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The Australian Competition & Consumer Commission (ACCC) is reporting a significant uptick in the number of small businesses seeking guidance from their office regarding their legal rights and obligations.
According to its latest Small Business in Focus report, the number of contacts from small businesses increased to more than 3400 in the second half of 2020, and enquiries about those businesses’ legal rights and obligations jumped 30 per cent. Overall, small business enquiries to the ACCC increased 60 per cent in 2020 compared to the previous year, with small businesses seeking information about their obligations to consumers during the COVID-19 pandemic.
The ACCC also reported that it brought a number of small business and franchising cases before the courts in the second half of 2020, including those relating to food and beverage franchise Retail Food Group and courier franchise Megasave.
“We currently have a number of important cases before the courts that highlight some of the problems the small business and franchising sector faces,” ACCC Deputy Chair Mick Keogh said.
Reports of potential misconduct were down slightly in July to December 2020 but the ACCC still received almost 2000 total complaints from small businesses, with one-third relating to incidences of misleading conduct and false representations by other businesses.
“The last 12 months have been incredibly difficult for many small businesses but it is pleasing that we have received fewer reports of misconduct from businesses and more requests for information about legal obligations and protections,” Keogh said.
Keogh said that 70 per cent of all businesses that contacted the ACCC in the second half of last year were micro-sized businesses with four staff or fewer.
“Many of these businesses have limited resources and are vulnerable to misconduct from larger suppliers, so it is important that they understand they have certain protections under the Australian Consumer Law,” he said.
It is reported that the Federal Government is in the process of enacting reforms that will strengthen existing unfair contract term protections in the Australian Consumer Law. The proposed changes include prohibiting and imposing civil pecuniary penalties for including unfair contract terms in small business and consumer contracts, expanding the definition of ‘small business’, and removing the contract value threshold.
“The ACCC has been advocating for a number of years for changes to the current unfair contract term law as it has some major limitations,” Keogh said. “The business-to-business unfair contract term law is a very important law for small businesses and we hope to see new, stronger laws come into effect later this year.”