New prohibitions on unfair trading practices on the horizon

Following the release of two Decision Regulation Impact Statements (DRISs) in December that proposed significant reforms to the Australian Consumer Law (ACL), the Australian Government is following through with the first tranche of those reforms, releasing draft legislation that targets unfair subscription practices, ‘drip pricing’ and conduct that unreasonably distorts the decision environment for the consumer.

The exposure draft of the Competition and Consumer Amendment (Unfair Trading Practices) Bill 2026 is currently open for consultation until 23 February 2026. The Government’s intention is that, once passed, these new laws will have effect from 1 July 2027.

Even though the Bill is an exposure draft, the Government’s intent is clear. Businesses should therefore adapt early to the principles of the announced reforms, embedding them into their operations in order to be well-placed to navigate the coming regulatory requirements.

Unfair trading practices

Overview

If the Bill passes in its current form, the ACL will be amended to introduce a principles-based prohibition on unfair trading practices. This will target conduct that ‘unreasonably distorts or manipulates’ consumer decision-making and causes detriment (whether financial or otherwise). The prohibition is intended to be flexible, capturing emerging unfair practices, particularly in digital environments but also in traditional in-store and retail settings.

More particularly, a person must not, in trade or commerce, in connection with the supply, or an offer to supply, goods or services to a consumer (who is not a body corporate or otherwise not acquiring in the course of carrying on a business) engage in conduct:

• that is, or is likely to:
  • unreasonably manipulate the consumer; 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.

The law would include a ‘grey list’ of conduct that may indicate a contravention of the general prohibition. This list includes:

• Interfering with the consumer’s ability to exercise legal rights or remedies in relation to the supply.
• Failing to disclose material information, or disclosing material information in a complex or ineffective way, to the consumer.
• Creating an environment that places the consumer under unreasonable pressure in relation to, or obstructs the consumer from, making or fulfilling the consumer’s decision.

In addition to the general prohibition, there will be two specific reforms targeting drip pricing and subscription practices.

Enforcement landscape

The general penalty regime applicable to the contravention, or being involved in a contravention, of many ACL provisions will equally apply here. This includes pecuniary penalties and other enforcement options such as disqualification from managing a corporation. Of note, the maximum pecuniary penalty for a body corporate will be the greater of:

• $50,000;
• three times the value of the benefit that resulted from the contravention; and
• if the value of the benefit cannot be determined, 30% of the body corporate’s adjusted turnover for the breach period (being at least 12 months).

For individuals, the maximum penalty is $2.5m.

We expect regulators will combine consumer complaints, mystery shopping and technical reviews in their investigations.

Businesses will need to review digital interfaces, marketing, and sales practices generally to ensure compliance. Subscription models and pricing disclosures should be audited and updated. Staff training and legal review of consumer-facing processes will be essential.

Impacts for business

Product and pricing

The proposed general prohibition is deliberately principles‑based, targeting conduct that ‘unreasonably manipulates’ or ‘distorts’ decision environments (including ‘dark patterns’). That means compliance cannot be a checklist alone – it will require behavioural risk assessments, UX audits and documented decision‑making showing why design choices are reasonable.

Further, the Bill reframes pricing transparency as a structural compliance issue, not a marketing nuance. Any base price shown must be accompanied by clear, proximate disclosure of per‑transaction charges or the method to calculate them at all stages of the transaction flow. This obligation is additional to existing requirement under the ACL with respect to displaying a single price.

This will affect UI/UX, cart flows, and affiliate/marketplace arrangements where fees are added late in the funnel. Systems that compute fees dynamically (location, payment method, delivery) must either calculate and display the fee at the base‑price stage or show a clear calculation method.

Subscription contracts

The law will affect subscription contracts made in trade or commerce with ‘subscribers’ but will not extend to:

• public utility contracts (other than telecommunications and transport);
• leases and licences of real estate;
• hire-purchase contracts and contracts for payment in instalments;
• the supply of prescription healthcare products;
• the supply of school or pre-school tuition or childcare;
• any other contracts that may subsequently be prescribed in the regulations.

Subscription contracts can be categorised as one or more of:

• a fixed term subscription contract;
• a free trial or promotional period subscription contract; and
• an indefinite term subscription contract.

In general, there would be three practical obligations:

• An initial pre‑sign statement that the contract is a subscription contract (and whether fixed, indefinite, free trial or promotional), together with information about potential liabilities, the period of the contract, information about renewal, any pre-cancellation notice period and how the person can end the contract.
• Ongoing notices (timing varies by contract type) and pre‑renewal alerts.
• An easy exit method requiring only steps reasonably necessary to protect the subscriber. If the subscription was made online, the exit method must also be online.

Promotional offers, free trials and auto‑renewal clauses will need rework. Legal terms alone will not suffice. Contracts with automatic renewals should be re‑engineered so renewal triggers align with notice windows. Cancellation should be frictionless and visible.

These obligations will not apply to contracts already in place prior to 1 July 2027, however if a contract is renewed or varied on or after that date, the applicable provisions will apply.

Subscription‑heavy deal targets

For potential acquirers of businesses that have material subscription-derived revenue, these will carry operational remediation risk and potential contingent liabilities. Due diligence would likely need to expand to include: audit of cancellation flows; sample customer communications for compliance with periodic notice rules; and evidence that transaction‑based charges are disclosed at the point a base price is shown.

Looking forward: Strengthening consumer guarantees and supplier indemnification

This policy push is part of a broader consumer fairness agenda signalled by the Government. Also on the horizon are reforms to the Australian Consumer Law’s consumer guarantees regime.

Also in December 2025, the Government released a second DRIS, addressing what the Government perceives as issues with the enforcement of consumer guarantees and supplier indemnification under the ACL.

Overview

The DRIS canvasses the following potential reforms:

• Civil penalties: Introduction of civil pecuniary penalties and enforcement options (such as infringement notices) for:
  • Suppliers failing to provide remedies for consumer guarantee failures.
  • Manufacturers failing to indemnify suppliers when required.
• Clarification and other reforms:
  • Major failures: The definition of ‘major failure’ would be clarified to reduce uncertainty and disputes.
  • Depreciation: Refunds for major failures may be reduced to account for substantial trouble-free use, with a 12-month threshold before depreciation applies.
  • Early life failures: A new rule will presume a fault existed at supply if a problem arises within 30 days, easing the burden of proof for consumers.

Implications for business

At this stage, no draft legislation has been released with respect to this tranche of reforms. Legislative amendments to the ACL will be developed in consultation with states and territories, with a transition period and further guidance to be provided.

In the meantime, businesses should:

• Ensure robust compliance with consumer guarantee obligations and be prepared for increased regulatory scrutiny.
• Review supplier and manufacturer agreements for alignment with the likely new indemnification requirements.

Gadens’ consumer law experts are available to provide guidance advice on preparing for these reforms.

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Authored by: Adam Walker, Partner