Australian Consumer Law

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What you need to know about Australian Consumer Law

If you or your business sells goods or services to consumers, it is imperative that you are aware of what implications this legislation will have. The Competition and Consumer Act 2010 (Cth)— which incorporates the Australian Consumer Law (hereinafter ‘ACL’)—has collated and superseded the Trade Practices Act 1974 (Cth), and the many state and territory consumer protection statutes. The ACL is intended to enhance consumer rights and remedies, harmonise national consumer protection statutes, and simplify legal compliance.

What you need to be aware of

  • Since the 1st day of January 2011, manufacturers and suppliers have been required to observe the consumer guarantee provisions and the unfair practices provisions, which provide consumers with increased protection mechanisms and remedies.
  • Since the 1st day of July 2011, manufacturers and suppliers have been required to include specific mandatory language in their notices for the repair of goods.
  • From the 1st day of January 2012, manufacturers and suppliers have been required to include specific mandatory language in their warranties for goods and services, and are subject to increased pressure to comply with all warranties issued.

What you should do

If you think that you or your business are affected by the ACL, contact us immediately to discuss your circumstances and the documentation you have been issuing to your customers.

What is a consumer?

The Competition and Consumer Act 2010 (Cth) Schedule 2, s 3 specifies that in order to constitute a consumer, the individual or business must satisfy one of the three following categories:

  • An individual who purchases a good or service (of any value) for personal, domestic, or household use or consumption; or
  • An individual who, or a business which, purchases a good or service, not in excess of $40,000, which is not purchased for the purpose of re-supply, manufacture or production, or repairing or treating other goods or fixtures on land; or
  • An individual who, or a business which, purchases a good consisting of a vehicle or trailer (of any value) for use principally in the transport of goods on public roads.

What are the consumer guarantees?

The consumer guarantees as to goods are listed from s 51-59, while the consumer guarantees as to services are listed from s 60-62. These provisions require manufacturers and suppliers to produce and supply goods in accordance with the guarantees. However, to use these provisions, a person or business must satisfy one of the three categories of consumer under s 3.

Consumer Guarantees as to Goods

  • Guarantee as to title (s 51)
  • Guarantee as to undisturbed possession (s 52)
  • Guarantee as to undisclosed securities etc. (s 53)
  • Guarantee as to acceptable quality (s 54)
  • Guarantee as to fitness for any disclosed purpose etc. (s 55)
  • Guarantee relating to the supply of goods by description (s 56)
  • Guarantees relating to the supply of goods by sample or demonstration model (s 57)
  • Guarantee as to repairs and spare parts (s 58)
  • Guarantee as to express warranties (s 59)

Consumer Guarantees as to Services

  • Guarantee as to due care and skill (s 60)
  • Guarantee as to fitness for a particular purpose etc. (s 61)
  • Guarantee as to reasonable time for supply (s 62)

Consumer guarantees cannot be excluded
Consumer guarantees cannot be excluded under any circumstances.

For example, Jane goes to Townsville Warehouse Ltd with the intention of purchasing a new table, and is instructed by the retailer that she may obtain a mahogany table for a discount price provided that she ‘takes it as it is’ and waives her right as to a refund in the event that any problems do arise with it. Within a few weeks, Jane’s table breaks due to a structural defect caused by the wood being rotten. Notwithstanding Jane’s agreement with the retailer, she would be able to obtain a refund because the table’s defect would be in contravention of the consumer guarantee as to acceptable quality (s 54), and the consumer guarantee as to fitness for any disclosed purpose (s 55).

Consumer guarantees: penalties for non-compliance
If a person purchases a good, and there is a contravention of one or more of the consumer guarantees in a major way, the consumer will be entitled to select from the following three remedies:

  • Reject the goods and obtain a full refund; or
  • Reject the goods and obtain an identical replacement good, or a good of comparable value; or
  • Retain the goods and obtain compensation.

If a person purchases a good, and there is a contravention of one or more of the consumer guarantees in a minor way, the consumer will not be able to obtain a full refund, but rather will be required to ask the supplier to remedy the problem. The supplier may elect to provide one of the following four remedies:

  • Provide a full refund; or
  • Replace the goods; or
  • Repair the goods; or
  • Remedy the title to the goods, if applicable.

If a person purchases a service, and there is a contravention of one or more of the consumer guarantees in a major way, the consumer will be entitled to select from the following two remedies:

  • Cancel the contract of service with the supplier and obtain a full refund; or
  • Preserve the contract of service with the supplier, and obtain compensation for an amount equal to the disparity between the service paid for and the service supplied.

If a person purchases a service, and there is a contravention of one or more of the consumer guarantees in a minor way, the consumer will not be able to obtain a full refund, but the supplier is required to remedy the problem. The supplier is required to remedy the problem free of charge and in a reasonable time.

Notices for the repair of electronic storage devices
Manufacturers and suppliers, who issue notices pertaining to the repair of goods, are required to do so in accordance with the Competition and Consumer Regulations 2010 (Cth), which specifies that ‘(a) if the notice relates to the repair of goods that are capable of retaining user-generated data, the notice must state that repair of goods may result in loss of the data’; and must include the following language verbatim:
‘Goods presented for repair may be replaced by refurbished goods of the same type rather than being repaired. Refurbished parts may be used to repair the goods.’

Manufacturers and suppliers who do not comply with these requirements may be liable to incur substantial pecuniary penalties.

User-generated data pertains to any data stored on goods.
For example, files stored on a computer hard drive, telephone numbers stored on a mobile telephone, songs stored on a portable media player, games saved on a games console, and files stored on a USB memory stick.

Warranties
Manufacturers and suppliers can elect to issue warranties; however, these warranties do not alter the application of the consumer guarantees.

The specific requirements as to warranties against defects are detailed in the Competition and Consumer Regulations 2010 (Cth), and will come into effect on the 1st day of January 2012. This schedule states that warranties against defects must be issued in a document that is transparent; and must concisely state ‘(i) what the person who gives the warranty must do so that the warranty may be honoured; and (ii) what the consumer must do to entitle the consumer to claim the warranty’, as well as what ‘period or periods within which a defect in the goods or services to which the warranty relates must appear if the consumer is to be entitled to claim the warranty’. Additionally, the person issuing the warranty must state his or her name, business address, telephone number, and email address (if applicable) on the warranty.

Furthermore, all warranties as to defects must contain the following language verbatim:
‘Our goods come with guarantees that cannot be excluded under the Australian Consumer Law. You are entitled to a replacement or refund for a major failure and for compensation for any other reasonably foreseeable loss or damage. You are also entitled to have the goods repaired or replaced if the goods fail to be of acceptable quality and the failure does not amount to a major failure.’

For the moment, there is considerable ambiguity as to exactly where and on what documentation this language should appear. This is a result of broad legislative drafting. As such, it is advisable that individuals and businesses take precautionary measures.
Manufacturers and suppliers who do not comply with these requirements may be liable to incur substantial pecuniary penalties.

Unfair practices
The Competition and Consumer Act 2010 (Cth) Schedule 2 sets-out a multiplicity of protection provisions vis-à-vis unfair practices perpetrated by manufacturers and suppliers. Unlike the consumer protection provisions, a person need not satisfy the s 3 consumer requirement in order to use the unfair practices provisions.

General Protections:

  • Misleading or deceptive conduct (s 18)
  • Unconscionable conduct within the meaning of the unwritten law (s 20)
  • Unconscionable conduct (s 21)
  • Unconscionable conduct in business transactions (s 22)

Specific Protections:

  • False or misleading representations about goods or services (s 29)
  • False or misleading representations about sale etc. of land (s 30)
  • Misleading conduct relating to employment (s 31)
  • Offering rebates, gifts, prizes etc. (s 32)
  • Misleading conduct as to the nature etc. of goods (s 33)
  • Misleading conduct as to the nature etc. of services (s 34)
  • Bait advertising (s 35)
  • Wrongly accepting payment (s 36)
  • Misleading representations about certain business activities (s 37)

These provisions attract a wealth of civil penalties, including injunctions, declarations, damages, compensatory orders, non-party consumer orders, non-punitive orders, adverse publicity orders, and disqualification orders.