How to Avoid Penalties
The Australian Competition and Consumer Commission (ACCC) has significantly increased penalties for non-compliance with updated laws under the Competition and Consumer Act (CCA) and the Australian Consumer Law (ACL). These changes aim to deter businesses from including outdated or unfair terms in their contracts and emphasize consumer protection.
Key updates include:
- Penalties for Unfair Contract Terms: From November 9, 2023, using unfair terms in standard form contracts with consumers or small businesses is illegal, with substantial penalties introduced for violations. These penalties can reach the greater of $50 million, three times the benefit gained, or 30% of the company’s adjusted turnover during the breach period. This applies to both new contracts and existing ones that are varied after this date.
- Scope and Examples: Unfair terms can include those allowing one-sided contract changes, automatic renewals without adequate notice, or disproportionate termination penalties. The ACCC encourages businesses to review contracts such as customer terms, professional services agreements, and website terms, ensuring compliance with the new standards.
- Increased Penalties for Broader Breaches: Breaches of other consumer laws now attract five-fold higher maximum penalties, intended to make non-compliance a significant financial and reputational risk for companies.
Businesses must update their terms and train staff to avoid potential legal actions. The ACCC and ASIC have both stated they are prepared to enforce these rules rigorously, making compliance essential to avoid severe consequences.
For further details, you can review ACCC’s guidance or contact the Live Terms team today!