The report of the second Australian Consumer Survey was released on 6 May 2016.
Australian Consumer Survey 2016
The Australian Consumer Survey was introduced as part of the implementation of the Australian Consumer Law (ACL). The first survey was conducted in 2010-11, shortly before the law came into effect and the second survey was conducted after five years to assess its impact.
The 2016 survey provides insights into consumer and business experience and understanding of consumer laws, their application and enforcement following the commencement of the ACL on 1 January 2011.
Its findings will be used to identify potential areas to strengthen Australia’s consumer policy framework to improve outcomes for consumers and business. In particular, it will provide an evidence base to inform the ACL Review.
Summary of Key Findings
The Australian Consumer Survey 2016 (ACS) involved 5,408 surveys with consumers and 1,210 surveys with businesses in Australia. Conducted in November 2015 (consumer survey) and February 2016 (business survey), this second wave of the ACS looks at trends in consumer and business perceptions, behaviours and experiences; areas of consumer detriment and areas of business burden.
Perceptions of consumer protection laws
Since 2011, when the first ACS was conducted and shortly before the commencement of the ACL, views of consumer protection laws have improved amongst both consumers and businesses.
Consumer views have shifted favorably across a range of the statements related to consumer protection laws and government intervention, in particular:
- Government providing adequate information and advice (54% agree compared to 38% in 2011)
- Government providing access to dispute resolution services (58% agree compared to 49% in 2011)
- Government being proactive in preventing businesses from treating consumers unfairly (45% agree compared to 40% in 2011)
- Businesses who treat consumers unfairly being detected (51% agree compared to 47% in 2011)
- Confidence in the law adequately protecting consumers from being treated unfairly (54% compared to 51% in 2011).
- However, consumer confidence in being able to buy products and services knowing that businesses will do the right thing and not mislead or cheat consumers has declined (64% agree compared to 71% in 2011).
From a business perspective, there have been a number of positive increases, the most notable being:
- The government provides adequate access to services that help consumers to resolve disputes with businesses (84% agree compared to 62% in 2011)
- Most disputes between consumers and businesses end up with a fair outcome (70% agree compared to 50% in 2011)
- The government is doing enough to ensure businesses comply with the Australian Consumer Law (68% agree compared to 54% in 2011).
In addition, business respondents are more likely to believe the ACL has had a positive impact on:
- Business understanding of their obligations and responsibilities (57% report a positive impact compared to 44% in 2011)
- Business compliance with the ACL (56% report a positive impact compared to 42% in 2011)
- Consumer understanding of their rights and responsibilities (50% report a positive impact compared to 36% in 2011)
- The investment required to comply with the ACL (28% report a positive impact compared to 16% in 2011)
Business perceptions of the ACL and views on the impact of the ACL vary by business size.
- Compared to small and medium businesses, large businesses were more likely to view the ACL as having made a positive impact across a range of factors
- Large businesses (84%) are more likely to agree that the government provides adequate information and advice to help businesses comply with the ACL compared to small (71%) and medium (70%) businesses
- Medium/large businesses are less likely than small businesses to agree that the ACL favours the consumer over the business (53% agree compared to 67% of small businesses)
- Small businesses (29% disagree) are more likely than medium/large business (18% disagree) to disagree that the ACL adequately protects the rights of businesses
Experience of consumer problems
Along with improved perceptions of consumer protection laws in Australia, the 2016 ACS has also identified a reduction in the proportion of Australian consumers experiencing problems related to the purchase of goods or services.
Six in ten (59%) consumer respondents had experienced at least one problem related to a product or service in the last two years, down from 74% in 2011.
Business respondents also reported a lower incidence of consumer problems – reporting an average of 3.44 consumer problems per month compared to an average of 5.15 per month in 2011.
The most common types of problems experienced were related to faulty, unsafe or poor quality products (30% compared to 27% in 2011), poor customer service (26% compared to 37% in 2011) and the provision of incorrect or misleading information (24% in 2015 and 2011).
Consumers who speak a language other than English at home were more likely to report cases of experiencing unclear or unfair contract terms (16% vs. 10% of English speaking consumers) and high pressure sales tactics (7% compared to 4% of English speaking consumers).
Industry sectors where consumer problems were more likely to arise were:
- Telecommunication products or services – 26% of consumers who made a purchase in this category experienced a problem (compared to 31% in 2011)
- Internet service providers – 25% of consumers who made a purchase in this category experienced a problem (compared to 32% in 2011)
- Electronics/electrical goods – 19% of consumers who made a purchase in this category experienced a problem (26% in 2011)
Consumers are taking action to resolve consumer problems
Consumers showed a higher propensity to take action to resolve their problems compared to the 2011 survey – 82% of consumers who experienced a problem took action to resolve it, compared to 75% in 2011.
Consistent with the 2011 findings, the industry sectors where consumers were more likely to take action were internet service providers (90% of consumers with a problem took direct action), banking or financial services (90% of consumers with a problem took direct action), utility services (89% of consumers with a problem took direct action) and telecommunication services (88% of consumers with a problem took direct action), all of which were likely to be problems related to an ongoing service.
Industry sectors where consumers were less likely to take action to resolve their problem included food and drink products (73% of consumers with a problem took direct action), health products or services (67% of consumers with a problem took direct action), public transport (64% of consumers with a problem took direct action), legal or professional services (63% of consumers with a problem took direct action), buying or selling real estate (62% of consumers with a problem took direct action) and work tools or work wear (62% of consumers with a problem took direct action).
Resolution of consumer problems
Consistent with the 2011 survey, almost half of consumer respondents who experienced a problem report that their problem has been resolved to their satisfaction (47% compared to 48% in 2011). The majority of resolved cases (84%) were settled directly between the consumer and the trader.
Industry sectors where problems were more likely to be resolved to the satisfaction of the consumer were electronics/electrical goods (58% of cases resolved to the satisfaction of the consumer) and telecommunication products (54% resolved to the satisfaction of the consumer), compared to the average of 47%.
In the public transport sector the proportion of cases unresolved and unlikely to be resolved is higher than the average (44% compared to the average of 26%).
In the utility services and travel services sectors the proportion of cases resolved but not to satisfaction of the consumer is above average (26% and 29% respectively compared to the average of 19%).
Decrease in the cost of consumer problems
It is estimated that it costs consumers $16.31 billion each year to deal with problems, a decrease from 2011 ($16.36 billion). Whilst the number of consumer problems has decreased significantly, the overall cost of consumer problems is only marginally lower. This is due to a higher proportion of consumers now taking action to resolve their problems and an increase in direct costs incurred by consumers when addressing their problem (average annual spend per person in 2015 was $299 compared to $221 in 2011).
It is estimated that consumer problems cost Australian businesses $18.03 billion per year, a result notably lower than in 2011 ($21.56 billion). The decrease in costs is driven by a lower incidence of consumer related problems however, the time spent dealing with each problem has increased (an average of 3.18 hours per issue compared to 2.54 hours in 2011).
Awareness of dispute resolution services
In 2016, around four in ten consumer respondents (44%) and two thirds of business respondents (66%) were aware of dispute resolution services provided by consumer protection agencies.
Within the consumer sample, awareness of these services has decreased since 2011 (down 3 percentage points to 44%) and this decrease is predominantly due to a decrease in Victoria (down 6 percentage points to 43%).
In contrast, awareness within the business sample is higher than the 2011 survey (up 5 percentage points to 66%). This increase is evident across most states and territories but is mainly due to business respondents in New South Wales, Northern Territory and South Australia.
Around one third of consumers (31%) report that they would participate in dispute resolution services if they had an issue with a business that they could not resolve. This represents a decrease from 2011 where 36% of consumer respondents were likely to participate in dispute resolution services. The decrease is evident across all states and territories but is particularly evident in Western Australia (down 11 percentage points to 28%), Victoria (down 5 percentage points to 31%) and Queensland (down 4 percentage points to 32%).
Business participation in dispute resolution services has increased with around three in ten businesses (29%) having gone through the process (an increase from 24% in 2011). Business use of dispute resolution services was higher in New South Wales (43%) and lower in Victoria (20%) and South Australia (14%).
Half of business respondents (53%) report that they would participate in dispute resolution services if they were unable to resolve a consumer issue, an increase from 43% in 2011. Intention to participate in dispute resolution services is higher amongst those who have previously participated in these services (67%).
Of the problems experienced by consumers, 23% were related to online purchases and of these purchases, 20% were purchased from an overseas based company. Industry sectors where online purchases were more common were electronics/electrical goods; clothing, footwear, cosmetics and other personal products; gift vouchers, travel services and entertainment.
Approximately six in ten consumers (63%) believe they have the same rights when purchasing online as they do in a physical store. This highlights a potential area for further consumer education to ensure consumers are aware of the scope and limitations of the ACL.
Businesses providing information about the ACL
The proportion of business respondents that provide their customers with information about the ACL has decreased from 55% in 2011 to 43% in 2016. The decline is particularly evident in Queensland, South Australia and Western Australia.
Signage, brochures and verbal information are the most common ways that businesses are delivering this information to consumers. In 2016, a higher proportion of business respondents report including information about the ACL on their contract/agreement documents (15% compared to 4% in 2011).