In December 2023, the Federal Court ordered Airbnb Ireland UC (Airbnb) to pay penalties of $15 million for admitting to false or misleading representations to Australian consumers about accommodation prices. Additionally, Airbnb has undertaken to pay up to $15 million in compensation to affected consumers.
This is a stark reminder of how crucial it is for businesses to understand their obligations and ensure compliance with the Australian Consumer Law (ACL).
It is also a reminder that Australia’s consumer watchdog, the Australian Competition and Consumer Commission (ACCC), will not hesitate in taking enforcement action against businesses over alleged false or misleading representations under the ACL.
It’s therefore imperative for all businesses to understand their obligations and ensure compliance with the ACL.
The ACL in a nutshell
The ACL is a national generic law that applies in the same way to all sectors and in all Australian jurisdictions. It provides consumers with the same protections and businesses have the same obligations Australia-wide. The ACL is set out in the Competition and Consumer Act and:
- Provides general standards of business conduct;
- Prohibits unfair trading practices;
- Regulates particular types of business-to-consumer transactions;
- Comprises consumer guarantees for goods and services; and
- Regulates the safety of consumer goods and services related to goods.
The ACL is administered and enforced by the ACCC and State and Territory consumer protection agencies such as NSW Fair Trading, Consumer Affairs Victoria and Office of Fair Trading Queensland.
False or misleading representations under the ACL
One of the ACL’s key provisions prohibits a business from making false or misleading representations. Further, making false or misleading representations constitutes unfair business practices and is a serious offence, for which there are hefty penalties as we see in the case of Airbnb.
False or misleading representations are unlawful under the ACL. Particularly, under section 29 of the ACL, a business must not make false or misleading representations about goods or services when supplying, offering to supply, or promoting those goods or services.
The ACL stipulates a business must not make false or misleading representations in relation to:
- standard, quality, value or grade of goods or services;
- composition, style, model, history or prior use of goods; that goods are new;
- a particular person that has agreed to acquire goods or services;
- testimonials by any person relating to goods or services;
- sponsorship, approval, performance characteristics, accessories, uses or benefits of goods or services;
- price of goods or services;
- availability of facilities for repair of goods or of spare parts for goods;
- place of origin of goods;
- a consumer’s need for goods or services;
- any condition, warranty, guarantee, right or remedy on the goods or services; and,
- the requirement to pay for any condition, warranty or guarantee on the goods or services.
Importantly, whether a business makes a false or misleading representation depends on the circumstances of each specific case.
Airbnb’s false or misleading representations
In June 2022, the ACCC initiated proceedings in the Federal Court against Airbnb alleging Airbnb made false or misleading representations between January 2018 and August 2021. These representations were made to thousands of Australian consumers. It involved displaying prices for Australian accommodation on the Airbnb website or mobile app using a dollar sign ($) only. It was not made clear that those prices were in US dollars. Some consumers were also charged foreign currency conversion fees, in addition to the higher price paid.
Moreover, the ACCC alleged Airbnb’s conduct was misleading or deceptive when it falsely told consumers who complained about being charged a higher price, that the user chose to display the price in US dollars on its booking platform, when often they did not.
Notwithstanding thousands of complaints, Airbnb didn’t change its booking platform until the matter was broached by the ACCC. The expectation is for all businesses to frequently review and update their practices to deal with matters brought to light by consumer complaints and ensure compliance with the ACL.
The ACCC sought declarations, injunctions, pecuniary penalties, orders for compensation of affected consumers, costs and other orders.
In the media release on 20 December 2023, ACCC Chair Gina Cass-Gottileb said, “By paying in US dollars, these consumers were charged more than they expected to pay, and were deprived of a chance to make an informed decision about whether to make the booking because of this misleading conduct regarding the price.”
Airbnb conceded it breached the ACL by making false or misleading representations to Australian consumers about accommodation prices on its booking platform between January 2018 and August 2021.
The Federal Court ordered Airbnb pay penalties of $15 million and part of the ACCC’s costs. Additionally, Airbnb is required to set up and maintain a compliance program under the ACL. Airbnb has also provided the ACCC with a court enforceable undertaking to compensate impacted consumers up to $15 million for the difference between the price the consumer expected to pay and what was actually paid as a result of foreign currency conversation rates and transaction fees.
The key takeaways
To sum up:
- It is a breach of the ACL for a business to make false or misleading representations about goods or services when supplying, offering to supply or promoting those goods or services, accordingly there are substantial penalties;
- Whether a representation is false or misleading depends on the circumstances of each specific case;
- The ACCC will take enforcement action against businesses that make false or misleading representations under the ACL; and,
- It is crucial for all Australian businesses to understand their obligations under the ACL and to review and update their practices to ensure compliance.
For more information on how to ensure that your business is compliant with the Australian Consumer Law, please contact Coleman Greig’s Commercial Advice team.
