarketing.
There are certain days and times you’re not allowed to contact consumers, and salespeople must inform the consumer of the purpose of the call and the name of the business they represent.
Examples Of Unfair Trade Practices
Don’t fall into the common trap of engaging in an unfair trade practice – you could open yourself to receiving some significant penalties.
This is where you sell something to somebody and promise them some form of benefit if they provide information to help you sell their business to others.
This is illegal and could see your business being fined up to $10 million.
A pyramid scheme is where your business recruits others to make money – rather than selling goods or services.
Imagine your business:
- ‘Hiring’ a new participant (and calling them a ‘member’ or a ‘partner’).
- Asking them to pay you for the privilege of joining.
- Promising them payment in return for recruiting others?
It may not be legal to run an operation like this.
Unfair contract terms
You must not have contract terms with a customer that are “unfair”.
The law against unfair contract terms will apply to “standard form” contracts. These are typical contracts that:
- Your business prepares and contains a set of generic terms.
- Are not negotiated.
- Are ‘take it or leave it: either the customer signs the terms, or you don’t sell them a thing.
Note that contract terms law don’t apply to every contract under the sun. It’s essential to get legal advice for your specific agreements and their terms.
A term is typically ‘unfair’ if:
- Your contract is ‘one-sided’ and favours your business over the consumer;
- There isn’t a good reason (commercially) for your business to have such a term in the contract; and
- If the term is enforced, your customer will suffer financial loss (or some other kind of disadvantage or inconvenience).
What might an example be?
- Terms allowing you to make one-sided changes (like increasing fees) without any right of the customer to terminate the contract without paying the penalty;
- Terms restricting the liability of your suppliers for a breach of contract; and
- Terms requiring the customer to pay colossal fees if they decide to end the contract.
So avoid using terms like these in your agreements, or you may find that they will be found ‘unfair’!
Accepting payment (but not intending to supply anything)
Believe it or not, this happens!
It goes against common sense – don’t accept payment for goods or services if:
- You have no intention of supplying those goods at all;
- You intend to provide something materially different to what was requested; or
- You know (or should know) that you won’t be able to supply them promptly.
Don’t stress if your failure to supply is because of something outside your control and/or if you exercised due diligence. The law is not intended to punish businesses that find themselves in this situation.
Make sure to read the ACCC’s page on unfair business practices to understand what you’re not allowed to do.
The Fair Trading Body In Each State
The Consumer and Competition Act is federal law; however, each state has its own regulatory body to help protect businesses and consumers.
As mentioned, we have been referring to the Department of Fair Trading in NSW; however, all states are listed below.
WA. Department of Mines, Industry Regulation and Safety administers the WA Fair Trading Act 2010.
NT. Consumer Affairs administers the NT Consumer Affairs and Fair Trading Act 1990. You can find information on trader issues such as advertising, business tenancies, disposal of uncollected goods and product safety.
Hopefully, this guide has shed some light on the Department of Fair Trading and the governing laws that help ensure the Australian marketplace is kept fair its parties protected.
If you operate in a state other than NSW, please ensure you are familiar with the active governing body that helps ensure the Consumer and Competiton Act.