Mackay Chapman August 2023 ACCC Update

In this month’s ACCC update:

• The Federal Court has imposed record penalties of $438m against former vocational college Phoenix Institute of Australia Pty Ltd (Phoenix) and its marketing arm Community Training Initiatives Pty Ltd (CTI) in proceedings brought by the ACCC and the Commonwealth;
• A new scam targeting customers of loyalty points programs with large, well-known Australian companies has been detected by the National Anti-Scam Centre;
• The National Anti-Scam Centre held its inaugural Advisory Board meeting in July marking the commencement of greater cross-sector collaboration in the fight against scammers; and
• Draft guidance is released explaining the obligations under the Australian Consumer Law which businesses must comply with when making environmental and sustainability claims.

‍Record penalties of $438m ordered against Phoenix Institute and CTI for acting unconscionably and misleading students

The Federal Court has imposed record penalties of $438m against former vocational college Phoenix Institute of Australia Pty Ltd (Phoenix) and its marketing arm Community Training Initiatives Pty Ltd (CTI).

The penalties were imposed for systemic unconscionable conduct and misleading students into thinking the vocational courses they were enrolling in were free and that they would receive “free” laptops when this was not the case.

Phoenix was also found to have failed to properly assess language, literacy, numeracy and computer skills of its many vulnerable and disadvantaged students to determine if they were suitable for the courses.

Most students were enrolled in two courses at the same time, leading to significant debts. On average, students incurred a debt of about $37,000 each, totalling more than $350 million in debts under the former VET FEE-HELP scheme.

Phoenix received more than $106 million in Commonwealth funding under the VET FEE-HELP scheme, and claimed an additional $250 million for students enrolled in its courses between January and November 2015.

The Court found the vast majority of students had no reasonable prospect of completing the courses. Only nine of Phoenix’s more than 11,000 students completed a course, and none completed two courses.

The penalties imposed on Phoenix and CTI are the largest ever imposed by the Federal Court for unconscionable conduct.

Read more here.

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‍Scam alert - new scam targets customers of loyalty points programs

A new scam is targeting customers of loyalty points programs with large, well-known Australian companies. 

The scam involves text messages or emails that state that the customer's loyalty points are expiring. The messages include a link to a fake website that prompts customers to login or provide credit card details. Scammers steal customers' points, login details, and personal information.

The scam is targeting customers of Qantas Frequent Flyer, Telstra, and Coles loyalty programs.

Scammers are using the fear of loyalty points expiring to panic consumers and trick them into clicking on links.

The National Anti-Scam Centre is working to take down the fake websites and protect consumers.

Read more here.

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National Anti-Scam Centre brings together cross-sector leaders to stop scammers

The National Anti-Scam Centre (NASC) held its inaugural Advisory Board meeting in July. The Advisory Board is made up of senior leaders from government, industry, consumer organisations, victim support services, and law enforcement.

The NASC Advisory Board will support and inform the NASC's work to disrupt scammers and reduce the impact of scams on consumers and businesses.

As scammers become increasingly sophisticated in their tactics, a coordinated response across government, law enforcement, and the private sector is essential to combat scams more effectively.

The NASC Advisory Board will enable the government to work with key industry sectors and consumer organisations to identify emerging scam and fraud issues, share information, and coordinate efforts to better protect consumers.

Members of the Advisory Board will play a key role in providing expert advice to the NASC by sharing their relevant experiences and intelligence to minimise the threat of scams.

The Advisory Board adopted a number of principles to guide their work together, including that consumers will be placed at the centre of considerations and that the NASC will seek to integrate existing initiatives and avoid duplication.

Read more here.

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Environmental and sustainability claims - Draft guidance for business

The ACCC draft guidance explains the obligations which businesses must comply with, under the Australian Consumer Law, when making environmental and sustainability claims.

It sets out what the ACCC considers to be good practice when making such claims, to help businesses provide clear, accurate and trustworthy information to consumers about the environmental performance of their business.

With the continuing rise in the importance of ESG criteria to consumers the guidance is an important step in the development of the regulatory framework around ESG disclosure and practice.

Read more here.

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‍The contents of this article do not constitute legal advice and it is not intended to be a substitute for legal advice and should not be relied upon as such.  It is designed and intended as general information in summary form, current at the time of publication, for general informational purposes only.  You should seek legal advice or other professional advice in relation to any particular legal matters you or your organisation may have.