Australian Consumer Survey 2011

The Australian Consumer Survey was the first national survey of consumer and business awareness and understanding of rights and obligations under consumer laws. It also covered the experiences of consumers and businesses in dealing with consumer issues.

The Survey was commissioned jointly by the Australian, State and Territory governments.

It showed that Australian consumers and businesses have a high level of awareness of the existence of consumer laws, but that there are opportunities to increase their knowledge of their rights and obligations.

Most consumers are confident that businesses do the right thing, but there are some vulnerable consumers in our society who are less confident and who encounter more difficulty in dealing with consumer issues.

Consumers are also generally aware that there are ways in which to resolve disputes if needed and that there are consumer agencies that can assist them. However, some people are concerned about the effectiveness of these avenues for seeking redress.

About the survey

The Australian Consumer Survey was commissioned by the Policy and Research Advisory Committee (PRAC) of the Standing Committee of Officials of Consumer Affairs (SCOCA). After a competitive tender process Sweeney Research was commissioned to undertake the Survey. The Survey was developed by Sweeney Research with the input of PRAC, along with the Education and Information and Compliance and Dispute Resolution Advisory Committees of SCOCA. The Australian Consumer Survey report does not represent the agreed policy position of any Australian government. There are similar international surveys on consumer issues, laws and experiences.

Australian Consumer Survey Report

The report of the first Australian Consumer Survey was released on 8 June 2011. A summary of the reports findings is provided below, together with a link to the full report.

Australian Consumers Survey Report 2011 [PDF 2.6MB]

Overview of the Report

There is a high level of awareness of consumer protection laws and most consumers are confident that businesses do the right thing.
Consumers are aware of consumer regulators, and about half of consumers will contact a regulator about a consumer problem.
There is broad awareness of dispute resolution services for consumer problems and most consumers and businesses would use a dispute resolution service if they needed to.
Most consumers take some action to resolve a problem and mostly contact the business concerned. In most cases, they can resolve the issue directly with the business. Most businesses have not used a dispute resolution service provided by a consumer regulator, but larger businesses are more likely to.
While there is generally good awareness of the existence of consumer rights and the ways to resolve consumer problems in the community, the Survey raises some issues to consider:
- Although consumers and businesses know about consumer rights generally, there is much less detailed knowledge of these rights and business obligations.
- Consumers do experience problems with goods or services. The most common problems are poor customer service, high or unexpected fees and delayed or undelivered goods or services.
- It is estimated that it costs Australian consumers a total of $14.2 billion a year to deal with consumer problems, based on the direct costs they incur and the time they spend dealing with problems. When considering this figure, it should be noted that in 2009-2010 Australians spent $724.43 billion (excluding dwellings) on household consumption.¹
- It is estimated that it costs Australian businesses a total of $6.6 billion a year to deal with problems where they have a legal obligation to provide a remedy for the consumer. This figure does not account for the costs incurred by businesses to replace or repair products.
- A quarter of consumer problems raised with businesses remain unresolved.
- Consumers who do not speak English at home are less likely to know about how to deal with consumer issues.

There is a high level of awareness of consumer protection laws

The vast majority of consumer and business respondents indicated awareness of the existence of consumer protection laws (90 per cent of consumer respondents and 98 per cent of businesses), however only a small proportion could spontaneously name existing laws. Amongst consumer respondents, approximately one in ten were able to recall the Fair Trading Act or Trade Practices Act. A similar result was evident amongst business respondents, with 18 per cent recalling either of these existing laws. There appears to be a general understanding amongst both consumer and business respondents that consumers have the right to receive a refund or replacement product for faulty or damaged goods or if a product is not fit for its intended purpose. Beyond this, awareness of specific rights and responsibilities is quite limited. An incorrect assumption exists amongst some consumer respondents that they have the right to return goods if they change their mind within a certain timeframe. It has become common practice for retailers to offer a refund or exchange for change of mind purchases within a set timeframe and therefore it is likely that consumer respondents have come to expect this even though no statutory right to do this exists.

Most consumers are confident that businesses do the right thing

Consumer respondents have a generally high level of confidence that businesses will do the right thing, and not mislead or cheat them. Around seven in ten consumer respondents surveyed believe that businesses generally do the right thing and do not mislead or cheat consumers. For the vast majority of consumer respondents, general recall of problems arising when purchasing goods or services in Australia is occasional or rare. The degree of consumer confidence is negatively impacted by frequent negative experiences with goods and services. Those consumer respondents who report more frequent experiences of problems are significantly less likely to agree that businesses generally do the right thing. A small minority (9 per cent) believe they experience problems more regularly. Some parts of the community are more vulnerable to experiencing more frequent problematic transactions. These include consumer respondents who speak a language other than English at home (where 22 per cent believe they experience problems at least half of the time), those with Aboriginal or Torres Strait Islander background (19 per cent) and single people living with their parents (13 per cent).

Consumers are aware of consumer agencies

Eighty one per cent of consumer respondents surveyed agree that organisations exist in Australia to ensure businesses comply with consumer protection laws. Some consumer respondents see their State or Territory's regulator as being the primary organisation responsible for dealing with consumer problems. Other respondents see the ACCC as the primary organisation responsible. Consumer respondents appear to have some doubt about the likelihood of offending businesses being detected and adequately penalised for exploiting consumers. Twenty five per cent were of the view that breaches of the law would not be detected and 33 per cent believe offending businesses would not receive adequate penalty. Half of business respondents agreed that the government is doing enough to ensure businesses obey consumer protection laws.

About half of consumers will contact a regulator with a consumer problem

Forty eight per cent of consumer respondents indicated that they would initially contact a State or Territory regulator if they needed information or advice about an issue with a business, when asked what they would do in a hypothetical situation. However, when asked about their most recent experience of a consumer problem, common avenues for obtaining information included speaking to family or peers and general internet searching. Of those consumer respondents who did contact a regulator in relation to their most recent problem, the vast majority were satisfied with the information they received.

Consumers do experience problems with goods or services

Consumer respondents were asked to recall any problems they had experienced in the last two years associated with the purchase of a product or service. This included times when:

they believed they had been misled or exploited by a business;
they purchased a product that was either faulty or did not operate how they expected it to; or
purchased a service that did not deliver what they expected.

Approximately three in four consumer respondents surveyed (73 per cent) recalled at least one problem in the past two years. The incidence of experiencing a problem was relatively consistent across all States and Territories. Community groups showing a higher incidence of experiencing a problem were:

those aged 25 to 34 years (81 per cent);
couples with no children (77 per cent);
those in paid employment (77 per cent); and
those with a tertiary qualification (78 per cent).

The most common problems raised by consumer respondents were:

being charged more than expected or being charged unexpected fees; and
delay or non-delivery of goods or services.

These issues were raised by approximately one in five consumer respondents. Other issues raised by consumer respondents included:

faulty or damaged products;
unclear or unfair contract terms;
incorrect claims made by sales people; and
poor workmanship.

One in three consumer respondents raised poor customer service as an issue. However, in most cases, this was a secondary issue rather than the core problem. For example, consumer respondents tend to experience poor customer service when trying to resolve the initial problem. Of the cases reported in this survey, four in ten recalled more than one issue related to their problem. It is estimated that it costs Australian consumers a total of $14.2 billion a year to deal with consumer problems, based on the direct costs they incur and the time they spend dealing with problems Consumer respondents who took some form of action to resolve their most recent problem were asked to estimate the direct cost incurred. These costs include things like paying for repairs or replacement products, telephone and postal costs, travel and petrol costs, legal costs and any other out of pocket expenses. They were also asked to quantify the time they spent dealing with their problem. The incidence of consumer problems reported in this Survey has been extrapolated to the total Australian population and multiplied by the average costs reported to provide a total estimate of time and money spent dealing with problems. It is estimated that it costs Australian consumers $14.2 billion each year to deal with consumer problems. When considering this figure, it should be noted that in 2009-2010 Australians spent $724.43 billion (excluding dwellings) on household consumption.²

It is estimated that it costs Australian businesses a total of $6.6 billion a year to deal with problems where they have a legal obligation to provide a remedy for the consumer. This figure does not account for the costs incurred to replace or repair products

Business respondents were asked to estimate the number of problems they experience in an average month where they have a legal obligation to provide a remedy for the consumer, such as where the business is required to provide a repair, replacement or refund for a good or service. Business respondents were also asked to estimate how much time they would spend dealing with a typical consumer problem. These reported figures have been extrapolated to the Australian business population to estimate the total cost to business in dealing with consumer problems, in terms of the time spent resolving the problems. It is estimated that consumer problems cost Australian businesses $6.6 billion per year. This estimate does not reflect the direct costs incurred by businesses, such as costs to repair or replace products or legal costs. This is an estimate of the value of the time spent by businesses dealing with the problems.

Most consumers take some action to resolve a problem and mostly contact the business concerned

Seventy four per cent of consumer respondents who experienced a problem in the last two years took some form of action to try to resolve the problem. In the first instance, most consumer respondents contacted the business directly. Seeking information or advice was generally a secondary step taken in trying to resolve the problem.

52 per cent of consumers were satisfied with the response from the business, but 42 per cent were not

Of those consumer respondents who contacted the business to resolve a consumer issue, around half were satisfied with the response they received, but 42 per cent were dissatisfied with the response they received.

Most consumers resolve problems directly with the business

Of the problems reported in this survey that have been resolved, 85 per cent were resolved directly with the business. Cases resolved directly with the trader were significantly more likely to be resolved to the satisfaction of the consumer (76 per cent) compared to those resolved via dispute resolution (only 54 per cent were resolved to the satisfaction of the consumer).

A quarter of consumer problems remain unresolved

Of the problems reported in this survey, one in four cases was unresolved and unlikely to be resolved. Many of these cases were situations where the consumer believed further action would require too much effort or where the business has not cooperated.

There is broad awareness of dispute resolution services for consumer problems

Awareness of dispute resolution services provided by consumer protection agencies is quite high. 45 per cent of consumer respondents and 59 per cent of businesses were aware that these services exist. This is quite a strong result, particularly amongst consumer respondents, given that only a small proportion had accessed these services. It should be noted that in some sectors, for example, financial services, businesses are required to be part of external dispute resolution schemes. Consumer respondents who speak a language other than English at home were significantly less likely to be aware of dispute resolution services (36 per cent) than those whose main language at home is English (46 per cent). Those who speak a language other than English at home are also more likely to believe that they regularly experience problems when purchasing products or services in Australia.

Most consumers would use a dispute resolution service if they needed to

The majority of consumer respondents surveyed were receptive to the idea of participating in a dispute resolution process if they were involved in a dispute with a business that they could not resolve. For the small minority that showed some hesitation about participating in dispute resolution, there was a perception that the process would involve a significant investment of their time and that it would be a stressful process.

Three quarters of businesses would use a dispute resolution service if they needed to

Seventy six per cent of businesses surveyed were likely to participate in dispute resolution if they faced an issue with a consumer that they could not resolve. Eighteen per cent indicated their business would be unlikely to participate in this type of process and the remaining 7 per cent were unsure. For this group, there was a preference to avoid involving a third party by resolving the problem independently or through a solicitor or lawyer; as well as an assumption by some that the process would not be effective.

Most businesses have not used a dispute resolution service and larger businesses are more likely to

Only a small proportion of businesses surveyed (14 per cent) had previously participated in a dispute resolution process. Participation in these services was more common amongst large and medium businesses.

The ACL is in its early stages and awareness is limited

At the time the survey was taken, which was before the commencement of the ACL, awareness of the ACL amongst consumer respondents was limited, at seven per cent. Shortly after the implementation of the ACL, prompted awareness of the new law amongst business respondents was limited at 15 per cent. Medium and large businesses showed considerably higher awareness (26 per cent and 37 per cent respectively) compared to small businesses (14 per cent). To date, news reports and news programs have provided a key source of awareness of the new law for both consumer respondents and businesses. Approximately 60 per cent of consumer respondents and 29 per cent of business respondents aware of the new law initially heard about it via a news report. Communication from industry organisations also acted as a key source of awareness for businesses. Those business respondents who were aware of the new law were asked to what extent they thought the ACL would impact their business, based on their existing knowledge. A quarter of business respondents were uncertain about the overall potential impact and around one third could not comment on how the ACL would impact their business on a range of specific aspects. Around one in five business respondents who were aware of the new law showed an expectation that the ACL would have a negative impact on their business in terms of the investment required to comply with it.

¹ Australian Bureau of Statistics (2010) Series ID A2302254W Households Final Consumption Expenditure, 5206.0 Australian National Accounts: National Income, Expenditure and Product.

² Australian Bureau of Statistics (2010) Series ID A2302254W Households Final Consumption Expenditure, 5206.0 Australian National Accounts: National Income, Expenditure and Product.