Australia introduces new unfair trading practices laws, expanded drip pricing protections and changes for subscription contracts

KEY TAKEAWAYS

• New unfair trading practices laws commence on 1 July 2027.
• The laws prohibit conduct that manipulates consumers or unreasonably distorts their decision-making, and causes detriment.
• Businesses should review marketing, pricing, customer journeys and digital interfaces well before the commencement date.
• The reforms also introduce new transaction charge disclosure requirements and strengthen protections against drip pricing.
• New subscription contract rules require clearer disclosures and easier cancellation processes.

 

SUMMARY

On 1 July 2027, the Competition and Consumer Amendment (Unfair Trading Practices) Act 2026 (Cth) (Act) will introduce a sweeping new prohibition on ‘unfair trading practices’ in the Australian Consumer Law (ACL). The Act targets ‘dark patterns’, including manipulative or distortive conduct that harms consumers but falls short of contravening existing provisions of the ACL. The Act also introduces additional disclosure obligations to combat ‘drip pricing’, and other mandatory disclosure and cancellation requirements in respect of subscription contracts.

The passage of the Act marks a significant expansion of the scope of the ACL, and brings with it critical compliance risk to businesses, noting the significant penalties that can flow from any contravention (upwards of AUD100 million for corporations and AUD2.5 million for individuals). It is essential to act now to prepare for these changes, including by undertaking a holistic review of end-to-end consumer interactions to ensure that consumers are not pressured, misled or manipulated in their decision-making process.

 

WHAT IS THE NEW UNFAIR TRADING PRACTICES PROHIBITION?

What conduct will be prohibited?

The new unfair trading practices prohibition will apply to conduct in connection with the supply, or offer to supply, of goods or services to a consumer. The use of the phrase “in connection with” is intended to include conduct which occurs after a good or service is purchased, such as conduct impacting a consumer’s ability to access or use goods or services after sale.¹

Conduct will contravene the new prohibition if it:

• does or is likely to:
  • manipulate the consumer; and/or
  • unreasonably distort the environment in which the consumer makes, or is likely to make, a decision; and
• causes, or is likely to cause, detriment to the consumer (whether financial or otherwise).²

The Explanatory Memorandum provides some guidance on how these limbs will be applied.

• The ‘Manipulation’ limb is “intended to capture wrongful interference with a consumer that results in a change in the consumer’s behaviour, decision-making or action that is against the consumer’s interests”.
  
  It may involve the exploitation of common cognitive or behavioural biases, such as by using high-pressure sales tactics to create a false urgency. The provision is not intended to capture legitimate, reasonable or generally accepted marketing or sales practices, such as ordinary promotion of goods and services used to influence consumers.³ Initially, it was proposed that to satisfy the ‘manipulation’ limb, conduct would need to be unreasonably manipulative.⁴ That requirement has been scrapped with the result that conduct will only need to be shown to be ‘manipulative’.

• The ‘Unreasonable distortion’ limb is "intended to capture conduct that encourages a consumer to make economic decisions about proceeding with a transaction when they otherwise would have been unlikely to do so, and conduct that obstructs a consumer from implementing an economic decision that they would otherwise have done, such as seeking a refund.”
  
  For example, this might be where the consumer is presented with an “overwhelmingly complex” environment or with “excessive and confusing information that makes key information difficult to find or understand”.⁵

• The ‘detriment’ limb may include “financial loss, wasted time or other negative impacts”.
  
  While actual detriment will contravene this limb, proving ‘likely’ detriment is itself sufficient.⁶ Importantly, detriment is not limited to financial detriment and may include non-financial detriment such as wasted time or inconvenience.

Who does it apply to?

The prohibition against unfair trading practices will apply generally to the supply, or offer of supply, of goods or services to consumers in Australia, including in online settings. The new provisions do not apply to:

• contracts with small businesses or franchisees, but consultation is ongoing to extend the provisions to some business-to-business dealings;⁷
• conduct where the consumer is a body corporate or where the supply is in the course of the consumer carrying on a business; or
• financial services or financial products.

What are ‘dark patterns’?

The new provisions target the use of ‘dark patterns’. These are tactics which might nudge or pressure consumers into unintended actions, often without the consumer’s awareness. This can include imposing obstacles and complexity (such as withholding the disclosure of material information), or exerting pressure in decision-making processes (such as imparting a false sense of urgency).

The distinction between a legitimate marketing practice and a prohibited ‘dark pattern’ may not always be immediately apparent. For example, a scarcity indicator may be used to legitimately display the levels of remaining stock. However, the same conduct could contravene the unfair trading practices provision if used to pressure consumers and create a false sense of urgency, particularly in combination with other sales tactics.⁸

Examples of ‘dark patterns’ may include:

• impeding the consumer’s ability to exercise legal rights or seek legal remedies;
• failing to disclose material information to the consumer;
• disclosing material information to the consumer in a complex, ineffective, unclear, unintelligible, ambiguous, untimely or overwhelming way; and
• creating an environment (including by using design elements in digital interfaces) which places the consumer under unreasonable pressure in relation to, or obstructs the consumer from, making or fulfilling the consumer’s decision.⁹

 

THE REQUIREMENT TO DISCLOSE TRANSACTION CHARGES

The Act creates new obligations for businesses to disclose transaction charges when they display the ‘base price’ for goods and services.

These new requirements are “intended to provide transparency and ensure a potential buyer can make informed decisions”.¹⁰ They build on the existing 'drip pricing' provisions in the ACL, which prohibit the practice of gradually adding fees to the overall price during the transaction process so that a consumer is not made aware of the total amount they must pay until late in the process.

What information must be disclosed?

Where a ‘base price’ (being the price payable for the goods or services themselves) is displayed and a transaction-based charge applies (being an amount that is not payable for the goods or services themselves, such as a delivery fee), businesses will be required to disclose:¹¹

• the amount of the transaction-based charge if it can be calculated, or if it cannot, the method for calculating the transaction-based charge;
• that the charge is a per transaction-based charge (eg if a transaction fee of AUD5 applies per transaction);
• whether the transaction-based charge is, or may be, payable (eg if different transaction methods do not attract a fee); and
• whether the base price displayed includes the transaction-based charge such that it is already incorporated in the product price.¹²

This information must be displayed: (a) while the base price is displayed; (b) in a legible, prominent and unambiguous way; and (c) in close proximity to the base price.¹³

Who does the disclosure obligation apply to?

These new provisions apply generally to offers to supply goods and services in Australia which are ordinarily acquired for personal, domestic or household use.

They do not apply to offers made exclusively to body corporates.¹⁴ Additionally, the following types of charges are not captured by the regime:

• optional charges payable at the purchaser’s election;
• payment surcharges (within the meaning of Part IVC of the Competition and Consumer Act 2010 (Cth));¹⁵
• taxes, duties, fees, levies or charges imposed on the supplier;
• amounts the supplier pays for a tax or levy that would otherwise be payable by another person; and
• charges prescribed by regulation.¹⁶

 

INFORMATION AND TERMINATION REQUIREMENTS FOR SUBSCRIPTION CONTRACTS

New consumer protections have been introduced in relation to subscription contracts, including new mandatory information provisions and termination requirements. The provisions are “intended to ensure potential subscribers know that they would be entering a subscription contract and can make informed decisions about whether to do so”.¹⁷

What are ‘subscription contracts’?

The provisions apply only to ‘subscription contracts’ with consumers and small businesses. ‘Subscription contracts’ include:

• Indefinite period: Contracts with a recurring or continuing supply for an indefinite period, with an automatic liability to pay and a right to end the contract (eg a monthly gym membership of AUD100 per month, continuing indefinitely until the contract is terminated).
• Fixed period with auto-renewal: Contracts with a recurring or continuing supply over a fixed period that continues after the end of that period, unless a party acts to stop it, with an automatic liability to pay and a right to end the contract (eg a contract for the supply of products for 12 months at a rate of AUD100 per month, which automatically renews at the end of the first 12 month period for a further 12 months, unless the subscriber cancels the contract).
• Initial free period: Contracts with a recurring or continuing supply, with an initial period free of charge, followed by automatic payment liability after the initial free period, with a right to end before that liability is incurred (eg a contract with a 30-day free trial, following which the membership automatically renews for AUD100 per month).
• Initial discount period: Contracts with a recurring or continuing supply, with an initial supply at an initial rate, with an automatic liability to pay for supply at a higher rate after the initial period, with a right to end before the higher rate applies (eg a contract with an initial rate of AUD25 for the first month, which then becomes AUD50 per month on an ongoing basis).¹⁸

The provisions do not apply to leases, real property licences, hire-purchase contracts, contracts for payment in instalments, childcare contracts, pre-school to secondary education contracts, and contracts of a kind prescribed by the regulations.¹⁹

What are the new pre-contractual disclosure requirements?

When an offer to supply is made, the supplier must disclose that the contract would be a subscription contract, as well as information about the following matters:

• the liabilities to pay that the subscriber may incur;
• the period of the contract;
• the renewal, extension or other continuation of the contract;
• any notice periods before the subscriber can end the contract;
• how to end the contract; and
• any other prescribed matters.²⁰

The information must be presented in a “comprehensible, audible and unambiguous way” within a reasonable time before a person could agree to enter the contract (ie for oral contracts), or in a “legible, prominent and unambiguous way” in close proximity to where a person can agree to enter the contract (ie for written contracts).²¹

Ongoing disclosures

The Act provides a mechanism by which regulations can prescribe ongoing obligations for businesses to disclose information to consumers or small businesses that are parties to subscription contracts. At this stage, no such regulations have been made to require ongoing disclosure. But there is scope for the Government to impose further requirements on businesses to provide prescribed information at prescribed times and in a prescribed manner.²²

Exit requirements

Perhaps most significantly, a supplier under a subscription contract will be required to: 

• provide a way for the subscriber to end the contract; and
• ensure that each cancellation method is:
  • easy to find;
  • straightforward; and
  • requires only steps reasonably necessary to end the contract and protect the subscriber’s interests; and
• where the subscriber entered the contract online, or the supplier provides an online way of entering such contracts for the same kind of goods or services, the supplier must ensure that one of the ways to end is online.²³

Practices which unreasonably hinder a subscriber from cancelling a contract would be unlawful, such as a gym operator requiring a subscriber to attend a branch in person to terminate their contract if they have now moved interstate or overseas.²⁴

 

WHAT BUSINESSES SHOULD DO NOW

The ACCC has long advocated for the introduction of a prohibition on unfair trading practices. We expect that enforcement of these new provisions will become an ACCC priority when the new provisions come into effect from 1 July 2027. 

Businesses should act now to ready themselves for the changes. Some proactive steps that could be taken include:

• Undertaking a holistic end-to-end review of the consumer journey to identify any aspects of the consumer's decision-making process which could be said to be manipulative, unreasonably distortive or potentially cause detriment.
• For businesses that offer goods or services online, reviewing the digital interface and user experience to analyse whether they contain any ‘dark patterns’, such as obfuscating key information in lengthy disclaimers or indicators of false urgency, or consumer data is being misused to 'nudge' consumers towards a particular outcome.
• Review pricing structures and disclosures to ensure that any transaction fees are disclosed in the manner that will be required when the new provisions come into effect.
• For subscription contracts, assess the adequacy of disclosures against the new requirements to ensure that easy and straightforward cancellations are possible for the consumer.
• Implement training and appropriate governance across the business, including by implementing ACL compliance programs and playbooks for consumer interactions. Marketing and customer experience teams need to be aware of the changes when designing advertising and user journeys.