Scope of chapter

11.1 Children are significant consumers of goods and services. Markets in toys, fast food, entertainment and clothes are directed explicitly at children. Young people often have direct spending power from pocket money and their own earnings.[1] In addition, children have an indirect effect on the marketplace through the influence they have on the way their parents and other adults spend money.

11.2 Some young people are relatively sophisticated consumers. However, many children, especially those of primary school age, may make uninformed purchases or be particularly susceptible to aggressive selling techniques. Of the 73% of respondents to our survey who considered that young people are more likely to be ripped off than adults, the majority gave young people’s inexperience as the reason for this.

Young people are more gullible than most adults, they fall for scams.[2]

Kids can be ripped off without them knowing.[3]

Its not a matter of young people or adults, it’s a matter of experience.[4]

11.3 The terms of reference require the Inquiry to consider the appropriateness and effectiveness of the legal process in protecting children and young people as consumers. The key legal processes that affect children as consumers are those relating to trade practices and consumer protection, financial services, advertising and the media.

11.4 Consumers are generally defined as those who purchase goods and services for personal or household use. Individuals using government services are also regarded as consumers. The legal processes in relation to children’s dealings with certain federal government service providers are examined in Chapter 9.

11.5 The most common complaint about consumer issues expressed in focus groups was that young people are routinely followed or hassled by shopkeepers who seem to think that their age makes them inherently suspicious.[5] Respondents to the survey nominated poor service as their most common problem when buying products.[6]

Shop assistants stare at you as if you can’t afford things and are just wasting their time.[7]

A legal process can do little to address these issues but they reflect many children’s perceptions of disadvantage when dealing with adult institutions.

Protecting and informing child consumers

11.6 The major barrier to children taking advantage of their consumer rights is that they generally do not know they have those rights.[8] Even if they do know they have rights, children may not understand how to enforce them or may not feel confident about pursuing a remedy. Young people told us that it is very difficult to seek redress for poor treatment by service providers because no-one listens to their complaints.[9]

11.7 Children do not often make complaints about consumer services or follow them through. The Inquiry therefore considers it essential that complaints mechanisms are complemented by regulatory requirements and educational initiatives that effectively safeguard child consumers’ well-being. These educational initiatives should begin as soon as children enter compulsory school years.

11.8 Departments in various States have distributed students’ guides to consumer affairs.[10] In addition, the National Primary School Consumer Education Working Party has produced resources, directed at different age groups, that provide consumer information to children.[11] These are positive initiatives. National co-ordination of approaches of this kind would ensure the greatest number of children are well informed consumers. National child consumer education strategies for implementation in all Australian infants, primary and secondary schools and in TAFEs should be developed.[12] The strategies should include information on consumer services and remedies, where to find these services and good consumer practices such as reading and understanding labelling.[13]

Recommendation 51 National child consumer education strategies should be developed for implementation in all Australian infants, primary and secondary schools and in TAFEs.

Implementation. The Australian Competition and Consumer Commission (ACCC), the Consumer Affairs Division of the Department of Industry, Science and Tourism and DEETYA should develop these strategies in conjunction with the relevant State and Territory consumer affairs and education authorities.

Enforcing children’s contracts

11.9 Commerce often involves consumers in contractual arrangements. At common law contracts are not binding on people under the age of 18.[14] A child can enforce a contract against the other party but the contract cannot be enforced against the child. This is one of the consequences of children’s historical classification as persons under a legal disability.[15] The main exception to this rule is that young people are liable on contracts for necessaries.[16] There are other statutory exceptions in some jurisdictions.[17] These rules can make service providers reluctant to contract with young people.

11.10 Some 16 and 17 year olds are in full time employment and living independently. These young people in particular should have greater contractual capacity, including the ability to enter credit contracts. The Minors (Property and Contracts) Act 1970 (NSW) reverses the general principle that a contract is not binding on a minor. It provides that where a minor participates in a civil act (including a contract) for his or her own benefit that act is presumptively binding on the child provided he or she has the necessary understanding to participate in it.[18] The Inquiry considers that legislation based on this model should be adopted nationally for young people aged 16 and 17.[19]

Recommendation 52 Legislation similar to the Minors (Property and Contracts) Act 1970 (NSW) should be adopted on a national basis for young people aged 16 and 17.

Implementation. The Attorney-General through SCAG should encourage the States and Territories to enact legislation to this effect.

Children as consumers of professional services

11.11 The Inquiry received a number of submissions on the difficulties faced by young people as consumers of professional services, particularly health services.[20] Complaints about professionals are generally dealt with by professional associations and specialist disciplinary bodies or by civil litigation.[21] While we acknowledge that children must be able to have their complaints about professional services resolved, further exploration of this matter is beyond the scope of this Inquiry.

Children as consumers of accommodation services

11.12 Accommodation services were not addressed in IP 18. However, they emerged as a serious concern during consultations.

11.13 Safe, appropriate accommodation is essential for the well-being of young people. Those who cannot live with their family can face significant difficulties as consumers. Private landowners often stereotype teenagers as high risk tenants and are reluctant to lease properties to them even where they can demonstrate a capacity to pay.[22] In addition, public housing can be very difficult for people under 18 to access.[23]

11.14 Once young people have secured accommodation they may face additional problems having essential services, such as electricity, connected. Many power providers insist on a large bond or guarantee from customers under 18.[24] These conditions do not apply to adult clients. While acknowledging the significant impact this discrimination can have on the ability of young people to live independently and the potential benefits of national uniform age discrimination laws, the Inquiry considers that these matters fall outside our terms of reference.

[1] See paras 2.25-28 for statistics on children’s spending power and patterns.

[2] Survey Response 129.

[3] Survey Response 226.

[4] Survey Response 352.

[5] Adelaide Focus Group 29 April 1996; Canberra Focus Group 6 May 1996; Wagga Wagga Focus Group 9 May 1996.

[6] Survey Question 12: 30.6% of respondents mentioned this problem. The other common complaints were that goods were over-priced (26.3%) and that shopkeepers were suspicious of them (11.3%).

[7] Survey Response 65.

[8] Adelaide Focus Group 29 April 1996; Community Legal Centres Minutes of Meeting Melbourne 28 May 1996.

[9] Adelaide Focus Group 29 April 1996.

[10] eg the NSW Dept of Consumer Affairs publishes Fair Go! which targets 16 to 18 year olds and includes information on consumer rights, using credit, product safety and making complaints: Dept of Consumer Affairs Fair Go! Every Student’s Guide to Fair Trading Dept of Consumer Affairs Sydney 1994.

[11] eg the Consumer Power interactive learning packages.

[12] This proposal is supported by Taxi Employees’ League DRP Submission 21; Women’s Advisory Council DRP Submission 26; SA Independent Schools Board DRP Submission 31; NT Government DRP Submission 71; Consumer Affairs Qld DRP Submission 81.

[13] See also recs 53, 57-59, 61, 64.

[14]Dillon v Wood (1881) 2 NSWR 298; Rubinovich v Emmett (1901) 27 VLR 265.

[15] See paras 13.6-11.

[16] There is considerable case law on the meaning of necessaries. Generally it is interpreted to mean goods and services that are necessary to a minor, such as food, clothing, accommodation and employment: J Carter & DJ Harland Contract Law in Australia 3rd ed Butterworths Sydney 1996, 277– 282.

[17] eg a young person who has turned 16 can effect a life insurance policy: Life Insurance Act 1945 (Cth) s 85. In Vic certain contracts by minors for the repayment of loans are valid: Property Law Act 1958 (Vic) s 28B. In SA a court may approve a minor’s contract rendering it binding: Minors’ Contracts (Miscellaneous Provisions) Act 1979 (SA) s 6.

[18] Pt 3.

[19] The proposal that the age of contractual capacity should be lowered is supported by Women’s Advisory Council DRP Submission 26. NT Government DRP Submission 71 supports a uniform age of contractual capacity. Recs 68-69 propose that children aged 16 and 17 be capable of litigating directly.

[20] eg Medical Consumers’ Association IP Submission 163; Mental Health Legal Centre IP Submission 167; NSW Health Care Complaints Commission Submission IP 182; Australian Association of Social Workers IP Submission 207.

[21] eg in NSW complaints about legal practitioners are dealt with by the Legal Services Commissioner a statutory body established under the Legal Profession Act 1987 (NSW) Pt 10 Div 2. A complaint about a medical practitioner can be made to the NSW Medical Board or the Health Care Complaints Commission. The Australian Medical Association deals with complaints against its members according to its by-laws.

[22] V Marlow, Capricorn Youth Housing Public Hearing Submission Rockhampton 1 August 1996; S Willey Public Hearing Submission Hobart 30 May 1996.

[23] One girl who participated in the Hobart Focus Group 30 May 1996 reported having to wait 18 months for public housing.

[24] Canberra Focus Group 6 May 1996; V Marlow, Capricorn Youth Housing Public Hearing Submission Rockhampton 1 August 1996.