Consumer Protection
The need for consumer protection:
Most consumers know what it means to be given ‘a fair go’. It means being treated justly
and honestly. For example, when you buy a product it should be of good quality, a sales
assistant should not give you misleading information and once you have signed a
contract all parties must abide by the terms and conditions.
The majority of businesses are trustworthy, honest and act ethically: that is, they
conduct their operations in a fair and morally right manner. Occasionally, however,
consumers are not given a fair go in the marketplace. It is for this reason, state and
federal governments have passed laws that are designed to protect consumers in the
marketplace. Two crucial pieces of protective legislation are the Competition and
Consumer Act 2010 (Cwlth) and the Fair-Trading Act 1987 (NSW).
Under the Competition and Consumer Act, an unconscionable act by a seller is any practice
that is just not reasonable, such as scams and rip-offs. Such an act is illegal and some traders do it to gain an unfair
advantage over the unsuspecting consumer. Every year, 1 in 20 Australians fall victim to some type of scam. These
people lose millions of dollars and sometimes their identities. The aim of any scam is to trick you into giving away
money or your personal details. Get-rich-quick schemes, fake lotteries and miracle health cures are some of the
favoured methods used by scammers to rip off people. Scammers are creative and manipulative and try new versions
of scams. As a wise consumer, you need to be aware of these unethical techniques so you can protect yourself from
such practices. Remember the golden rule to help you beat scammers: ‘If a deal sounds too good to be true, it probably
is.’
Common Scams and Rip offs
False and Misleading Advertising:
Two of the most common false and misleading advertising techniques are:
• Bait and switch advertising. This involves advertising a
few products at reduced and, therefore, enticing prices
to attract customers. When the advertised products
quickly run out, customers are directed to higher priced
items.
• Misleading advertising. Some advertisements use
words that are deceptive or claim that a product has
some specific quality when it does not. Such actions
convey a false impression of the exact nature of the
product.
Referral selling
This illegal technique offers the consumer a ‘special deal’ if she or he buys the product and then supplies the
names of potential customers to the trader. The ‘special deal’ usually takes the form of a discount or
commission, which is not always paid.
Unordered or unsolicited goods
This practice involves sending unordered goods through the mail and then demanding payment for them.
The Competition and Consumer Act 2010 protects you from having to pay for these goods. You should write
to the trader, explaining where the unordered goods can be picked up. The goods become your property
after one month of mailing the letter. If you do not write, then the goods become your property after three
months. You must not use the goods during this period.
Special prizes and offers
You scratch the prize coupon to discover you have won a ‘mystery’ prize. When you
go to collect your prize, you are told you can receive it only if you purchase a certain
number of goods. As a consumer you should be careful of any deal that involves free
gifts, prizes, lucky numbers or ‘free deals just for you’.
Get-rich-quick schemes
In this type of scam, a letter or email arrives offering you the chance to participate in the transfer of money
from another country. For your help, you will receive a percentage of that amount. However, you are
required to supply your bank account details for the transaction to occur, giving the scammer the
opportunity to steal your money.
Pyramid schemes
The chain letter is the most common form of this type of scam. You are required
to pay a joining fee with the opportunity of earning quick and easy money as
you recruit new members. However, most participants will lose their money.
ACTIVITIES
Using your laptops, research and complete the following activities in your books:
1. Define the following terms:
- Unconscionable act
- Scams
- Rip offs
2. State the purpose of both of the following protective legislations:
- Competition and Consumer Act 2010
- Fair Trading Act 1987
3. Read the following article by accessing the link below about Reebok Australia’s alleged false and
misleading advertising and answer the following questions:
(a) What did Reebok claim about their product?
(b) What responsibilities that Reebok have when claiming things about the product?
(c) What actions have resulted?
(d) Why do you think such actions were misleading?
http://www.adnews.com.au/news/reebok-to-pay-350-000-for-false-and-misleading-
representations
4. Read the following case study and complete the following questions
(a) Why do you
think Jamie
was vulnerable
to this type of
scheme?
(b) What advice
would you give
Jamie to
ensure he does
not fall for
similar scams?
