Are Australia’s consumer protection laws allowing predatory businesses to flourish?
Predatory businesses that systematically take advantage of vulnerable consumers are far too common. While most commerce in Australia is conducted fairly and in a way that benefits consumers, there are still many businesses that take advantage of the poorest and most vulnerable in our community.
There are a range of possible legislative responses to predatory business behaviour. Governments can introduce ‘bright line’ rules that regulate specific business practices, such as payday loans or door-to-door sales. However, general protections that are ‘standards-based’ are important as well — the most relevant being the prohibitions against misleading and deceptive, and unconscionable conduct, in various consumer laws.1 Standards-based rules help to fill the gaps left by bright line rules, which often struggle to keep pace with emerging predatory business models.2
These core consumer protections have enabled effective enforcement action against some very sharp business practices. However, some unfair business models continue to flourish. This article examines some of the common unfair business models in today’s marketplace and the role of our existing consumer laws. In particular, the article considers the core prohibition designed to protect vulnerable consumers — the prohibition against unconscionable conduct. The article argues that this prohibition, based on equitable principles around conscience and morality, is outdated in today’s modern services-driven economy. A new prohibition on unfair trading, drawing on similar laws in the European Union (‘EU’) and the United States (‘US’), may be more effective at tackling these business models.