Consumers Essay: How effective is consumer law in achieving justice for consumers?

Consumer law is generally highly effective at achieving justice for consumers as it has been able to
keep up with the changing society through decades of alteration and modification, successfully
achieving justice for consumers in most cases. There are numerous government bodies which seek
to educate the community, provide financial and time economic options for consumers with disputes
and oversee the compliance to regulations – removing much of the reactive nature of the law.
Although the majority of the law is effective, the judicial system somewhat contravenes this
somewhat as those who are forced to fight for justice through its system can be abused by
resourcefully superior corporations. Legislation lays the foundations for an efficient legal system
with many different avenues, allowing consumers to purchase items or enter into contracts in a
better frame of mind, knowing that the law can efficiently protect them.

Legislation sets the foundation that is used to successfully achieve justice for consumers. On 1
January 2011, the Australian Government removed much of the confusion in consumer law in
different states by compiling all state consumer legislation into the Competition and Consumer Act
2010. As well as allowing separate bodies to make regulations dictating the way different types of
businesses run, the Act lists the types of conduct which are illegal for every business, including
product safety, consumer guarantees, misleading and deceptive conduct, sales practices and unfair
contract terms. Legislation is therefore extremely important in the fight to achieve what is just for
consumers.

One government body consumer law has introduced to promote justice is NSW Fair Trading which
firstly provides advice and education to the community, secondly ensures compliance to the law and
thirdly aids in dispute resolution by offering investigative and mediatory services. The high demand
for Fair Trading’s educatory system manifested itself in the 8.4 million1 requests for services last
financial year. There are nearly 10002 staff members working for Fair Trading, based across NSW,
who help in over-the-counter enquiries or running the organisation, promoting its functionality. By
educating the population, Fair Trading reduces the number of disputes that would otherwise end in
a long, costly dispute process or injustice to consumers. To ensure that businesses comply with the
law, Fair Trading can administer, deny or remove licences from businesses. Using its own discretion
to filter out businesses that could be a potential threat to consumers diminishes the reactive nature
of consumer law. Fair Trading was involved in nearly 35’0003 compliance related activities last
financial year, evidence of its important role. In just one of these cases, from April 2012, Fair
Trading NSW finned Mr Ezzeddine of “AAA Ezzecrete Concreting” $61,486 for representing that he
was prepared to do residential building work, while unlicensed4; totalling six breaches of section
5(2)(a) of the Home Building Act 1989. If a conflict arises, Fair Trading is willing to assist in the
dispute process by either talking to one party on the behalf of another or offering its effective
mediation service to both parties. In cases where the issue will not be solved through negotiation or
mediation, Fair Trade NSW can refer the matter to the Consumer, Trader and Tenancy Tribunal
(CTTT) for further assistance.

The CTTT was established by the Consumer, Trader and Tenancy Tribunal Act 2001. The aims of
the CTTT, outlined in the act, are to be an effective alternative to the costly, time consuming and
confrontational nature of court, as well as being informal but still making equally fair decisions. A
consumer can bring a matter to the CTTT for as little as $35, or $5 for students and pensioners,
allowing consumers to access the law. Initial mediation and conciliation at the CTTT is mandatory,
but failing that, a tribunal can be called where a binding judgement will be made, usually within the
day, preventing consumers from taking excessive time off work. There is a large demand for justice,
that the CTTT efficiently delivers, as last financial year, the CTTT had nearly 60’000 applications,
over 70’000 hearings and nearly half a million website visits5 that holds copious amounts of
information. In one dispute case, the Tribunal heard that a family hired a removalist, but in transport
several items were badly damaged, so the consumer applied to the CTTT.
The Tribunal Member found that under the then relevant Trade Practices Act 1974, there was an
implied warranty of due care which does not need to be explicitly stated. Although the husband
valued the damage himself at $12’000, the Member considered $6’0006 to be the appropriate
balance between what may have been the actual value and the liability of the removalists. This
shows that not only is the CTTT effective at achieving access and equal judgements for consumers,
it also finds the best balance of what is fair between both parties.

Although the Australian Competition and Consumer Commission (ACCC) has less direct interaction
with consumers than the CTTT, its indirect effect on the lives of consumers can be profound if the
Commission actively seeks to deliver justice to consumers. One example of this is the recent Apple
iPad 3 which was advertised in Australia as “iPad with WiFi + 4G”, despite the ACCC’s warning
letters prior to release that it was misleading and deceptive conduct in suggesting that the iPad
worked with current 4G networks in Australia, when it did not. Apple was ordered to place stickers
and signs that explained it was not compatible with the current 4G networks and offer complete
refunds to unsatisfied customers who had already purchased it. Although the ACCC was successful
in protecting consumers in this situation, it is not always motivated to amend situation with the best
interests of consumers in mind. This can be seen in the ACCC’s involvement in FOXTEL
Management Pty Ltd’s Christmas Sale advertising campaign. The campaign included a prominent
headline stating that customers could acquire a FOXTEL subscription for $55 per month on a six-
month contract, however an asterisk directed them to fine print terms, indicating it was a lock-in
contract for 12 months. The ACCC issued seven infringement notices totalling $46’2007, but did not
demand FOXTEL give consumers the option to cancel the contract. As the ACCC is funded on
infringement fines as well as Government funding, it can be argued that in some occasions the
Commission is motivated for a larger pay cheque before complete justice for consumers.

On a different note, common law is a method whose effectiveness differs from reasonably fair, but
highly inaccessible, to extremely unjust. Philippe de Buck, Director General of BUSINESSEUROPE
says ‘For consumers, the judicial route will always remain slow, complex and expensive’, and
encourages consumers to ‘settle out of court’ for smaller matters8. One case which was beyond the
help of tribunals was the decade long case of McCabe v British American Tobacco. Mrs McCabe
contracted terminal lung cancer and sued the company for supplying her with their products but
failing to inform her that it was addictive and deadly. BAT took advantage of the costly and time-
consuming nature of the court system by prolonging the case and appealing against every
judgement, knowing that Mrs McCabe would lose her battle with the cancer or exhaust her finances
before reaching the High Court. Mrs McCabe passed away after being awarded $700’000 in
damages from the Victorian Supreme Court, leaving what she didn’t spend to her children. BAT
appealed the case after her death and successfully reclaimed the $700’000 and all legal fees from
throughout the cases, forcing the McCabes to sell their houses, financially crippling them. The
judicial system was extraordinarily unjust for the McCabe family as they were forced to pay
significantly more than they inherited from their mother’s unsuccessful dispute that they were
uninvolved in. Furthermore, their mother had to waste what little time she had left fighting for what
she believed to be right. Although still costly and time consuming, in the case of Commercial Bank
of Australia Limited v Amadio (1983), justice was eventually delivered. In this case, an elderly Italian
couple with little understanding of written English guaranteed the son’s indebtedness to the bank for
his loan. Their son misled them as to the extent of the guarantee, and the bank did little to explain to
the parents the huge risk they were running. The High Court found in a 3-1 majority that it was
unconscionable for the bank to rely on this guarantee as the Amadios had minimal access to the
law and the bank was aware that the son’s business would almost definitely fail. Although the
Amadios were successful in nullifying the contract, they still took the matter all the way to the High
Court, costing them excessive time, money and stress. Although there are still significant,
complicated flaws that need to be addressed for consumer law to be completely effective, the
Australian Government has still made a substantial improvement from when ‘caveat emptor’ was the
primary consumer related law. In circumstances where individuals face no option but to take the
matter to court, the outcome can be grossly unjust and the means oppressively expensive and time
consuming.
Consumer law is usually very effective at achieving justice as it has provided consumers with a
variety of different methods which both prevent disputes arising and resolving conflicts fairly and
equally. Government bodies are the most effective method as they educate the community, enforce
compliance with businesses and help resolve disputes. Legislation contributes to the effectiveness
as it sets the foundation for how these bodies can interact with consumers and businesses. The
judicial system degrades the effectiveness of the legal system in its entirety as it provides very
limited access through its long and costly processes and, although some judgements are fair, others
are vastly unjust. Despite the ineffectiveness of the courts, the system in its entirety is still highly
effective at achieving justice for consumers.

1
Fair Trading – A Year in Review 2010-2011
2
Fair Trading – A Year in Review 2010-2011
3
Fair Trading – A Year in Review 2010-2011
4
Fair Trading Media Releases – $61,486 fines and costs order or unlicensed concreter
5
CTTT – 2010-2011 Year in Review
6
CTTT General Division Case Study – Removalists
7
ACCC Media Centre – FOXTEL pays infringement notices for Christmas sale advertising
8
BEUC Topic of the Month – Collective Redress