The Assistant Minister for Productivity, Competition, Charities and Treasury, Andrew Leigh, has been busy recently on putting a stop to a number of egregious consumer rip-offs by corporations, and has got agreement from all the states and territories to legislate.
We all know the tricks. Give them your credit card and “ka-ching” every month another small, almost unnoticeable payment gets skimmed off, and trying to unsubscribe is a nightmare. Or buy something online for $50 and by the time you get to the check-out, it is $80.
Or delay getting the first service on time and the whole boat warranty is void. It says so in tiny grey type in Para 15 on Page 5. And so on.
Dealing with this should not be a matter of politics, as in the Coalition favours business and Labor favours consumers. We are all consumers and small business is a significant consumer victim of some of the practices to be outlawed.
In a speech yesterday (1 December), Leigh cited developments in behavioural science as a reason for corporations becoming trickier and meaner. Corporations can engage clever psychologists to work on consumer vulnerabilities and inattention to trick them into making decisions that they would not have made if the corporation had been upfront.
The significant point about corporations using sophisticated psychological research, is not so much that it is new, but that it is just the latest unfair trick in long-term, ingrained corporate behaviour – to use any technique available to increase profits.
It should mean that the legislation, when drafted, should do more than outlawing a list of specific unfair practices such as those mentioned above – important as that is.
It should state that the purpose of the prohibitions is to protect consumers, followed by a comprehensive prohibition against all unfair and unreasonable practices and then say they include, but are not limited to, the set-out list the specifics. Then if corporations find new tricks that give them an unfair advantage, they will be less likely to get away with it – but, of course, there are no guarantees in the law.
The advantage of the stated purpose and the comprehensive prohibition on unfair conduct is that it would provide some protection while legislatures get round to dealing with the new tricks specifically.
True, the psychological tricks have been a quantum leap and have been one of the causes of the corrosion of trust in corporations. Roy Morgan research now puts trust in corporations in Australia at the lowest since it began measuring it in 2017. Presumably it began detailed research as the anecdotal evidence began to come in.
Eroding trust and consumer frustration have not been caused by a sudden change in human nature. Rather, many usually reasonable, trusting people have been driven to thinking the worst for the good reason that they have had to dal with increasing corporate bastardry – hours on understaffed la-la lines with no satisfactory response, for example.
Experiencing “a higher than usual” volume of calls is now so usual that the phrase is permanently in most la-la lines’ pre-corded prompts. That misleading. The problem is not the number of calls but the failure to have enough trained staff to deal with them.
It happens because corporations are screwing down their call-centre staff so they do not have the slightest breather between calls, and they have to deal with some normally reasonable person whose patience has been warn very thin. Corporations want to reduce wage costs and increase profits at the expense of the stress levels of their staff and customers.
I would rather be a parking inspector than work in a call-centre.
And the numbered options for consumers to press are not there to “help better direct your inquiry”, rather they are there to help the corporation make more profit by enabling them to give sales inquiries preference over service inquiries.
But a more sinister trend has emerged. Until the internet swamped us, corporations ran on the motto: “The customer is always right”. This quaint phrase encapsulates the idea that businesses regard every customer as important and to be retained by providing whatever service it took because customers are the bedrock of business.
But there has been a change in this thinking that is as profound as the misuse of behavioural psychology over the past decade or two. Massive oligopolies and monopolies no longer treat all customers as the bedrock of their business. To the contrary.
Good customers (assets on the balance sheet) are those who hand over their credit cards, take the goods or services, and have no complaint or service requirements that would require the corporation’s staff to deal with at a cost.
Bad customers who require help or refunds, on the other hand, are liabilities on the balance sheet. The quicker these bad customers can be turned into non-customers, the better it is for the balance sheet of the corporation because they would then no longer be burning up staff time at a cost to the corporation.
Corporations’ “bad customers” are only asking what a reasonable consumer should expect. But modern corporations treat these customers as a liability to be got rid of and the best way to do that is to ignore them. Do not give them any costly prompt human help.
To lose a customer improves the bottom line. Hence, the endless la-la lines.
A shopkeeper could not tell a customer to clear off in the way a corporation can electronically make a difficult customer disappear.
The competition between oligopolists is no longer one to best serve the customer by good service, good products, and good prices. Rather the competition is to use whatever trick it takes to grab seamless credit-card transactions. If one oligopolist stoops to a low practice, they all competitively have to stoop to it.
Also, the nature of goods is changing. More goods are reliant on software. Often failing software or failing delicate circuit boards can cause appliance failure – and otherwise perfectly good appliances are dumped.
On top of this the legal system is so costly that consumers are shut out. Lawyers charge hundreds of dollars an hour, far eclipsing the value of the averge consumer complaint. Justice out-priced is justice denied.
Aggrieved customers become non-customers and the corporate balance sheets improve.
That is unless a new fearless, well-funded consumer watchdog can pursue bad corporate behaviour and impose large fines.
I am sure the proposed new consumer law will improve things but in the drafting, some good general tests are needed as to what is bad behaviour, backed by a strong enforcer and provisions for significant aggravated damages for consumers who have been given time-consuming run-arounds or beguiling come-ons spawned by the corporate misuse of behavioural psychology that Leigh has correctly identified.
Crispin Hull
This article first appeared in The Canberra Times and other Australian media on 2 December 2025.