Penalties for non-compliance
What are the penalties for non-compliance?
Australian Consumer Law(ACL)
The ACL applies nationally and in all States and Territories, promoting fair trading and the protection of consumer rights and interests. The three key elements of the ACL are:
- A prohibition on misleading and deceptive conduct: A court may award damages where a person is found to have engaged in conduct that is in breach of this provision of the ACL. Conduct can include the making of representations in terms and conditions for, or advertisements promoting, trade promotions so it is important to ensure they are accurate and correct.
- The imposition of a number of statutory guarantees in relation to the supply of goods and services (eg guarantees as to due care and skill; guarantees as to fitness for purpose; guarantees as to reasonable time for supply): The guarantees imposed under the ACL apply to goods and service which are ordinarily supplied for personal, domestic or household use or which are valued at under A$40,000 (approx. US$27,703), so the guarantees will apply to most prizes awarded. The guarantees generally apply even if goods or services are given away, including as prized. The guarantees, and consumers' rights and remedies for breaches of them, cannot be excluded, restricted or modified.
- The unfair contract terms (UCT) regime that applies to standard form consumer contracts: This regime will apply to trade promotions terms and conditions since they are standard form agreements that are presented on a 'take it or leave it' basis. A provision is unfair if, it would cause a significant imbalance in a party's rights or obligations under the contract, would cause detriment to a party if relied on, is not reasonably necessary to protect the legitimate interest of the party advantaged by them, having regard to the extent to which the term is transparent and the contract as a whole. The ACL and the ACCC note that provisions which are at risk of being unfair include asymmetrical liability regimes, unilateral amendment rights, broad termination rights in favor of one party only and provisions which reserve discretion in favor of one party only.
If a term is found to be unfair, it is void and unenforceable. While the UCT regime doesn't allow the ACCC to seek pecuniary penalties where a term is found to be 'unfair', the ACCC has successfully relied on other sections of the ACL prohibiting false and deceptive conduct to obtain pecuniary penalties from suppliers in connection with the inclusion of unfair terms in contracts (essentially on the basis that including a term which the supplier knows is likely to be contrary to law and unenforceable is misleading and/or deceptive). The maximum pecuniary penalty which can be awarded is currently the larger of:
Three times the value of the benefit received; or
10% of annual turnover of the entity in the preceding 12 months, if court cannot determine benefit obtained from the offence.
So the possible consequences of including unfair terms are quite severe.
The Privacy Commissioner is responsible for the enforcement of the Privacy Act and will investigate an act or practice if the act or practice may be an interference with the privacy of an individual and a complaint about the act or practice has been made. Generally, the Privacy Commissioner prefers mediated outcomes between the complainant and the relevant organization. Importantly, where the Privacy Commissioner undertakes an investigation of a complaint which is not settled, it is required to ensure that the results of that investigation are publicly available. Currently, this is undertaken by disclosure through the Office of the Australian Information Commissioner website of the entire investigation report.
The Privacy Commissioner may also investigate any 'interferences with the privacy of an individual' (i.e. any breaches of the Australian Privacy Principles) on its own initiative (i.e. where no complaint has been made) and the same remedies as below are available.
After investigating a complaint, the Privacy Commissioner may dismiss the complaint or find the complaint substantiated and make declarations that the organization rectify its conduct or that the organization redress any loss or damage suffered by the complainant (which can include non-pecuniary loss such as awards for stress and/or humiliation). Furthermore, fines of up to A$420,000 (approx. US$290,890) for an individual and A$2,100,000 (approx. US$1,454,450) for corporations may be requested by the Privacy Commissioner and imposed by the Courts for serious or repeated interferences with the privacy of individuals.
Australian Capital Territory
Penalties apply for various offences under the Lotteries Act, including fines and/or imprisonment for conducting lotteries that are not approved or exempt from approval. The maximum financial penalty imposed under the Lotteries Act is A$40,500 (approx. US$28,050).
New South Wales
If a party does not comply with a permit issued by the Office of Liquor, Gaming and Racing, the Office can take a range of actions, including:
- Prohibit further fundraising or community gaming activities;
- Refer the matter for legal or administration action; or
- Take a range of specific investigation and enforcement activities against charities.
Penalties also apply for offences against the Lotteries and Art Unions Act, including severe penalties for serious offences such as misappropriation of funds or prizes or fraudulent conduct. The maximum financial penalty imposed under the Lotteries and Art Unions Act is A$5,500 (approx. US$3,809).
Depending on the nature of the non-compliance and the findings of any investigations by the director, the outcome could include directions being issued by the director to either:
- Invalidate the draw and direct another draw to be undertaken under the supervision of the director and under appropriate conditions;
- Cancel the lottery or game of chance and undertake appropriate actions as required by the director;
- Direct the organizer to adopt, vary or cease practice in the conduct of the lottery or game of chance.
Serious breaches of the act or regulations may result in severe penalties, including fines and imprisonment. Under the Gaming Control Act, the maximum penalty that can be imposed is a fine of up to A$13,175 (approx. US$9,125) as well as a term of imprisonment of up to 2 years.
There are various penalty provisions in the Charitable and Non-Profit Gaming Act, including failure to comply with the rules of the promotion and failing to comply with various record-keeping requirements. A range of monetary penalties may be imposed depending on the breach (up to a maximum of A$26,110) (approx. US$18,084) as well as a term of imprisonment of up to 2 years.
Penalties may be imposed under the Lottery and Gaming Act and Regulations. Serious breaches of the Act and Regulations may attract penalties up to 2 years imprisonment and more than A$10,000 (approx. US$6,926) in fines.
Penalties may be imposed for breaching the Gaming Control Act 1993, noting that trade promotions are not regulated. Serious penalties apply for conducting unauthorised lotteries, including large fines, some in excess of A$159,000 (approx. US$110,123) and imprisonment for up to 2 years for some offences, although these generally relate to gambling related activities and wagering.
Monetary penalties apply for breaches of the Gambling Regulation Act. The maximum penalty for a first time offence is A$9,671 (approx. US$6,698). For subsequent offences, the maximum penalty is A$16,119 (approx. US$11,164). Other disciplinary action may also be taken, including suspension or withdrawal of the trade promotion permit.
Various penalties apply for breaching Western Australian trade promotions regulations. For example, monetary penalties apply for:
- failing to ensure that every ticket or chance is included in the draw; and
- failing to hold the draw within one month of the closure of the lottery.
Penalties can include fines up to A$10,000 (approx. US$6,926) or 2 years imprisonment