How often have you had trouble cancelling a subscription to a streaming video site or some other service? When you’re trying to do something online, how often have you ticked a box to say you’d read the terms and conditions, when you hadn’t?
I do it all the time. And my guess is that almost everyone else does too. Why? Because the site won’t let you get on with making a restaurant booking or buying something until you do.
You don’t have the time to read the terms and conditions, which probably run to several pages of fine print. And how would you benefit if you did? It will be written in legalese – by lawyers, for lawyers.
What little you could understand would give you a clear impression: you have few rights, but the company has loads. Ah, it was written by the company’s lawyers to cover its backside, but not yours.
Say you were mad enough to wade through all that guff. Can you imagine the reception you’d get if you rang the company’s call centre and told someone in Manila that you’d like them to explain what term 3(b) means, and could they strike out clause 9(f) because it’s unacceptable?
No, it’s a take-it-or-leave-it deal. The company knows you won’t have read or understood the terms and conditions, and it doesn’t care. All it wants is to be able to tell the judge you said you had, so you’ve got no grounds for complaint.
But can companies really get away with those kinds of stunts? Are the unfair conditions they write into their contracts legally enforceable? In most rich economies – even the US – no they’re not.
And in Australia? In a speech last week, Dr Andrew Leigh, Assistant Minister for Competition, gave the answer: maybe, maybe not.
He told a small business conference that those leasing printers from Fuji Xerox may have received notification that certain terms in their contracts were void.
That’s because, on application by the Australian Competition and Consumer Commission, last August the Federal Court found that 38 contract terms in 11 of Fuji Xerox’s small business contracts were void and unenforceable. These included ones providing for automatic renewal, excessive exit fees and unilateral price increases.
You may not know that the commission protects small businesses as well as consumers. Leigh reminded us that one of the government’s first acts last year was to prohibit the use of unfair terms in standard-form contracts.
From November this year, the commission and the Australian Securities and Investments Commission can ask the court to fine big businesses that try to push small businesses around in this way.
But unfair contract terms are one thing; unfair trading practices are another. Although the Australian Consumer Law bans several specific unfair practices, there’s no general ban on them. The government is working on this.
One form of unfair trading practice is the “dark patterns” used by companies on their websites. Leigh says these are subtle tweaks in the way sites are designed, intended to trick users into doing things they didn’t intend to do. They discourage consumers from doing things that would reduce the company’s sales.
Efforts to make it hard for you to unsubscribe from digital streaming services are so notorious the Norwegian Consumer Council wrote a whole paper about them, Leigh said.
It compared how hard it was to sign up for Amazon Prime with how hard it was to cancel a subscription. “Consumers who want to leave the service are faced with a large number of hurdles, including complicated navigation menus, skewed wording, confusing choices, and repeated nudging,” it found.
(What I found, before I switched to the ordinary taxis’ app, was how hard it was to cancel a ride with Uber, even though drivers were playing pass-the-parcel with your order. And how hard it was to query a surprisingly high fare, only to have my complaint considered and dismissed in a nanosecond.)
The commission lists other examples of dark patterns: false reminders such as low-stock warnings and false countdown timers, preselected add-ons to what you purchased, and illogical colours, such as a red button for yes and a green button for no.
Then there’s the manipulation of search engines, such as when food delivery companies impair the ability of restaurants to attract customers by ensuring the delivery company’s site appears above the restaurant’s in internet searches.
There’s nothing new about unfair trading practices. But, with the law as it stands, the commission has had mixed results getting firms prosecuted. It alleged Medibank had engaged in misleading conduct in what it told members about its benefits. The Federal Court said Medibank had acted “harshly” and “unfairly”, but still ruled against the commission.
In another case, the commission was unsuccessful in bringing an action against a vocational education and training provider that used door-to-door selling in disadvantaged communities, promising students a free laptop, and promising the courses were free if the students’ earnings stayed low. Such behaviour was found not to breach the act.
The US, European Union, Britain and Singapore simply prohibit unfair trading practices. The US, of all places, has been doing it since 1938.
The Albanese government is working on plans to do something. Leigh says the government knows that effective competition depends on strong safeguards for households and small businesses.
“When laws allow a firm to get away with ripping off consumers, it can create the wrong competition incentives. Other firms in the market see bad behaviour go unpunished and protect their own patch by employing the same dodgy tactics. Soon enough there’s a race to the bottom in dodginess,” he said.
Consumer protections are intended to improve the wellbeing of consumers – and small businesses. But consumer protections also foster effective competition.
They help drive a race to the top in service quality. “But that race to the top can only occur if there’s enough competition,” Leigh said.
True. So, what we also need is stronger merger laws.
