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A Thief in the Night: Unmasking and Regulating Dark Patterns
What area(s) of law does this episode consider? | Dark patterns and unfair trading practices. |
Why is this topic relevant? | In our digital economy, personal data holds immense value for various legitimate – and illegitimate – reasons. However, the acquisition of data isn’t solely about personal privacy; consumer protection is also a key legal issue. Dark patterns are strategies used in websites and apps to nudge users into unintended actions like surrendering personal data. In Australia, there’s a notable gap between tightly regulated conduct and actions that might appear unfair to consumers. In comparable jurisdictions, this gap is sometimes filled by a flexible unfair trading practices framework. |
What legislation is considered in this episode? | Privacy Act 1988 (Cth) |
What are the main points? |
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What are the practical takeaways? |
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Show notes | ACCC, Digital platforms inquiry 2017-19. ACCC, Digital platforms services inquiry 2020-25. S Temby & J Vasquez, Regulating the web – is the Australian Consumer Law ‘fit for purpose’? |
David Turner = DT; Shaun Temby = ST; Ross Davis = RD
00:00:00 | DT | On this season of Hearsay, we’ve talked about data and privacy a few times; we’ve described data as the new gold. In our digital economy, personal data holds immense value for both legitimate and illegitimate reasons. And while we’ve talked about data and privacy from the perspective of the Privacy Act and the GDPR on this season, consumer protection is actually a key legal issue with data as well. Now, at first glance, this might seem puzzling, but consider how that data is collected and traded. Sometimes, data acquisition involves a borderline or unethical practice designed to be difficult for the consumer to understand – industry professionals call this a dark pattern. Dark patterns are strategies used in websites and applications – often e-commerce websites and applications – to nudge users into unintended actions, like surrendering personal data. In Australia, there’s a bit of a gap between tightly regulated conduct and actions that might seem unfair to consumers. Now, in comparable jurisdictions, this gap is sometimes filled by a more flexible unfair trading practices framework, something that we don’t have in Australia. With us today to speak about these issues is Shaun Temby, a partner at Maddocks and an expert in competition and consumer law and dark patterns. He joins us to step through whether Australia should have a general prohibition on unfair trading practices. Shaun, thanks so much for joining me today on Hearsay! |
ST | Thank you very much for having me, David. It’s a pleasure to be here. | |
DT | Well, and it’s a pleasure to reconnect. I don’t think any of our listeners will know, but one of my first jobs in the law was working with you, Shaun. | |
ST | Yeah, it’s great to see you again, David, and great to see you doing so well. | |
DT | Oh, thanks very much. And you too. Why don’t you tell us a bit about your background in the law and sort of what you’re doing now at Maddocks. | |
ST | Sure. Well, I’ve been practicing now for, I think, 30 years; which is horrifying to think about. But almost exclusively in the area of dispute resolution, I spent quite a bit of time working at a number of firms in Perth. And about 10, 12 years ago, I decided it was time to challenge myself and to try my hand in a more competitive legal market. And I chose to come to Sydney. And let me tell you, I found it to be very competitive. A lot of really smart people. So it was a real challenge, but I found it immensely rewarding and particularly so. So I moved to my current firm, which is Maddocks. I’ve been here now about eight years and to come to a firm with such great people, with such a great culture and the opportunity to work with some amazing clients, it’s been a really great step. | |
DT | Now you mentioned some amazing clients, and I know this is always a bit difficult to talk about on a podcast, but to the extent you can give us a bit of information about some of the matters you’ve worked on, what’s one of your favorite matters? | |
ST | Well, my focus is on consumer markets and franchising in terms of my industry or sector focus, as we sometimes call it. And so I work with a lot of big name consumer facing clients, you know, such as McDonald’s or ChaTime, Nissan. And more recently, I devoted a considerable part of last year working for Mercedes-Benz. Mercedes-Benz is currently being sued by a number of its dealers in the Federal Court because they’re transitioning from their traditional wholesale dealer model to a new agency model. A number of the dealers are upset about that. And we spent a really ridiculously hard and challenging year last year getting that ready in a very short period of time. So I mean an immensely challenging matter both legally, factually and, you know, organisationally, but great clients. Such a pleasure to work with. I had a really great team of people here. So it was challenging, but super fun. And we were awaiting judgment very shortly. | |
DT | Well, everything crossed. And knowing you, Shaun, that kind of high pressure environment performing in those circumstances, it doesn’t surprise me that that’s one of your favourite recent matters. | |
ST | Oh, you know, I love a challenge, David, as you know. So, yeah, it was great. Thank you. | |
DT | Now, we’re talking about dark patterns and, kind of, the consumer protection side of personal data. And I think it’s fair to say that when most consumers and, in fact, most lawyers hear “personal data”, they immediately go; “Privacy Act”, you know, “GDPR” in the EU and the UK – privacy policy, cyber, data retention. They don’t immediately go to consumer law. Tell us a bit about the issue from a consumer’s perspective. | |
0:05:15 | ST | OK, you’re precisely correct that most people think about data in that way, and it really took people by surprise several years ago when the Australian Competition and Consumer Commission, our competition and consumer law regulator pivoted and started focusing on consumer data. You know, really started looking at it as being something that had real value and that was deserving of protection and then applying our consumer law framework to ensuring that consumers’ interests were being properly looked after. And when it first happened, there was a lot of confusion. People saying; “hang on, isn’t this the privacy commissioner’s role? Isn’t this the role of various organisations set up by the government to specifically look at consumer data and privacy and things like that?”. And the commission said; “no, you know, we need to protect people’s data and protecting consumers is a fundamental part of our role”. So they then started a series of litigation, a series of cases against Google and Meta, also known as Facebook, around the level of disclosure being provided and information being provided to consumers by these organisations to ensure that consumers were able to make fully informed decisions about what was happening with their data and what they wanted to happen and what they didn’t want to happen. So it is an emerging area and an evolving area as well. So it’s been fascinating to see what the commission’s been doing in that space. |
DT | Yeah, absolutely. And it does make sense as an issue for the ACCC to focus on and as a consumer protection issue. I kind of think about it analogously to sort of the unfair contract terms, provisions and that environment of a mismatch of bargaining power, the capacity to either accept or reject these terms and conditions that might place quite draconian or onerous requirements on your disclosure and use of personal data. There’s a real parallel there between say, telco providers who put that 50 page unfair contract terms document in front of you and give you a couple of minutes to sign. I can see why the expertise of a regulator like the ACCC would be really well deployed in this area. | |
ST | It’s interesting. The government asked the ACCC to conduct a wholesaling review of the digital marketplace and digital platforms in Australia. And there’s been a series of reports that have been published quite regularly over the last I think it’s almost five years now; we’re coming to the end of that review period. | |
RD | TIP: The ACCC has released a series of reports into digital platforms and marketplaces. Relevantly, the Digital platform services inquiry 2020-25 is currently ongoing. The inquiry is to consider:
This current inquiry was directed by the Australian government in response to the previous Digital Platforms Inquiry 2017-2019. Which published its final report on 26 July 2019. We’ll leave a link to both in the show notes. Briefly, that final report and the series leading up to it highlighted the intersection of competition, data protection and privacy and consumer protection. The Final Report stated:
consumers to make more informed choices about how their data is processed. This, in turn, is likely to increase competition between digital platforms regarding the privacy dimension of their services”. | |
ST | And it was a world first inquiry looking at the, you know, the inequality of bargaining power, the differences in the access to information, sophistication, knowledge, and how that then played out both in a competition law space, but also in a consumer protection space. And what they found, or at least what the ACCC theorises in this report is that that inequality of knowledge and experience and resources is being used by the big tech companies in a way that has the potential to be exploited. And dark patterns is, you know, the kind of catch all phrase that is used to, as you say, to describe some of these practices. And it’s not the sole focus of those inquiries that I spoke about, but it certainly comes up in a couple of the reports. | |
0:10:01 | DT | And what is a dark pattern? We’ve mentioned it a couple of times now, but how would you define it? And I suppose, can you give us an example that might be familiar to some of our listeners. |
ST | Sure. So, well, the ACCC describe it like this. They talk about it being elements of user interfaces that have been designed to make it difficult for users to express their actual preferences. Or that nudge users to take a certain action that may not be in their best interests. So that’s reasonably clear. But let’s look at some examples to really put some context to that. So one example is what we call the Roach Motel, which has contractual terms in an arrangement between a business and a consumer that permit the consumer to give notice and walk away from a deal. So, gym memberships, for instance, subscriptions to online services is another example. Technically, the contract permits you to give notice and to walk away. But frequently there will be significant practical steps that are troublesome, difficult to find, or inconvenient for the consumer. And so they act as a deterrent to the exercise of the strict contractual right. And so you can see that the law says; “well, the terms are clear. You’ve got a contractual right to terminate. Therefore, it’s not an unfair contract term. You can exercise your contractual right, no problems”. But if the practice of the use of those terms is really difficult and potentially deliberately so, that is a dark pattern. | |
DT | Yeah, absolutely. It reminds me of, I don’t want to keep going back to privacy in this context, but it does remind me of something that one of our guests said recently on this season – that what’s more important than what your privacy policy says is whether your business practices actually adhere to the privacy policy. You can provide your users with all of these rights to have their data corrected or deleted or to opt out of the collection of certain data. But if you don’t provide substantively the ability to exercise that contractual right, then you could be in breach of the Privacy Act and here could be fulfilling a bit of a dark pattern. | |
ST | Yeah, I mean, interestingly, picking up your point about a disconnect between what you’re doing – Meta was recently found to have engaged in misleading and deceptive conduct in the Federal Court because they sold, effectively, a privacy app to say; “use this app and we will protect all your data”. But then the company got bought out by Meta, I should say, and Meta then on-sold all of that data to third parties. And there was this real disconnect between what the whole purpose and intent of this privacy app was and what actually the company ended up doing. And so a fine in the millions of dollars has been imposed on Meta as a consequence of that. Another really good example of that kind of disconnect between policy and practices where you’re able to go through and turn off some of these settings that enable the website or the app to collect information about you. But each time you step through the process – and it can be many, many steps. But also there are these warnings, you know, “if you delete this, the data can never be recovered” – which is true, so it’s not misleading and deceptive, but it kind of gives rise to these feelings of apprehension about whether or not I should take this step. | |
DT | There’s a sense of peril. | |
ST | Correct. And so that is another dark pattern, another dark practice, which they introduce in order to nudge you towards the outcome that they would prefer, you know, where they would prefer you end up. | |
DT | Yeah, you see that a lot with sort of cookie retention or cookie collection policies. You know, you have to click through quite a few different options to get to that functional cookies only section. And along the way, you might be told that the website might not work as intended if you don’t agree to all of these. So I think some of these are quite familiar to a lot of our listeners, but there’s an ambiguity around the extent to which consumers are protected against these dark patterns in Australia, right? | |
ST | Yeah, absolutely. Some of the practices, I mean, if you lie to a consumer or mislead them about something – that’s covered, that’s caught, you know, no problems. But it’s all of these softer, kind of, practices that are much harder. You know, if I say to you; “if you delete this, it’ll be gone forever”. I’m not lying to you, but I’m kind of creating this apprehension in you that maybe you’re not making the right decision. So it’s not covered by the current consumer protection regime in Australia. And it’s why the commission is recommending we introduce, you know, an unfair practices prohibition, because as I think you identified right at the start of the podcast, there’s this gap. | |
DT | And what does an unfair trading practice prohibition look like? They exist in other jurisdictions. | |
0:14:50 | ST | They do. I should say this is reasonably new territory for many jurisdictions, and that’s largely because a lot of these practices are really only now impacting a large percentage of the population because of the rise of digital marketplaces and digital platforms. It’s really created a ripe environment for these, sort of, practices to grow and to be used by the larger tech companies. So it’s a new area. And what you will see is that there’ll be a general prohibition on a company from trading in an unfair way. And what you might have is some guidelines about the sort of things that a court can take into consideration in determining whether or not a practice is unfair. You know, it has something being clearly explained, has something been designed with a you know, a fair outcome or process in mind, things of that nature. I’ve got to say, though, you know, you talked about unfair terms prohibitions. There’s been a lot of debate in legal and business circles about whether or not these sort of prohibitions are sufficiently clear and whether or not it’s… you know, how do you as a lawyer advising a business or if you’re a business making decisions about what you’re going to do, how do you apply such a subjective test such as fairness or unfairness in your decision making process? Because I think we all know when we see something really unfair, we go; “well, that’s unfair, doesn’t pass the pub test, whatever”. That’s easy. But when you start getting down towards the margins, which is where a lot more of the conduct actually takes place, it gets a lot harder. |
DT | Absolutely. And you see these sorts of protections or regulations in the consumer law space a reasonable amount where the test for breach or for something that’s unlawful is by reference to a variety of non-exhaustive factors. And I can imagine, you know, someone advising a business on whether or not they’re on the right side of that line. It’s hard to provide a definitive answer there because you’re saying; “well, on these factors, it seems fair to me, but it’s difficult to provide guidance”. If everything’s case by case, it’s difficult to delineate where the line is. | |
ST | Yeah. And if you’ve got some precedent, you know, in the airline industry to say; “well, these sort of ticketing policies, that’s unfair”, then you can apply that in different ticketing contexts. But we just don’t have enough cases. My problem with this whole unfair practices prohibition that is being discussed here in Australia at the moment has been pushed pretty heavily by the ACCC is we don’t really know how it’s going to work. And the recent example we’ve had around unfair contract terms, it’s been around for quite a while. There’s so much uncertainty still about how this is actually going to work that I think it is problematic. And particularly when this is really being driven off the back of the digital platforms inquiry, but it’s not being proposed that the unfair trading practices prohibition only apply in the digital world. Somehow the ACCC has kind of identified this problem, you know, quite rightly, I think, in the digital space and said; “oh, well, let’s ban these unfair practices everywhere”. And I just don’t think they’ve made the logical case for it to be applied more broadly and nor have they really stopped to consider what the ramifications of that might be. So, yeah, it’s a fascinating area. Great for lawyers… | |
DT | Tell, yeah, those are usually the beneficiaries of unclear and vague legislation. But, you know, you mentioned as an example of a dark pattern trying to cancel a gym membership. I think a lot of us have had that experience. And that’s probably one of those examples that maybe rightly or wrongly goes beyond the digital context. One person’s unfair business practice is another’s, you know, conversion optimisation or behavioural economics nudge. You know, I think you even mentioned – you even used the word nudge earlier. Throughout the 2010s, there was a whole cottage industry of growth hackers who provided consulting services to growing software as a service businesses precisely to make changes in the pattern of user interface and experience that would lead to conversion or that would improve retention. So there’s certainly a continuum of practices that range from UX that optimises conversion to user experience that unfairly optimises conversion. And I think it would be very hard even with a set of non-exhaustive factors to consider to really identify what a dark pattern is and what a kind of industry standard is almost. | |
ST | Yeah, I mean, it sounds sexy, doesn’t it? Dark pattern, you know. But in reality, what’s the difference between a legitimate nudge and something that crosses that line? I think it can be really difficult. And you mentioned behavioural economics. Every major tech company that is engaging with consumers all over the world has a suite of coders who are constantly beta testing different prompts and buttons and shading. And they’re looking in real time, you know, with this huge population base, they’re looking at what gets the best outcomes. What’s the most effective call to action? That is happening all the time. So, you know, that notion of creating a nudge or encouraging consumers to make the sort of decisions that you want, that’s the way businesses work. How then you draw that line and identify it as a dark pattern. I think it’s going to be quite problematic. | |
0:20:36 | DT | And you can see where the disconnect will be that it’s going to be really tough for in-house counsel or external counsel to get sufficiently embedded in the teams that are doing that A-B testing who are making those conversion optimisations, who are making those changes to user interface to really effectively kind of guard against that risk. |
ST | The general counsel unit, you know, within a large business like that, they’re not even going to know these things are happening. But the coding teams just constantly run through all of these tweaks and changes to work out, you know, how that impacts buying decisions by consumers. They don’t have time and they don’t check all of these things with legal. So, you know, how then does legal get a say? | |
DT | And I suppose you can try to cut that off at the pass with policymaking, with setting rules for the organisation around what’s permissible on a product design. But in a large organisation, things are always going to slip through. You mentioned earlier that there’s very few prosecutions by the ACCC under these unfair contract terms provisions. They’ve been around for more than a decade now. Is that an indication that some of these provisions which have, as their touchstone, a kind of nebulous concept of unfairness are kind of limited in their effectiveness for consumer protection? I mean, why are there so few cases? | |
ST | Well, I mean, part of it would be resources. You know, ACCC can’t prosecute every example of unfair contract terms. And the general strategy for the commission is to find one or two examples in a particular sector, make a lot of noise about it and publicise it, you know, across the country and try and drive better business behaviour as a consequence. The ACCC will say that one of the reasons that we’re still seeing unfair contract terms, you know, being so prevalent is that previously, if they discovered and proved that a term was unfair, the only consequence was that the term was rendered void. So there was no penalties attached to the creation of or giving effect to an unfair contract term. Now, that has been remedied with some recent legislative changes and they come into effect in November of this year. There are going to be some significant penalties in the millions of dollars that they’re giving effect to or in a drafting, entering into a contract with an unfair term. So we’re going to see a significant number of prosecutions in this space. The ACCC will be looking for some high profile scalps. So while there hasn’t been a huge buildup of cases previously, there’ll certainly be a wave of new ones. But I don’t think it’s really going to give us enough examples. Hopefully, we’ll get some principles that kind of come out of it, the way the judges approach it and, you know, the way the courts are going to be interpreting and applying these provisions. And it’ll build up that body of law, which will then give lawyers such as myself a greater understanding of how these rules might be applied in practice and in everyday commerce. | |
DT | Especially in the digital realm, I suppose, short of a class action, there’s relatively few instances where a prospective plaintiff might be motivated to bring a claim around unfair contract terms. The value to an individual customer might not really be sufficient to provoke litigation. But as we see this change where there’s actually exposure to civil penalty for unfair contract terms, we might see those cases coming. | |
ST | Yeah, I think that’s right. The traditional experience has been that most of the challenges around unfair contract terms have been for reasonably high value consumer items. Airfares is a perfect example. The problem with a lot of this stuff, particularly going back to your original comments around data privacy, is that data is really valuable en masse. But for an individual person, you know, their particular data about where they shopped and what websites they browse is trivial. So this, you know, as a class action lawyer looking for a big payoff, it just doesn’t fulfill the criteria in order to motivate a litigation funder and a class action lawyer to go and sue for what is a really tiny little payout for each individual member of the class. There’s no real benefit there, which is why you haven’t seen any of that class action litigation in this space. But the penalties will be different because we’re going to see – as I’ve already said – my prediction is we’ll see a wave of litigation as the ACCC really tries to drive home to business, it’s time to get your house in order. | |
DT | We talked before about a class of dark pattern where the user might have some contractual rights, but those aren’t really given effect to in the user experience. They’re in practice, not exercisable. Do you think we’ll see some dark patterns effectively being the subject of unfair contract terms prosecutions for that reason? Or are they still kind of outside of the range of conduct that the ACCC can prosecute with their current tools? | |
0:25:48 | ST | Yeah, that’s a good question. I wrote an article about dark patterns in 2020. I had to go looking through my records and we did some analysis about, I think, six or eight different types of dark patterns that we could identify at that point in time and whether or not we thought they were captured by the prohibitions on misleading deceptive conduct and also unfair contract terms. And most of them are caught. The one example where we’re confident that they’re not caught at the moment is that one you just mentioned, David, that I described as the Roach Motel, you know, that place you check into, but you can’t leave. That is because there is that disconnect between what your legal rights are and how you can apply those rights in practice. That is a gap. There’s no doubt about that. |
RD | TIP: We’ll leave a link to the article that Shaun has just mentioned in the show notes. In brief though, Shaun looked at several different kinds of dark pattern, including:
Each of these are something a consumer might experience in their online journey. Some of them are particularly insidious – for example the sneaky items category is where a platform sneaks an item into an online cart prior to purchase. | |
DT | Now, you mentioned that the ACCC is pushing this prospective change around unfair trading practices pretty hard arising from the digital platforms inquiry. Seems likely, if we’re looking into our crystal ball, that we might see that sort of regulation coming on the horizon. | |
ST | Yep. | |
DT | You mentioned that there are a few examples of this internationally, but even then, those international examples, not a huge amount of experience in practice. If there was an international regime that Australia ought to imitate, which one would it be? | |
ST | Look, you know what? It’s such a hodgepodge at the moment of, you know, broad based prohibitions, which the United States has through to specific, kind of, protections of marginalised or vulnerable communities, children, you know, that sort of thing. Look, it’s hard to say. I like that, the UK, they’ve recently recommended a kind of fairness in design policy, really directed at digital platforms and digital marketplaces. I think that’s the way we should be going. I think we should be looking at industry specific legislation, maybe a code of conduct, the breach of which does give rise to penalties. I think, you know, a voluntary code without any kind of consequence, if you breach it, is not going to do anything with the big digital platforms. But I do think something industry specific directed at fairness in design and with consequences, if you get that wrong, is a better approach than a broad based unfair trading practices prohibition that applies, you know, everywhere. | |
DT | You know, I’m going to ask about codes of conduct, actually, when you mentioned something industry specific, because that is typically how we implement industry specific legislation. I suppose in your own franchising area, the franchising code of conduct is kind of the gold standard around legislation there. | |
ST | Well, I wouldn’t call it gold standard. It’s such a mess. But the touchstone, the principle behind it is good, which is okay. If you observe problems in particular sectors, then work with the sector to design, you know, methods of behaviour or ways of conducting yourself that remedy those problems. That is, you know, that is the Australian approach to these sorts of things. And I can’t really see why – I don’t think the ACCC has made a case for that to be departed from, to be honest. | |
DT | Is there a challenge in identifying what a digital business is? | |
ST | That is a really good question. Particularly when you’ve got businesses that are, you know, bricks and mortar, etc, that also have a digital presence. So yeah, there would be some issues there. But I mean, not insurmountable. I think the fact you’ve got physical premises doesn’t change the fact that the way, you know, the way in which you are conducting business and the way in which you are engaging with consumers, and that aspect of your business could be subject to the code of conduct. And if you choose to conduct business online, then you should be subject to the same, you know, restrictions and protections that everybody else has. | |
DT | It seems like a real difference in the impact of this proposed unfair trading practices regulation would be between small businesses and large ones, right? You mentioned that a lot of the dark patterns that you and your team have identified tend to be employed by larger technology companies. The proposal is a more wholesale prohibition. How would small businesses be exposed to that sort of legislation? | |
0:30:48 | ST | Well, you know, the consumer protection provisions in the Australian consumer law at the moment apply to every business. You know, if you are B2C or business to consumer, then the consumer is entitled to the same rights and remedies irrespective of the size of the business that they’re dealing with. That’s the cost of doing business in Australia. We have a strong consumer protection regime. And if you want to be involved in a business that is selling goods or services to consumers, you’ve got to follow the rules. I mean, what you’d find in this instance, as you find in many, you know, similar examples is small business, if they want to set up a website, they will go to a third party provider. And the third party provider, that might be an online service, or it might be a marketing company, or, you know, lots of different choices available to you. But it’s then the responsibility of the company that you are buying the, you know, the web design services, or if you plugging into a platform that they’re running, it’s the responsibility of that entity to ensure that you are complying with the law. You know, there’d be a contractual liability there. So it doesn’t excuse you, the business, of its primary responsibilities to the consumer, but you would be relying upon the expertise of that third party provider. That’s how it would work in practice. |
DT | You’re sort of externalising the risk. It’s still your risk, but you’re externalising it. | |
ST | Yeah, you’d be trying to pass it on to some extent to that, you know, that party that’s holding themselves out as the expert in this space, you would hope they’re an expert in this space. | |
DT | We’ve talked about some of the international regimes that are kind of industry focused or focused on vulnerable groups. Have any of them focused the applicability of the legislation on whether the business is big or small? | |
ST | Not that I’m aware of. | |
DT | And have any of those international regimes seen results from the prohibition? Have we noticed a reduction in the incidence of dark patterns in particular jurisdictions? | |
ST | I am not aware of there being any data that suggests that’s the case. But as I said, right at the outset, we know we’re right at the infancy of how we regulate some of these things. And, you know, Australia is not at the forefront, but we’re not far behind. So, you know, we’re yet to see how effective they are, I think is the simple answer. | |
DT | Now, again, I keep going back to the privacy dimension of personal data, but I’m doing it now because it reminds me of this conundrum in privacy law reform around whether there should be a private action, you know, the concept of a tort of privacy, or whether that should remain in the hands of a regulator to deal with complaints from the public and then prosecute accordingly. Are we likely to see a private action for unfair trading practices? You know, you mentioned the unfair contract terms provisions only recently became something prosecutable. Or are we going to see something that’s much more in the hands of a regulator? | |
ST | The simple answer is we don’t know. It’s still being discussed, you know, federally and also with the state attorneys general as well, because obviously there’s a constitutional issue which we won’t bore the listeners with. But it requires it to be something that is dealt with both at a state level and a federal level. So simple answer, we don’t know. The prediction, I guess, is that you’ll certainly see an ACCC prosecutorial right. And I suspect you’ll also see a right of private action, most likely to be deployed, I think, defensively, but it’ll be able to be used both as a shield and a sword. But what I would prefer to see if we’re looking at fairness in design in connection with digital platforms is potentially, you know, giving an ombudsman or someone of that nature who can get down into the weeds and deal with matters quickly and deal with digital platforms quickly to address concerns. I think that’s more likely to drive changes more quickly than having rights to sue. | |
DT | Yeah. Tell me a bit more about that distinction between kind of an ombudsman and the ACCC being involved as a, I don’t know, a more litigious regulator. | |
ST | Oh, that’s probably a whole podcast on its own, David. But what, you know, the role of the ACCC is to look at a broad range of things that impact both competition and consumer guided by the welfare of the Australian consumer. And so they’ve got a really broad remit and they’ve got really strong powers to, you know, to investigate, to educate, to develop policy and ultimately to prosecute. So, you know, it’s a huge beast. Whereas with an ombudsman, they are generally established to look after a specific issue, you know, whether that be banking, insurance, privacy, where government is seeing significant issues in a highly specialised area. And they’re looking for something that is simple and cheap and easy for consumers to access and that will drive more immediate results at low cost. You know, that’s when an ombudsman can be quite effective, particularly if they’re set up right where they’ve actually got – rather than simply the power to make a recommendation, which in my view is pretty useless – where they’ve got powers to compel production of information, where they’ve got investigative powers, where they’ve got the ability to force a lot of information. So if you can force people into a room and to achieve a result and even impose a result on people, you know, that’s when you really see an ombudsman be effective. | |
0:36:15 | DT | Yeah, a power of recommendation is a bit of a nonstarter, isn’t it? I think you and I have powers of recommendation. We might not have them granted by legislation, but we’ve got them nonetheless. |
ST | Exactly. | |
DT | You mentioned before that the right of private action might be used defensively and also offensively or as a sword and a shield. Tell me a bit more about what you mean by that. | |
ST | So the expression sword and a shield is often used by lawyers, as I’m sure you know, David, to talk about ways in which legal rights can be exercised and deployed. And so a shield is one where if you are being sued by a company to enforce a contractual right, you can use it defensively. So you might say in relation to an unfair practice, if you’re being sued for or chased by a debt collector in connection with your fees for a subscription based service, and you say; “oh, but I tried to disconnect and was unable to because it was too complicated or it stepped me through so many things that I thought I disconnected”. And I hadn’t, you know, because of the duck pattern, you have been exposed to a claim for these subscription fees. You might then say; “well, it’s unfair what you did to me and the position in which I find myself as a consequence of your unfair practice. Therefore, I should be relieved of the obligation to pay the subscription fees”. That would be an example of it being used as a shield. In terms of how it might be used as a sword, I guess we start moving into the class action territory. You know, if you’re looking at a large number of consumers who want to try and attack an unfair practice, drip pricing is kind of one. Drip pricing it’s covered under misleading, deceptive conduct. We found in Australia some cases to that effect. But you could imagine a situation where a large number of consumers have ended up buying something and paying a whole lot more for it than they expected because of the way in which the prices have been presented and the options have been priced. And when they’re presented and part of that buying funnel, that buying journey, you might be able to construct an argument to say; “well, that that that whole process has been designed to make me encourage me to buy things, do so with little thought and do so without an ability to do comparison shopping, creating a sense of urgency and adding the prices up as I go along. And I’ve gotten to the end of it and I bought something that I don’t really want”. You might go and try and attack the contract and try and have it set aside before you’re required to perform it, for instance. So that would be where you’d be trying proactively trying to get ahead of having to fulfil your contractual obligations. I mean, as I think about it in a digital platform environment, you probably get to the end of that purchasing decision. And by the time you do something that binds you, you’ve handed over your credit card details. You’ve probably paid. So you’re going to be chasing the digital marketplace, the platform to try and get your money back. So you’d be using the cause of action as a sword in that instance. | |
DT | Yeah, that makes sense. I suppose it’s sort of about who’s the moving party, right? | |
ST | Yeah, exactly right. That’s it. I wish I’d said that. That’s a really nice, concise way of addressing that issue. | |
DT | Yours was more evocative. | |
ST | You mean more words? | |
DT | Both! Both more words and more evocative. Well, Shaun, we talked about some really interesting law reform on the horizon and how we might expect that to work here in Australia based on the experience overseas. I’m going to ask you the question we always finish with about how young professionals and law students can get involved in this area, because I think it’s a fascinating area and one of those areas in commercial practice that I think really connects with the kind of ethic that sometimes brings young people to law school, you know, it’s a connection to justice and fairness and seeing that our community and our society governs behavior in a way that accords with those principles, although unfairness is not always the most helpful signpost for businesses. So how can younger listeners get involved in the area that you now practice in? | |
ST | The thing that I always tell people when they ask me what I do is I tell them that I help people solve their problems. And frequently that involves big companies fighting each other. But you’re right. I think it is an area of the law, it’s an area of practice that is attractive to many people coming out of law school for that precise reason that you’re looking to help people. You’re looking to apply, particularly in this space, in the consumer law or the consumer protection space. You’re looking to protect people from behavior that is inherently wrong. So, yeah, definitely agree with those comments. In terms of what you can do to improve your chances of success in this space, the starting point while you’re at university would be to make sure you do the hard, you know, corporate and commercial units because you need a really broad based understanding of how businesses work and how business regulation works to be a successful commercial litigator. And if you’re interested in the Competition of Consumer Act and the role of the ACCC, then, you know, obviously anything that university offers on cartels or restrictive trade practices and consumer protection, consumer guarantees, I would be signing up for those as well. And then once you get here, once you get into a law firm environment, I would make sure you do rotations through some of the commercial teams before you end up in a litigation team or dispute resolution team. You know, you need to be able to understand how to, how a deal is put together, how a deal is documented, the things that are important to commercial parties, because that will really help you understand where the pressure points and touch points might be for a future dispute. And then also how you can resolve that dispute. And then finally, once you get to a dispute resolution team, just be hungry, be hungry for new experiences, volunteer to do more and to grab every opportunity that you can see. If you go to a meeting with the client, volunteer to do the file note of the meeting, then volunteer to turn that into a letter to the other side, you know, then volunteer to do the research note that comes off the back of it. Just show initiative and take ownership and interest in the matters that you are exposed to and you’ll just, you’ll learn so much and you will become an invaluable member of the team. And inevitably what follows from that is you get more opportunities. | |
DT | Couldn’t agree more. Those are great tips. Well, Shaun, thank you so much for joining me today on Hearsay. | |
ST | Thank you very much, David. Great to be here. | |
0:42:52 | RD | As always, you’ve been listening to Hearsay the Legal Podcast. I’d like to thank today’s guest, Shaun Temby, for being a part of it. As you well know, if you’re an Australian legal practitioner, you can claim one Continuing Professional Development point for listening to this episode. Whether an activity entitles you to claim a CPD unit is self-assessed, but we suggest this episode entitles you to claim a substantive law unit. More information on claiming and tracking your points on Hearsay can be found on our website. Hearsay the Legal Podcast is, as always, brought to you by Lext Australia, a legal innovation company that makes the law easier to access and easier to practice, and that includes your CPD. Hearsay is recorded on the lands of the Gadigal People of the Eora nation and we would like to pay our respects to elders past and present. Thanks for listening and see you all on the next episode of Hearsay! |
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