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ACCC cracks down on misleading conduct in the digital economy

Corporate
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The Australian Competition & Consumer Commission (ACCC) has launched a string of high-profile proceedings against major online platforms in a crackdown on misleading and deceptive conduct in the digital economy.

In June 2022, the ACCC brought a Federal Court action against Airbnb for breaching both s 18(1) and s 29(1) of the Australian Consumer Law (ACL). The regulator alleges that Airbnb (both Airbnb, Inc. and Airbnb Ireland UC) made false or misleading representations to Australian consumers by displaying prices in US dollars on its booking platform. While in some cases small print was used to clarify that prices were in USD and not AUD, it's alleged this only occurred at late stages of the booking process, after consumers had already reserved their accommodation (at the higher USD price).

The ACCC's claim also alleges that Airbnb ignored thousands of customer complaints about the pricing issue and incorrectly informed some complainants that they had selected to view prices in USD.

By taking this action, we are stating very clearly that digital platforms like Airbnb need to ensure the accuracy of all statements that may affect consumers’ purchasing decisions,” said ACCC Chair Gina Cass-Gottlieb.

In April, the ACCC announced it had instituted proceedings against Uber B.V. (Uber), and that the ridesharing giant had admitted it had breached the ACL by making false or misleading statements and agreed to make joint submissions to the Federal Court for penalties of $26 million to be imposed. The false or misleading statements were:

  • sending messages to consumers telling them that they would be charged a cancellation fee, even though they were within Uber's free cancellation window; and
  • failing to monitor the algorithm that calculated estimate fare ranges for its "Uber Taxi" option, leading to inflated estimates being compared with Uber's cheapest ride

Ms Cass-Gottlieb explained that "online businesses often carefully design their user interfaces to influence consumer behaviour," and digital platforms needed to avoid making misleading statements to ensure consumers can make informed choices.

These cases follow world-first action by the regulator against Meta (formerly known as Facebook) for breaches of the ACL and the ASIC Act, after the social media giant failed to stop scam cryptocurrency advertisements appearing on Facebook. As explored by our Digital Economy team in March, some public figures had complained of their likenesses being used by the scams, and the ACCC alleged that the ads were likely to mislead Facebook users into thinking the crypto schemes were backed by these figures.

Taking action on 2022-23 priorities

Taking such strong action against digital behemoths like Airbnb, Uber and Meta highlights the ACCC's commitment to its 2022-23 enforcement and compliance priorities. Of the 12 priorities announced in March, two were specifically related to the digital economy:

  • consumer and fair trading issues relating to manipulative or deceptive advertising and marketing practices in the digital economy
  • competition and consumer issues relating to digital platforms

At the time of the announcement, then-Chair Rod Sims called out "a growing number of manipulative techniques" being used to "exploit or pressure" consumers in the digital economy. These included:

  • scarcity reminders
  • false sales countdown timers
  • interfaces that discourage consumers from unsubscribing
  • failures of influencers and comparison sites to disclose commercial relationships

"To realise the full benefit of online markets, consumers and businesses must be confident to engage online," Mr Sims said.

Familiar territory

The ACCC's latest court proceedings against digital platforms come as other cases involving similarly misleading conduct are resolved.

In April 2022, proceedings initiated in 2018 against online hotel comparison service Trivago were finalised when the Federal Court ordered the company pay penalties of $44.7 million for making misleading representations about hotel room pricing. This included the use of "strike-through" price displays on its website, which gave consumers the impression they were being shown a discounted room rate, which was often not the case.

In May, action taken by the ACCC in 2017 against ticket resale platform Viagogo AG reached its conclusion when the Full Federal Court upheld a $7 million penalty for breaches of the ACL. The Federal Court had previously found that Viagogo falsely represented itself as an "official" seller of certain event tickets, and failed to disclose additional fees until late in the booking process.

ACCC Commissioner Liz Carver stated that businesses "must clearly disclose if they charge additional, avoidable fees on top of the advertised price."

Renewed focus on digital platforms

In addition to various court proceedings, the ACCC participates in the Digital Platform Regulators Forum, alongside the Australian Communications and Media Authority, the Office of the Australian Information Commissioner and the Australian eSafety Commissioner.

The Forum first met in March, and last month released its first set of targets, being:

  • algorithms
  • greater digital transparency
  • increased collaboration between the Forum members

"The ACCC considers that the work of the Digital Platform Regulators Forum is key for our own work on digital platforms, particularly as we are currently reviewing whether there is a need for competition and consumer reform as part of our ongoing digital platforms inquiry," explained Ms Cass-Gottlieb.

The Forum's announcement aligns with some of the key findings in the fourth interim report of the ACCC's Digital platform services enquiry, which focuses on online marketplaces. These included concerns about:

  • a lack of transparency about how algorithms work and why they may lead to some products featuring more prominently than others on certain sites
  • the accuracy of online price comparison tools
  • the use of consumer data by online marketplaces contrary to the wishes of consumers

Takeaway

As the ACCC continues to make good on its promises to protect consumers engaging online , businesses should take stock of their current marketing tactics and ensure that deal comparisons, algorithms, targeted advertising and product and pricing displays are all serving, and not potentially misleading , would-be customers.

For expert guidance or more information on this topic, contact a member of Lander & Rogers' Digital Economy team.

Photo by Gilles Lambert on Unsplash.

All information on this site is of a general nature only and is not intended to be relied upon as, nor to be a substitute for, specific legal professional advice. No responsibility for the loss occasioned to any person acting on or refraining from action as a result of any material published can be accepted.

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