Consumer Law relates to the rights, relations and conduct of persons or businesses engaging in commerce, merchandising, trade and sales. It deals with everything from sole traders to small businesses and large corporations.
If you run a business in Australia, you’ll be affected by the Australia Consumer Law (ACL) which is contained in Schedule 2 of the Competition and Consumer Act. Whether you work with customers, businesses, provide services or sell goods, you must know how the consumer laws affects your business.
The ACL is a national law to protect consumers. The Australian Competition and Consumer Commission (ACCC) alongside the state and territory consumer protection agencies jointly administer the ACL. ACL applies to anyone conducting business in Australia, this can include businesses that are overseas.
Most people and businesses go through life without needing to enforce a legal right or respond to an allegation that they have breached someone else’s right. But when a breach occurs, you need an experienced team of professionals guiding you on the safest, simplest and most supportive path to a sustainable solution.
Complying with Australian Consumer Law
Some examples of how you must comply with the ACL include:
- If your customer asks for an itemised bill, you must provide it free of charge.
- If you sell goods or services worth more than $75 (excluding GST), you must give your customer a receipt.
- If you give receipts, they must identify you (the supplier), your ABN and/or ACN (if any), what was supplied, the date of supply and the price.
- If the goods or service does not meet a consumer guarantee (e.g. where goods are not of acceptable quality), your customer has the right to ask for a refund, replacement or repair where:
- the goods or service is under $100,000
- the goods are over $100,000 and normally bought for personal or household use
- the goods are business vehicles or trailers mainly used to transport goods.
If there is a problem with your good or service, your customer has the right to ask you for compensation for damages and loss if the supplier could have reasonably foreseen the problem.
- You cannot have a store policy and/or signs in store which seek to override consumer guarantee rights (for example ‘no refunds’ or ‘no refunds on sale items’). This is unlawful.
Guides to understand ACL
The ACL website has guides to help you understand specific consumer law topics. These topics include:
- unfair contract terms
- consumer guarantees
- consumer product safety
- sales practices
- avoiding unfair business practices.
As part of consumer law and fair trading laws, the ACCC regulates ACCC Consumer Rights and Guarantees.
As a business owner, you must understand consumer rights in order to comply with your obligations.
Businesses must provide an automatic guarantee with any product or service they sell. The guarantee includes that products or services will work and do as advertised.
If you sell a product or good, you must guarantee that it:
- is of acceptable quality
- matches the provided description
- meets any express warranties
- is fit for purpose.
An express warranty is an extra promise or representation the business makes about the goods or service provided. For example, you may make a claim that a chair can hold up to 100kgs of weight. Once an express warranty is made, it is covered under consumer guarantees, and consumers can exercise their right to have the good repaired, replaced or refunded if it doesn’t meet the extra promises you made about its performance, condition and quality.
If you supply a service, you must provide it:
- with due care and skill
- fit for specified purpose
- within a reasonable time (if no time is set).
There is no specific time when the consumer guarantees no longer apply to products. They may apply even after the manufacturer’s warranty period has past. The length of the consumer guarantee period depends on a number of factors including:
- how much time has passed since the consumer bought the product
- the type of product
- how a consumer is likely to use the product
- the length of time for which it is reasonable for the product to be used
- the amount of use it could reasonably be expected to tolerate before the failure becomes noticeable.
When your business must provide a remedy to the consumer
Under consumer law, you must provide a remedy if your products or services:
- are faulty (even if the customer only found out it was faulty after using the product)
- don’t match the sample or demo model
- don’t match the description
- doesn’t do what the salesperson said it would.
The remedy you must provide to the customer will depend on whether the issue is major or minor. The ACCC Consumer Guarantees – A Guide for Businesses and Legal Practitioners can help you determine what is a major or minor failure.
Dealing with the manufacturer
If your business sold a product or service to a consumer, you cannot refuse to help them by sending them directly to the manufacturer or importer for a remedy. This applies even where the fault was caused by the manufacturer.
You can approach the manufacturer or importer directly, however you will only be entitled to recover costs from them. You cannot demand a repair, replacement or refund from the manufacturer.
Consumer rights as a business
If you buy a product or service to use in your business, you may be able to rely on consumer guarantees if something goes wrong.
As a business, you also have consumer rights if the goods or services you buy to help run your business are:
- under $100,000
- over $100,000 and normally bought for personal, domestic or household use
- vehicles or trailers that are mainly used for transporting goods.
For example, consumer rights apply if you buy a:
- microwave oven to use in your office kitchen
- business van to deliver products to your customers.
Consumer rights don’t apply if goods are purchased to be resold or transformed into a product that is sold.
ACL provides automatic guarantees to consumers that apply regardless of the warranties you give or sell to consumers.
Warranties are voluntary promises you can offer to consumers. The warranties apply to the product or service you sell to a consumer and can be enforced under contract law and the ACL.
Businesses sometimes make extra promises about the quality or standard of a product. For example, they may refer to:
- the quality, state, condition, performance or characteristics of the product
- what the product can do and for how long
- the availability of servicing
- supply of parts.A business’s warranty can’t override the consumer guarantees. For example, if a product suffers a failure outside a warranty period, it may still be covered by consumer guarantees.
If you’re a supplier or manufacturer and provide such a warranty, under the ACL you must comply with that warranty. If you fail to comply with a warranty, consumers have rights against you under the consumer guarantees.
There are different types of warranties you can offer to consumers. It’s important that you understand and honour your obligations.
Unfair contract terms
The ACL protects small businesses and consumers from unfair terms in standard form contracts.
A standard form contract is a contract between 2 parties where 1 party prepares the contract giving the other party little or no opportunity to negotiate the terms.
You enter standard form contracts all the time. These instances include contracts for:
- internet services
- credit cards
- mobile phones
As a business, you need to make sure your terms don’t unfairly disadvantage the consumer or small business.
For example, when an individual signs up for a new phone plan, they agree to a standard form contract. They have no opportunity to negotiate the terms with the business.
Whether a term is ‘unfair’ must be considered in the context of the contract as a whole. However, under the ACL, to be unfair, a term must meet 3 conditions:
- The term would cause financial or other detriment to a consumer or small business if it were enforced.
- The term significantly imbalances the rights and obligations between the business and consumer or small business.
- The term is not reasonably necessary to protect the interests of the business.
For example, the following contract terms may be unfair:
- Where one party (but not the other) is able to vary the terms of the contract (for example price).
- Where one party (but not the other) is able to decide whether to renew or nor renew the contract.
- Where one party (but not the other) is able to determine whether the contract has been breached.
Go to the ACCC website for more examples of unfair contract terms.
If a Court finds the contract term to be unfair the term will be void. Only a Court can find a contract term unfair.
What to do if you think a term is unfair
If you think a term in your contract is unfair you can:
- request the other party to remove or amend the term to be fair
- contact ACCC for information about your rights and possible courses of action where the contract is for a non-financial product or service
- contact the Australian Securities & Investments Commission (ASIC)if the contract is for a financial product or service
- talk to a lawyer
- contact your local state or territory consumer protection agency- external site.
Consumer product safety
The ACL governs product safety in Australia. This means that the products you supply must be safe and meet consumer guarantees.
You cannot sell banned or recalled products and you must ensure that your products or product related services comply with relevant mandatory safety and information standards before they are offered for sale.
If you become aware that a product you supplied may have caused a death, serious injury or illness, you are required to submit a mandatory injury report to the Commonwealth Minister within two days of becoming aware of the incident.
Consumer Product Safety Recall Guidelines
If a consumer product presents a safety risk or is non-compliant with a mandatory safety standard or ban, it may need to be recalled. If you need to conduct a recall, the ACCC’s Consumer Product Safety Recall Guidelines provide guidance and should be read before you commence any recall action.
Unfair business practices
ACL ensures that businesses conduct fair sales practices. This allows consumers to trust the businesses they deal with.
Unfair Business Practices include:
- referral selling
- pyramid schemes
- unfair contract terms
- unconscionable conduct
- unsolicited supplies
- accepting payment with no intention to supply.
Businesses found conducting these practices may face penalties.