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Big spike in small business contacts to competition regulator

11 February, 2014

The Australian Competition and Consumer Commission has launched the latest 'Small Business in Focus' report which outlines its work in the sector.

ACCC deputy chair Dr Michael Schaper said that the report highlights the ongoing activities of the ACCC to educate small business of their rights and responsibilities, and to take enforcement action where necessary.

Between 1 July 2013 and 31 December 2013, the ACCC received close to 3600 complaints from small businesses. This was an 84 per cent increase from the first half of 2013. Enquiries from small businesses also increased dramatically. Franchising complaints rose slightly from 286 in the previous period to 309 this period, while franchising enquiries almost doubled.

Dr Schaper said: "The growth in complaints received by small businesses and franchisees reflects the need to educate and empower the sector. In the last six months, more than 6500 people have visited our small business web page, more than 3000 visitors have accessed our online small business education program and Commission staff have attended close to 60 small business presentations, expos and field days.

"The rise in complaints is likely due to a number of factors such as increased awareness-raising campaigns by the ACCC amongst the small business sector; enhanced data collection of small business issues within the Commission's info-centre; and increasing public debate about small business matters and the Competition and Consumer Act in recent months.

"Misleading conduct and false representations remained the biggest single issue for the small business and franchising sectors, with over 1400 complaints received."

Enquiries about the consumer guarantees were the second largest topic of concern.

"The Australian Consumer Law not only spells out the responsibilities of businesses towards their consumers but also gives small firms certain protections," Dr Schaper continues.

"Australian businesses contacted us because they wanted to know both sides of the coin."

The ACCC continued to use a range of compliance and enforcement tools to encourage compliance with the Competition and Consumer Act, including several significant court judgments.

Euro Solar and Worldwide Energy and Manufacturing were ordered to pay combined penalties of $125,000 for making false or misleading representations about the country of origin of their solar panels, and for publishing fake testimonials.

"This is the ACCC's first litigated outcome in relation to the specific prohibition against fake testimonials under the Australian Consumer Law," Dr Schaper said.

Many small businesses were victims of scams, with over $700,000 reported lost to the ACCC through false billing scams.

Dr Schaper explained: "Small businesses owners are swamped with paperwork and pay any bill that arrives. Standardising who and how invoices are paid could save many small businesses time and money by identifying scammers before they steal any money.

"We also urge them to check for our latest alerts."

The ACCC also released best practice guidance for business and review platforms to help them reduce the risk of misleading consumers through the use of online reviews.

"Online reviews are an increasingly popular and useful resource, however it has the potential mislead consumers and hurt Australian businesses if not used correctly," Dr Schaper said.

The ACCC administers the Franchising Code of Conduct, which requires franchisors to provide information and dispute-resolution to franchisees. The ACCC audited seven franchisors in the last six months, and the majority of them were found to be compliant with the Code.

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