The federal government is considering a major crackdown on unfair trading practices, once again raising the prospect of blanket legislation to replace a patchwork of industry-specific codes of conduct.
Specific unfair trading practices are currently banned by the Australian Competition and Consumer Commission (ACCC) through Australian Consumer Law and sector-specific rulebooks.
However, there is no overall ban — leaving a gap for businesses to engage in conduct that the courts may view as unsavoury, but ultimately in accordance with existing legislation.
Speaking at the Council of Small Business Organisations Australia National Small Business Summit on Wednesday afternoon, Assistant Minister for Competition, Charities and Treasury Andrew Leigh said unfair trading practices are a major impediment to market competition.
“When laws allow a firm to get away with ripping off consumers it can create the wrong competition incentives,” he said.
“Other firms in the market see bad behaviour go unpunished and protect their own patch by employing the same dodgy tactics.”
“Soon enough there’s a race to the bottom in dodginess.”
One potential fix is a broad ban on unfair trading practices written into law, Leigh suggested.
“If you have a broad prohibition of unfair trading practices, you can capture a lot of what people are trying to argue for in a code,” he said.
Speaking to SmartCompany, Leigh said the federal government “couldn’t be more engaged” on the matter, citing its focus on international jurisdictions to bring overarching bans into law.
Australians can expect “announcements to come on precisely what we’re going to be doing” in the coming months, he added.
The continual ability for businesses to ‘rip off’ customers comes despite recent legislative action from the Albanese government.
It has already overseen the passage of laws banning unfair contract terms between big businesses and their smaller suppliers, and installed legislation bumping the maximum penalty for corporations engaging in anti-competitive behaviour up to $50 million.
A separate Treasury consultation is currently investigating how fine-print clauses used by online travel booking platforms can influence the rates offered by small accommodation businesses.
Beyond talk of that broad ban, Leigh also indicated the federal government is focused on ‘dark patterns’ — tactics used by digital platforms to unfairly influence customer behaviour and steer Australians away from small business.
“Dark patterns are subtle design tricks used by companies on their websites,” Leigh said.
“These patterns deliberately trick users into doing things they did not mean to do. Or they discourage behaviour that’s bad for the company.”
Such examples include labyrinthine subscription cancellation processes, low-stock warnings on e-commerce sites, and false countdown timers.
They can even be utilised against small traders, Leigh said.
Search engine manipulation can constitute a dark pattern, he said, “such as when food delivery companies impair the ability of restaurants to attract customers by ensuring the delivery company’s site appears above the restaurant’s in internet searches”.
While the federal government appears quite keen to stamp out unfair trading practices with a blunt legislative instrument, clamping down on ‘dark patterns’ may require more finesse, he said.
“We’re certainly aware of the problem of dark patterns,” Leigh continued.
“How to tackle it is the open question.”
The ACCC’s ongoing Digital Platforms Inquiry has raised the prospect of both a ban on unfair trading practices and platform-specific regulation.
“We’re open minded about both of those approaches to tackling dark patterns, but they’re clearly invidious in their effects on competition and widespread in the online world.”
Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
