Making False Claims
The carbon tax has been in place for a few months and businesses are beginning to more accurately estimate the effect it is having on their costs. Before blaming the carbon tax for a price increase however, business owners need to consider the Competition and Consumer Act 2010 (Cwlth).
The Act states “you must not make false, misleading or deceptive claims about the price of goods or services.” This
includes false, misleading or deceptive claims linking price rises to the carbon price. The Australian Competition & Consumer Commission (ACCC) has cracked down on a number of businesses making false claims about carbon tax increases influencing price rises. If you intend to make similar claims ensure you are able to justify your claim. In one high profile example Genesis Fitness Club (GFC) in Berwick paid an infringement notice of $6,000 in relation to a carbon price claim made about the cost of gym membership fees.
In April 2012, GFC Berwick Pty Ltd sent a letter to 2,122 of its members promoting a ‘RATE FREEZE’ offer. In it, they offered members a range of lengthy contract extensions at current or reduced membership rates. The letter represented to members that by taking up this offer members could avoid a fee increase of 9-15% due to the carbon price.
ACCC chairman Rod Sims said, “The ACCC believes that GFC Berwick did not have a reasonable basis for claiming the carbon price would increase the cost of gym memberships by 9-15%. We understand that over 200 members took up the offer and extended their contract. We are concerned that the false claims about the carbon price may have encouraged these people to sign lengthy contract extensions they otherwise would not have.”
“Businesses are free to set their prices as they see fit but must carefully consider the basis for making carbon price claims and ensure such claims are truthful and have a reasonable basis,” Mr Sims said. As part of the resolution of this matter, the CEO of the Genesis Division of Belgravia Health & Leisure Group Pty Ltd, the company which manages the franchise network, wrote to all affected members on behalf of GFC Berwick offering them the opportunity to withdraw from the contract extensions at no cost.
Before making a claim, ensure you have hard evidence including:
- Invoices showing the impact of the carbon price on your supply chain or business input costs – for example, raw materials, packaging and transport cost increases
- Notices/invoices showing the impact of the carbon price on the cost of services – for example, gas, electricity, waste disposal and travel cost increases
- Information from your industry association and the government. This may provide guidance as to likely price impacts as a result of the carbon price in certain industries. Information dealing with your specific business model is more likely to reflect your particular costs.
The ACCC has published a paper called Carbon Price Claims: Information to support your claims and can offer further guidance on this issue at www.accc.gov.au/carbon.