Protections needed for small businesses using digital platforms

The Commissioner has called for better regulation to protect small businesses using online platforms to sell and market their goods and services.

In his response to the Australian Competition and Consumer Commission’s regulatory reform recommendations for digital platform services, the Commissioner supported a new regulatory framework to protect businesses and consumers improve competition.

“As digital platforms become increasingly important, there is a need to maintain modern and updated regulatory frameworks.” Commissioner Chris Lamont said.

“Small business participation is essential to ensuring a competitive marketplace and digital platforms are becoming increasingly essential to maintaining a viable business model.”

The Commission’s Small Business Survey found that one in five businesses were conducting operations and/or selling products or services on a digital platform or an online marketplace and COVID-19 had accelerated the move online.

Reported challenges included pricing structures that do not align with small business profit margins, high service charges without performance accountability and payment delays which make it difficult for small businesses to manage their cashflow. Respondents also reported challenges accessing customer support and resolving disputes.

“Small businesses are often unable to find avenues to resolve problems with a platform, such as when they are assessed as being non-compliant with the platform’s terms of service, make accidental errors, or find themselves blocked or restricted from a service without clear or justifiable reasoning,” Mr Lamont said.

The Commissioner also supported a mandatory code of conduct for digital platforms and an external dispute resolution body.

“An independent external ombuds scheme is essential to holding digital platforms to account,” he said.

Read the full response.