Emerald Chamber of Commerce Inc

Jail needed to protect consumers from scam artists, government told

Patrick Hatch - June 3, 2016

New laws that ban "unfair" business practices and could send repeat rip-off artists to jail are needed to end Australia's status as a shyster's paradise, consumer advocates say.

The Consumer Action Law Centre has used a major federal review of consumer law to call for new measures it says would bring Australia into line with nations such as the United States and Britain.

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"We're seeing that particularly predatory businesses are pretty easy to establish in Australia and get away with," Consumer Action chief executive Gerard Brody said.

Mr Brody said financial penalties alone were not enough to stop some scammers. Provisions in NSW law allowing for jail time after repeated consumer law violations needed to be expanded nationally, he said.

Consumer advocates say financial penalties are not enough to protect the public.

Consumer advocates say financial penalties are not enough to protect the public. 

Breaching consumer law can result in 14 years' jail in Canada, five years in Japan and two years in the UK.

"We think that having the risk of prison time would be a key way to focus the mind of directors or managers of companies that seek to repeatedly take advantage of vulnerable consumers," Mr Brody said.

In its submission to the legal review, Consumer Action also calls for laws to move their focus from "unconscionable conduct" to outlawing businesses that are inherently unfair and exploitative.

It highlights hair loss clinics and so-called "debt management" firms as businesses that could be investigated if unfair trading laws were introduced.

"We think that 'unfair' is a much clearer notion than 'unconscionable conduct', and it's something that's been introduced and implied in the UK and Europe and the United Sates – they all have prohibitions against unfair business practices," Mr Brody said.

"Our law for too long has focused on transparency … [but] even people with high levels of literacy don't always read the terms of a contract.

"We need to move away from that philosophy around disclosure to be one more around fairness and safety."

Consumer Action's submission to the review also calls for a ban on unsolicited sales, such as door-to-door sales and cold-calling, and for the establishment of a Retail Ombudsman to resolve small disputes between businesses and their customers.  

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