First Byte: ACCC wins by forfeit in the first unfair contract terms case

Unfair terms and conditions will not be tolerated under the consumer watchdog’s unfair contract term rules.

The Australian Competition and Consumer Commission (ACCC) has chalked up its
first win on a case solely arising from the unfair contracts terms rules, with internet service provider ByteCard quickly capitulating and consenting to declarations that its terms and conditions (T&Cs) were unfair.

The rules target industries with a reputation for locking customers in to dodgy contracts, like mobile service providers, airlines and gyms. They caused a stir when they were introduced, threatening to be a serious weapon for consumers and an equally serious headache for businesses. Marred with vague terms like ‘fairness’ and ‘legitimate interests’, it’s sometimes a challenge to assess whether contracts are compliant.

Unfairness in ByteCard’s T&Cs arose because they:

  • allowed ByteCard to vary prices without notice, and without giving consumers the opportunity to negotiate or the right to terminate;
  • included an indemnity from its customers for, well, anything. It wasn’t even limited to losses arising from the customer’s actions; and
  • permitted ByteCard to terminate any account at any time without cause or reason.

For ByteCard, the case cost $10,000 towards the ACCC’s legals, the cost of its own legals, and, most importantly, the damage to its reputation. It could also face damages claims from customers who were adversely affected by the unfair terms.

The kinds of clauses targeted in the case aren’t peculiar to internet service providers. The common thread to the terms in question are that they are one-sided, wide reaching, vague or are internally inconsistent.

It’s fair to assume that these kinds of clauses will remain of most concern to the ACCC.

In short, the ACCC is done with friendly approaches. Enforcement of the unfair contract terms rules is now a priority. If you haven’t reviewed your standard form consumer T&Cs yet, then get your solicitor to do so now.