Once your business is up and running, you will need to be aware of the laws that govern fair trading in the day-to-day operation of your business. This is not as onerous as you may think, because our fair trading laws are a two-way street. They also recognise the fact that traders as well as consumers can suffer from unfair operators. The laws are reviewed from time-to-time to ensure competition and fairness in the marketplace and businesses and industry associations are invited to comment on proposed changes.

Many of the NSW Government's fair trading laws are the same as in other states and countries around the world. These laws reflect the United Nations Guidelines for Consumer Protection which recognise the 'eight consumer rights' developed by Consumers International. These rights include the right to information, choice, safety, representation, redress and consumer education.

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The main law covering business behaviour in NSW is the Fair Trading Act 1987.

Under the Act, amongst other things, it is unlawful to:

• make false claims about a product or service
• operate in a misleading or deceptive way, or in a way that is likely to mislead or deceive your customers. You are required to tell the truth to your customers and not hide any relevant information. This also includes advertising your business.
• take unfair advantage of vulnerable customers, which is also known as unconscionable conduct. This may occur where customers have no alternative than to do business with you (for example, you may be the only shop in a country town) or where you have a product or service that is in high demand, and you abuse your bargaining power. A common example of this is where customers are pressured to sign a contract that they can't understand and which includes unfair conditions.

A good way to check whether you are engaging in unconscionable conduct is to ask yourself - is there any significant difference in what my customers pay and the way they are treated compared to businesses in similar situations? (think of location, product/service, sales tactics and customers). If there is, then you need to think whether the differences are justified. It could be that you offer other benefits to your customers.

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The Fair Trading Act gives the government a number of options to enforce the law and empowers the courts to punish those who have broken it.

These include:

• an enforceable undertaking. This is a legally-binding agreement to do certain things so that you comply with the law
• an injunction to stop you continuing to do something which breaks the law. For example, you may have to cancel booked advertisements that have been considered to be misleading under the Act
• a public warning notice
• prosecution through the courts
• financial penalties
• a notice to place corrective advertising. For example, you may be required to place an advertisement in a major paper that gives customers certain information about your business such as fees not disclosed in previous advertisements
• freezing of bank accounts
• referral of complaints to other authorities or bodies.

Consumers and businesses also have a right to compensation through the courts for any loss or damage that occurs due to the law being broken.

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Running a business, you should be aware that Federal laws will also have a bearing on your operations. One of the most important Federal laws is the Trade Practices Act 1974 which complements the NSW Fair Trading Act.

The consumer protection/fair trading provisions of the Trade Practices Act and the Fair Trading Act are virtually the same - the Fair Trading Act is used within NSW while the Trade Practices Act may be used for NSW, national or cross-border issues.

The Trade Practices Act also provides protection for consumers against unfair practices by prohibiting anti-competitive or restrictive behaviour that lead to consumer problems.

The Trade Practices Act is administered by the Australian Competition and Consumer Commission (ACCC) which also looks at prices surveillance (are the prices customers pay, reasonable?) and strategies to prevent marketplace failure (where key industries are not delivering proper benefits for their customers).

The ACCC can be contacted on  1300 302 502.

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Codes of practice and service charters are guidelines for fair dealing between you and your customers. What they do is let your customers know what you as a business agree to do when dealing with them. Sometimes they relate to a single business. At other times they can represent a whole industry.

Codes of Practice and Service Charters can assure customers that your business is trading fairly and ethically. The Office of Fair Trading has already endorsed several voluntary codes of practice developed in consultation with different industry groups. These codes have resulted in better customer/trader relations by establishing agreed minimum standards of behaviour and conduct for handling various trading situations.

Codes of practice

Usually, codes of practice are put together through consultation with representatives of a specific industry and the community. They can be mandatory or voluntary. Mandatory codes provide a minimum standard of protection to the consumers of particular industries. They are prescribed as regulations under the Fair Trading Act 1987 (Part 7) and have the force of law.

Voluntary codes are a form of industry self-regulation. They can be sponsored by a particular industry association or they may be in partnership with a government agency. Membership of an industry association may be a condition of the code.

Unlike mandatory codes, voluntary industry codes are flexible and can be altered quickly in response to changing industry/consumer needs. Compliance with a voluntary code can give you a competitive edge in the marketplace. Usually this is promoted through the display of an industry-endorsed logo that customers should look for.

Service charters

Service charters, on the other hand, are usually created on a business by business basis and give certain guarantees to customers about the service levels that they can expect and what will happen if they are not met. Areas identified in service charters are those of importance to customers.

If you decide to adopt a service charter or a code of practice, the most important thing to remember is that they are active documents. In other words, customers and the government expect you to live by the code or charter and not to simply launch it and forget about it. The code or charter is your written promise to the world about how your business deals with customers, not just a vague motto.

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