Carol Berry (Whitlam, Australian Labor Party) Share this | Hansard source

Last month, I joined the Assistant Minister for Productivity, Competition, Charities and Treasury, Andrew Leigh, in the Mural Hall where he announced that the Albanese Labor government would introduce new laws to ban unfair trading practices. I wanted to attend that media conference and to speak on this bill today because I know these practices can cause frustration and even harm to consumers across the country, including in my electorate of Whitlam.

Australians are fortunate to have many options when they decide to make purchases or subscribe to services. They can do this in person, in a shop or online through their laptop. Most businesses do the right thing; however, too many use practices that can pressure, trick, confuse or trap consumers. Australians increasingly make purchases or sign up for subscriptions online. While online transactions can make consumers' lives easier, there are also serious downsides. Consumers may be pressured into making a purchase because a countdown timer warns them that only a few of their chosen items are left in stock, when actually there are still plenty available. They find what looks like a bargain when they get to the checkout and discover a fee or a charge has been added to their purchase at the last minute, and it's no longer of such good value. Or they find that, although they were able to subscribe to a service online, they are unable to unsubscribe without making a phone call to a person who is then very difficult to connect with. Many aspects of an online purchase may seem benign, but this is not always the case. Smart businesses understand the significance of every button, prompt, colour, timer and default setting. Each of these is adjustable, and every click is measurable. The online world is optimised for engagement, retention and revenue.

More than half of reported consumer problems now occur in relation to online purchases. One in 10 people say that an online provider has manipulated their choices, while more than a quarter encountered unexpected charges added late in the transaction. That is why this bill is needed. It amends the Competition and Consumer Act to reflect the realities of how Australians buy, compare and subscribe in today's world. It responds to concerns that certain harmful business practices, particularly in digital and subscription based markets, may not be adequately addressed by Australia's existing consumer law prohibitions on misleading or deceptive conduct, unconscionable conduct and unfair contract terms. And it explicitly targets conduct that manipulates consumers or distorts the conditions under which transactional decisions are made, including through what is known as dark patterns. 'Dark patterns' is a term used to describe design techniques that are crafted to influence behaviour in ways that benefit businesses at the expense of consumer understanding. These techniques exploit well known cognitive biases, including loss aversion, optimism bias, inattention and fatigue.

The Competition and Consumer Amendment (Unfair Trading Practices) Bill delivers three important reforms. It introduces an economy-wide prohibition on unfair trading practices, it stops drip pricing, and it ends subscription traps. Its key features include ensuring that businesses disclose key terms up front, give reminders before free trials end, make cancellation simple and show all mandatory fees clearly before consumers buy.

The first major reform in this bill is the introduction of an economy-wide prohibition on unfair trading practices. Remarkably, this prohibition does not currently exist in Australia. The bill stipulates that businesses must not manipulate consumers or unreasonably distort the environment in which consumers make or are likely to make decisions in circumstances that cause or are likely to cause detriment. This principles based test captures conduct that does not neatly fall within the existing prohibitions on misleading conduct or unconscionability but which nevertheless exploits behavioural biases, overwhelms consumers with complexity or structures choices in a way that leads people towards decisions they would not otherwise make.

The bill helpfully includes a non-exhaustive list of examples of practices that may contravene this new prohibition. These include impeding a consumer's ability to engage legal rights or seek legal remedies; failing to disclose material information to the consumer; disclosing material information to the consumer in a way that is complex, ineffective, unclear, unintelligible, ambiguous, untimely or overwhelming; and creating an environment, including by using design elements in digital interfaces, that places unreasonable pressure on a consumer or that obstructs the consumer from making or fulfilling their decision.

These examples are provided to help businesses understand where the line is drawn without restricting ordinary, legitimate commercial behaviour. It's important to note that this general prohibition is not about stopping businesses from promoting their products, nor is it about stopping advertising. It's about dealing with conduct that crosses the line from persuasion into manipulation—conduct that harms consumers and undermines fair competition.

Another major focus of this bill is drip pricing. This term describes the practice of displaying a low upfront price and then, after the consumer has progressed through several steps of the online process and often not until they've reached the final checkout stage, suddenly adding mandatory transaction or service charges. By that stage, many consumers have invested a significant amount of time comparing options, and they are mentally committed to the purchase. When the final price appears, they are reluctant to walk away from the transaction.

Drip pricing is intensely frustrating. The price originally seemed reasonable, even a great deal, but then new fees appear at the very last step. This technique is used by businesses because it taps into well understood behavioural tendencies. People anchor on the first price they see, and, once they've invested effort in reaching the final stage of the transaction, they are less inclined to abandon it, even when new information would have changed their initial decision. This bill requires businesses to disclose mandatory transaction based charges at the same time that they display the base price. There should be no artificially low headline prices and no last minute surprises. By ensuring any per-transaction fees and charges are clearly displayed, the new laws will make consumers aware of the real price of a product or service, enabling them to make purchasing decisions that are more informed. It's important to note that the bill does not prohibit transaction fees; it just prohibits hiding them. It will also ensure that businesses that do the right thing are not disadvantaged by competitors that conceal the true cost until the final step.

The third major area of reform in this bill addresses another great source of consumer frustration: subscription traps. Subscription services have become an increasingly common way for Australians to pay for products and services, and this model often works well for both businesses and consumers. However, problems arise when the subscription is structured so that joining is swift and effortless while leaving involves added frictions or becomes confusing or emotionally loaded. That imbalance is what turns an ordinary subscription into a subscription trap. Too often, subscriptions are designed to capitalise on the assumption that consumers will forget to cancel free trials, will not notice renewals, or will struggle to find the cancellation pathway.

The Consumer Policy Research Centre found that three in four Australians have had a negative experience when trying to cancel a subscription. One in three felt pressured to continue their subscription, and one in 10 gave up trying to cancel and kept paying for a service they no longer wanted or needed. Some even resorted to cancelling their credit card or a bank account just to get rid of the recurring subscriptions. The estimated detriment from spending on unwanted subscriptions by Australian consumers is an extraordinary $971 million per year. This bill directly addresses these problems with subscriptions. It stipulates that businesses must clearly disclose to a consumer that is entering a subscription what it costs, how long it runs, how it renews and how it can be ended. This information must be provided prominently and in a way that is easy to understand.

The bill also establishes a framework for reminder notices, ensuring that consumers receive timely, sensible prompts when a trial period is ending or a renewal is approaching. Cancellation must be straightforward. It must be easy to find, and it must require only the steps that are reasonably necessary.

I note the amendments in this bill will not commence until 1 July 2027, which is just over a year away. This will allow businesses time to understand the new obligations and adjust their practices accordingly. The Australian Competition and Consumer Commission will develop guidance materials on the operation of the new laws, and the government will undertake a review of the first two years of operation of the subscription provisions to ensure the protections are working as intended.

The Albanese Labor government is committed to ensuring strong protections for Australian consumers, and this bill is part of a wider agenda to strengthen competition, improve transparency and support consumers across the economy. Strong consumer laws ensure Australians are treated fairly and protected against misleading conduct, unsafe products and unfair practices. Stronger competition is also essential to easing cost-of-living pressures. The Albanese government has legislated the most significant overhaul of Australia's merger laws in 50 years, ensuring that large mergers are properly assessed before proceeding and that anticompetitive acquisitions do not escape scrutiny.

We've increased funding for the Australian Competition and Consumer Commission by more than $30 million, enabling stronger action against misleading pricing tactics, particularly in supermarkets and other consumer-facing markets. We have outlawed unfair contract terms and, for the first time, have given the Australian Competition and Consumer Commission and the Australian Securities and Investments Commission the power to seek penalties against companies that breach these laws.

We are strengthening the unit pricing code and cracking down on shrinkflation. Australians will be able to see clearly when the contents of a product have been reduced, even if the sticker price remains the same. We've made the Food and Grocery Code of Conduct mandatory, backed by strong penalties that prevent supermarkets from using their market power to unfairly squeeze suppliers and farmers.

Penalties matter, and that is why we have increased the maximum penalties under the Competition and Consumer Act from $10 million to $100 million. Stronger sanctions ensure that businesses of all sizes face meaningful consequences for conduct that undermines fairness and that breaches of consumer law cannot be dismissed as a mere cost of doing business.

Across the labour market, Labor's reforms to non-compete clauses and other restrictive practices will help improve job mobility and productivity, and the right to repair is being extended to agricultural machinery, ensuring that farmers have a genuine choice in how they service their equipment.

Through a revitalised National Competition Policy supported by the $900 million National Productivity Fund, the federal government is working with states and territories to remove planning and zoning barriers that make it difficult for new entrants to compete. Together, the Albanese government's range of reforms is strengthening competition, enhancing productivity and contributing to a fairer marketplace.

It's important to note that unfair trading practices don't only affect individuals. Small businesses and franchisees often face the same vulnerabilities when dealing with larger suppliers. That is why this government is consulting on extending unfair trading protections to small businesses, including those in franchising.

In conclusion, I support this bill because banning unfair trading practices, cracking down on drip pricing and cleaning up subscriptions will strengthen protections for Australian consumers and support better functioning markets. These reforms will help make Australia a market where good businesses thrive by doing the right thing. They will also restore confidence that online markets can work on straightforward terms where prices are what they seem and leaving a service is as simple as joining it. They will protect consumers not only from outright deception but also from the kinds of subtle, cumulative influences that can undermine genuine choice. For all these reasons, I commend this bill to the House.

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