Consumer Protection in Papua New Guinea

WEEK 7: CONSUMER PROTECTION

5.1. What is Consumer Protection?

• Definition: Consumer protection is a crucial component of legal systems that safeguards consumers' rights and ensures fair business practices.

• Legislation: In Papua New Guinea (PNG), it is enforced through various laws, regulatory bodies, and case law aimed at protecting consumer interests.

5.2. Goal of Consumer Protection Laws

Consumer protection laws pursue several key objectives:

5.2.1. Ensure Safety

• Objective: Protect consumers from unsafe or defective products.

• Methods: Establishes safety standards, conducts regular inspections, and implements enforcement measures against the sale of hazardous items.

• Key Case: Grant v. Australian Knitting Mills (1936) AC 85

  • Context: A consumer developed a rash from a defective swimsuit.

  • Outcome: The manufacturer was held liable for the injuries.

• Overview: Consumer protection laws empower consumers to seek redress for harm or grievances, ensuring accountability in business operations.

• Regulatory Body: The Independent Consumer and Competition Commission (ICCC) oversees consumer goods safety in PNG.

• Legislation Highlight: The Food Sanitation Act 1991 mandates that food businesses comply with health regulations to prevent foodborne diseases.

• Penalties for Violations: Businesses that neglect these standards face fines or closure.

5.2.2. Promote Fair Trade

• Objective: To prevent deceptive and unfair business practices.

• Importance: Consumer protection laws ensure accurate information dissemination, transparency in advertising, and the avoidance of monopolistic behaviors.

• Example: Telecommunications companies must provide clear and concise service terms, ensuring consumers are aware of all fees.

• Regulatory Framework: The ICCC Act 2002 empowers the ICCC to regulate trade practices and address complaints regarding unfair business conduct.

• Key Cases:

  • ACCC v. Kogan.com Pty Ltd (2015)

  • Summary: Kogan.com was accused of failing to honor its return policy.

  • Outcome: Kogan.com was found to have engaged in unfair conduct.

  • ACCC v. Coles Supermarkets Australia Pty Ltd (2014)

  • Summary: Coles misled consumers about bread prices.

  • Outcome: The court determined that Coles engaged in deceptive trade practices.

5.2.3. Guarantee Informed Decisions

• Objective: Ensure consumers access clear and complete product information.

• Importance: Accurate product information enables consumers to make informed purchasing decisions and minimizes exploitation risks.

• Regulation Requirement: Vendors of electrical appliances in PNG must disclose energy efficiency ratings for consumer choice facilitation.

• Laws: The Consumer Protection Act 2002 obligates sellers to supply essential product details.

• Key Cases:

  • Merricks v. Mastercard [2020] UKSC 51

  • Context: Class action against Mastercard for consumer losses due to anti-competitive fees.

  • Importance: Clarified the importance of clear consumer information for proceeding with collective actions.

  • ACCC v. Booktopia Pty Ltd [2023] FCA 194

  • Issue: Booktopia misrepresented refund rights.

  • Outcome: Booktopia penalized $6 million; required to publish corrective notice.

5.2.4. Provide Remedies

• Objective: Facilitate legal recourse (compensation) for consumers harmed by defective or unsafe products.

• Importance: Contributes to consumer confidence and deters unethical practices in business.

• Legal Framework: The ICCC Act 2002 offers remedies such as refunds, repairs, or replacements for inadequate goods.

• Key Hypothetical Case: John Kaupa v. SMK Ltd

  • Outcome: The court awarded damages to Kaupa due to injuries caused by a defective appliance, setting a precedent for consumer accountability.

5.3. Why is Consumer Protection Important?

• Importance: Consumer protection maintains public health, fair market practices, trust, and competition.

5.3.1. Safeguarding Health and Safety

• Importance: Protects public health by ensuring products meet quality standards, especially critical in health-sensitive sectors.

• Legislation Example: The Medicines and Cosmetics Act 1999 regulates pharmaceuticals in PNG to ensure safety and effectiveness.

• Key Cases:

  • R v Gillespie [2011] EWCA Crim 3152

  • Summary: Importation of falsified medicines led to customer harm.

  • Outcome: Gillespie found guilty, emphasizing the need for industry regulations.

  • Therapeutic Goods Administration (TGA) v. Vapor Kings Pty Ltd [2023]

  • Context: Unlawful nicotine vapor product advertising led to a penalty for Vapor Kings.

5.3.2. Preventing Economic Exploitation

• Objective: Combat unethical business practices such as overpricing and misleading advertising.

• Importance: Key in sectors with limited consumer bargaining power.

• Example: Regulation of telecommunications pricing prevents unfair charges to customers.

• Key Case: Hitron Pty Limited v Papua New Guinea Telecommunications Authority (2000)

  • Outcome: Rulings emphasized the significance of fair advertising practices.

5.3.3. Building Consumer Confidence

• Objective: Foster trust in marketplaces ensuring consumer rights are respected.

• Importance: Encourages consumers to engage in business transactions.

• Regulatory Framework: The Consumer Affairs Council Act 1993 promotes consumer rights awareness and education.

• Key Case: Competition and Markets Authority v Emma Sleep GmbH (2024/UK/CM/001)

  • Issue: Misleading online sales practices related to return policies.

5.3.4. Promoting Fair Competition

• Objective: Ensure non-antitrust practices among businesses to maintain market levels.

• Significance: Compliance with regulations encourages fair competition and innovation.

• Key Case: ACCC v. Flight Centre Travel Group Ltd (2016)

  • Summary: Flight Centre was found guilty of price-fixing, highlighting regulatory need.

• Other Notable Case: Independent Consumer and Competition Commission v PNG Mainport Liner Services Limited (2018)

  • Summary: Investigated greed resulting from share acquisitions that violated competition laws.

5.4. Overview of Consumer Protection Laws in PNG

Consumer protection in PNG is guided by various laws that aim to uphold consumer rights and promote fair trade.

5.4.1. Independent Consumer and Competition Commission (ICCC) Act 2002

• Function: Establishes ICCC as the main consumer protection agency in PNG.

• Powers: Regulates anti-competitive practices and investigates consumer complaints.

• Key Sections: Sections 5-7 detail its powers in market monitoring, enforcement, and anti-competitive behavior investigations.

• Example: ICCC enforcement against price collusion in telecommunications in 2018.

5.4.2. Goods Act 1951

• Objective: Governs product quality and fitness standards in PNG.

• Consumer Protection: Mandates sellers to ensure goods are adequately described and of satisfactory quality.

• Key Sections: Sections 10-15 cover seller obligations regarding goods descriptions, implied warranties, and buyer’s rights.

• Example Case: ACCC v. Samsung Electronics Australia Pty Ltd (2015)

  • Context: False representations about product capabilities led to consumer harm.

  • Outcome: Samsung mandated to issue refunds and corrective advertising.

5.4.3. Fairness of Transactions Act 1993

• Objective: Promotes equity in commercial dealings

• Coverage: Protects consumers from unjust practices, secret charges, or unfair terms.

• Example Case: A finance company's contract terms were ruled unconscionable, forcing a reduction in liability.

5.4.4. Commercial Advertisement (Protection of the Public) Act 1976

• Goal: Oversees advertising truthfulness, forbidding misleading claims.

• Key Sections: Sections regulate advertisement content against false statements.

• Notable Cases:

  • Australian Securities and Investments Commission v Mayfair Wealth Partners Pty Ltd (2021)

  • Australian Competition and Consumer Commission v Singtel Optus Pty Ltd (2011)

  • Both highlight serious penalties for misleading advertisements.

5.4.5. Electronic Transactions Act 2021

• Purpose: Regulates electronic contracts and online transactions in PNG.

• Legal Standing: Ensures electronic signatures and contracts have the same validity as traditional contracts.

• Key Sections: Outline legal recognition and security measures for electronic agreements.

• Case Context: Courts (PNG) Limited v Michael’s & Michael’s Limited (2019) affirmed the legality of electronic contracts.

5.4.6. Prices Regulation Act 1949

• Purpose: Monitors prices of essential goods to prevent exploitation.

• Function: Authorizes the government to set maximum prices during emergencies.

• Example: Government intervention during COVID-19 to curb price inflations on medical supplies.

5.4.7. Packaging Act 1974

• Objective: Ensures safety and correct labeling of products.

• Key Sections: Mandate clear ingredient and safety information on packaging.

• Consequences: Violations can lead to significant penalties.

  • Example Case: Tesco Stores Limited fined for selling expired food items at multiple outlets.

5.4.8. National Institute of Standards and Industrial Technology Act 1993 (NISIT Act)

• Role: Establishes NISIT, responsible for standards development and enforcement within industries.

• Key Sections: Empower NISIT to set compliance standards and safety protocols.

• Example: Penalties issued for companies selling unsafeguarded electrical products.

5.5. Consumer & Supplier - Rights and Obligations

5.5.1. Consumer Rights

• Outlined under various acts, encompassing rights related to information, safety, choice, fair treatment, and redress.

5.5.1.1. Right to Information

• Consumers are entitled to receive complete information on products, allowing for fully informed decisions.

• Relevant Act: Under the Fairness of Transactions Act 1993, clear product labeling and specifications are mandated.

5.5.1.2. Right to Safety

• Consumers must receive products safe for use, as per Goods Act 1951 stipulations.

• Example Case: Liability can arise from negligence in product safety testing, where consumers are harmed.

5.5.1.3. Right to Choose

• Consumers should not face coercion in choosing products, favoring diversity and fair competition.

5.5.1.4. Right to Fair Treatment

• Ensures consumers experience fair dealings and are protected from unfair trading practices under the ICCC Act 2002.

• Example: Customers overcharged can pursue legal action for unfair pricing.

5.5.1.5. Right to Redress

• Gives consumers avenues to seek remedies for defective products or unfair practices, including compensation under relevant laws.

5.5.2. Consumer Obligations

5.5.2.1. Obligation to Be Informed

• Consumers must seek product knowledge and understand usage before purchasing.

5.5.2.2. Obligation to Use Products Correctly

• Consumers must follow proper usage instructions to be eligible for redress under acts governing product safety.

5.5.3. Supplier Responsibilities

5.5.3.1. Obligation to Provide Safe Products

• Suppliers must ensure products are safe, as highlighted by the ICCC Act 2002.

• Example: Expired or contaminated items can invoke investigations.

5.5.3.2. Obligation to Provide Accurate Information

• Suppliers must offer truthful descriptions of their products as per advertising guidelines under the Commercial Advertisement Act 1976.

5.5.3.3. Obligation to Honor Warranties and Guarantees

• Suppliers are tasked with upholding warranties provided upon purchase as mandated by the Fairness of Transactions Act 1993.

5.5.3.4. Product Liability

• Suppliers might face accountability for damages from defective products under the Goods Act 1951.

• Key Case: Adelaide Chemical & Fertilizer Co v Carlyle (1940)

  • Context: Resulted in strict liability for product-related injuries, reinforcing proper hazard labeling importance.

5.6. Regulatory Institutions

5.6.1. Independent Consumer and Competition Commission (ICCC)

• Role: Ensures compliance with consumer laws and investigates unfair practices.
  ### 5.6.2. National Institute of Standards and Industrial Technology (NISIT)

• Role: Maintains enforcement of safety and quality standards.
  ### 5.6.3. Department of Commerce and Industry

• Role: Works with the ICCC to oversee and enforce business regulations, enhancing consumer protection.

5.7. Remedies Available to Consumers

5.7.1. Consumer Remedies

5.7.1.1. Compensation

• Consumers may seek financial recovery for damages from defective products, unfair practices, or misleading promotions.

5.7.1.2. Refunds

• Consumers can claim full or partial refunds for defective products not matching descriptions, supported by the Fairness of Transactions Act 1993.

5.7.1.3. Replacements

• Rights to product replacements for defective items; the Goods Act 1951 underpins this entitlement.

5.7.1.4. Complaints to ICCC

• Consumers can lodge complaints regarding unfair practices, allowing for regulated investigations and corrective measures.

5.7.1.5. Legal Action

• Consumers may initiate court proceedings for serious breaches of consumer rights, enabling the court to assess damages or enforce injunctions.

5.8. Case Studies

5.8.1. Case Study 1: Consumer Dispute with Retailer

• Context: Defective purchased appliance with unresponsive retailer.

• ICCC's Role: Intervention resulted in the retailer's obligation to process refunds and improve service.

5.8.2. Case Study 2: Misleading Advertising by a Company

• Summary: Deceptive health claims in dietary product advertisements led to consumer misrepresentation complaints.

• ICCC's Response: Investigation completed, resulting in penalties and corrective acts.

5.8.3. Case Study 3: Product Liability Claim

• Situation: Consumer injury from a defective product led to claims of negligence against the manufacturer.

• Outcome: Court found the manufacturer liable and demanded compensation for damages suffered.

5.9. References

• Independent Consumer and Competition Commission Act 2002.

• Goods Act 1951.

• Fairness of Transactions Act 1993.

• Commercial Advertisement (Protection of the Public) Act 1976.

• Electronic Transactions Act 2021.

• Prices Regulation Act 1949.

• Packaging Act 1974.

• National Institute of Standards and Industrial Technology Act 1993.

5.10. Exercise

1. What are the primary consumer rights under PNG’s consumer protection laws?

2. What legal remedies exist for consumers encountering defective goods in PNG?

3. Provide an example showcasing consumer protection laws application in PNG.