The competition watchdog has received more than 3,000 complaints about small business or franchising in the first six months of the year – and is warning SMEs to stay vigilant about watching out for ruthless and illegal behaviour.
The Australian Competition and Consumer Commission’s report on the small business and franchising sectors for January to June 2013 finds misleading advertising or false representations make up the majority of complaints.
The number of complaints about small business increased during the half year, rising from 1471 to 1950. Complaints about franchising fell from 454 to 286.
The largest catalysts for complaints were misleading conduct and false representations, along with consumer guarantees and unconscionable conduct.
While the complaints vary from sector to sector, including complaints about advertising, supermarkets and computer services, some are experiencing more growth than others – such as online retailing.
ACCC deputy chair Michael Schaper told SmartCompany this morning the online retailing sector remains a key point of interest.
“For us, cracking down on those false claims is important to make sure these businesses have a chance to survive,” he says.
Within franchising, Schaper says, most of the complaints had to deal with false representations. Prospective franchisees were given false information about the type of training and support they would receive.
“Although the overall number of complaints is down for franchising, that’s still the hottest issue they’re facing.”
Schaper says misleading representations remain the most important issue, and this is where the ACCC will spend most of its time.
Recently the watchdog ordered seven suppliers of bottled water to remove the word “organic” from packaging, arguing this was an erroneous term that could have been used to inflate prices.
But this isn’t the only area in which this type of action has been taken. The ACCC has taken action against companies for using the words “free range” and even “freshly baked” in an inaccurate manner.
Schaper says the ACCC will continue to crack down hard on these claims – not only to protect consumers, but also businesses.
“When those false claims are made, it cheapens the other providers,” he says.
“Coming down hard on those claims is important for businesses to make sure they can keep operating.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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