Assistant Minister Andrew Leigh is cracking down on subscription traps and hidden fees. Photo: Michelle Kroll.
Draft legislation has been released to launch a nationwide crackdown on unfair trading practices involving hidden transaction fees and subscription traps.
Assistant Minister for Productivity, Competition, Charities and Treasury, Andrew Leigh, is making it his mission to go after shonky traders and ban dodgy practices that cost Australians millions of dollars each year.
In December, Dr Leigh promised to consult with stakeholders early this year on draft legislation before introducing the bill.
It was released on Monday (9 February), and the consultation period runs until 23 February.
The Assistant Minister said modern exploitative marketing techniques are outpacing existing regulatory frameworks, and as household budgets are increasingly squeezed, the government is updating the law to provide consumers with greater protections.
“Too many Australians have clicked ‘buy’ only to discover extra charges at the final screen, or found themselves locked into subscriptions that are far easier to start than to stop,” he said.
“These practices chip away at household budgets and undermine trust in the marketplace.
“With cost-of-living pressures front of mind, the government is acting to ensure the price consumers see is the price they pay.”
The draft laws would outlaw harmful business conduct that unreasonably manipulates or distorts consumer decision-making, and would also target subscription traps and hidden transaction fees.
Under the proposed reforms, businesses offering subscriptions in Australia would need to disclose key information to customers at critical points during a subscription and provide a clear, straightforward way to cancel.
Transaction fees must also be prominently disclosed so consumers are not surprised by unexpected costs at checkout.
Dr Leigh has given some examples of subscription traps, one being 24-hour gyms that offer immediate signups to their apps but make it far harder to opt out, with cancellations available only after many steps on a website.
Another example is a dating app that offers month-only subscriptions that auto-renew for longer periods and charges cancellation fees for early termination.
Drip pricing is another target area, which is when a low upfront price is displayed, but only after the consumer has progressed through several steps do additional mandatory per-transaction charges appear.
A drip pricing example is when concert tickets are advertised at a certain price and have a compulsory ‘service fee’ added at the last stage of the booking process.
Or a provider of home internet services advertising a competitive introductory rate for new customers, only to reveal further into the signup process that a significant set-up fee is added, contrary to how the service was promoted.
Commonwealth, state and territory ministers met late last year in Canberra and agreed on the need to introduce a ban on unfair trading practices that reflects a shared judgment across jurisdictions.
The ministers said the current framework was no longer keeping pace with how commerce is conducted.
They agreed that Australians should be able to understand what they are paying for, rely on the information presented to them and exercise a genuine choice to enter or leave a service.
Dr Leigh said on Monday that the legislative reforms would equip Australian consumer law regulators with a powerful new tool to protect consumers making purchasing decisions, whether in-store or online.
“The proposed ban has strong backing from state and territory governments, and the Commonwealth thanks consumer ministers and officials for their continued collaboration in progressing the reform,” Dr Leigh said.
“Stronger competition is essential to easing cost-of-living pressures. This work forms part of the government’s broader agenda to deliver fairer outcomes for consumers.”
Other measures include strengthening consumer protections through new prohibitions and penalties that reinforce consumer guarantees, improve supplier accountability, and continue rolling out the Scams Prevention Framework.
Submissions on the draft legislation on hidden fees and subscription traps can be made via the Treasury Consultation Hub.
