As a business providing goods and services, you will interact with the Australian Consumer Law (ACL) on a daily basis.
You should understand your rights and responsibilities under the ACL because they impact almost every aspect of your activities with customers.
What is the Australian Consumer Law?
- general standards of business conduct
- unfair trading practices
- the regulation of specific types of business-to-consumer transactions
- basic consumer rights (guarantees) for goods and services
- the regulation of consumer product safety
Who is a consumer?
Consumer guarantees only apply to consumers, so what is a consumer?
The ACL defines consumers as people or businesses who acquire goods or services for less than $40,000.
A consumer can also be someone who purchases goods or services for more than $40,000 but those goods or services are a kind “ordinarily acquired for personal, domestic or household use”. For example, a car.
From 1 July 2021, the definition will change to increase the threshold from $40,000 to $100,000.
What are the consumer guarantees?
There are different guarantees depending on whether you’re offering goods or services.
- be of acceptable quality
- be fit for purpose
- have been accurately described
- match any sample or demonstration model
- satisfy any express warranty
- have a clear title, unless otherwise agreed
- come with undisturbed possession (can’t be prevented from using the goods by another person)
- are not incumbered by other charges or debts
- have spare parts and repair facilities available for a reasonable time after purchase unless the consumer was told otherwise.
- be provided with acceptable care and skill (taking all steps to avoid loss or damage)
- be fit for the purpose or produce intended results
- be delivered within a reasonable time when there is no agreed end date
Consumer guarantees do NOT apply if the consumer:
- changed their mind about the good or service
- found it cheaper somewhere else
- decided they did not like the purchase or had no use for it
- misused the product in a way that caused the problem
- knew or were made aware of faults before purchasing
- asked for a service to be performed in a certain way, against the advice of the business
Services not covered by consumer guarantees include:
- services bought before 1 January 2011
- services costing more than $40,000 that are not ordinarily used for personal, household or domestic use (e.g. shop fit-out)
- transportation or storage of goods for the consumer’s trade, profession or occupation
What rights do consumers have?
If you fail to meet one of the consumer guarantees, the customer is entitled to one or more of the following remedies:
- right to have the product repaired, replaced or refunded
- right to cancel a service
- may claim compensation for damage and loss
For major issues, the consumer has the right to choose which remedy they would like.
For example, if you sell a faulty item to a customer, you can’t force them to take a replacement product. They can elect to request a refund.
For minor issues, the business can choose to provide a repair, replacement or refund.
No refund signs are unlawful because there may always be a situation where a consumer guarantee applies.
Please note that customers don’t have to return their products in the original packaging to be eligible for a consumer remedy.
What about second-hand items?
The condition, age and nature of the second hand product will affect the expectations a consumer has regarding how long it will last and how it will function.
Provided that a business points out any defects with the product, that business won’t be liable for that defect.
Vague cautions such as ‘second-hand’ won’t be enough though, the business must specifically identify what is wrong with the product. The ACL will still apply to second hand goods so you need to take care to identify any faults and make these clear to the customer.