CONSUMER LAW

Overview

Consumer law aims to protect the rights of consumers by imposing certain obligations on businesses involved in the sale of goods and services.

In Australia, this protection is regulated through what is referred to as the the Australian Consumer Law (ACL). 

Legislative Background

The ACL is set out in Schedule 2 of the Competition and Consumer Act 2010 (“CCA”) and came into force on 1 January 2011.

What is the ACL?

The ACL is a single, national law which applies in all Australian jurisdictions. Consumers are entitled to the same rights and businesses have the same obligations, irrespective of which state or territory the transaction was engaged in.

 The ACL is broken up into different chapters:

  • Chapter 1 — Introduction
  • Chapter 2 — General protections - deals with consumer protections which apply generally
  • Chapter 3 — Specific protections – deals with specific forms of conduct. They support the general prohibitions in Chapter 2
  • Chapter 4 — Offences
  • Chapter 5 — Enforcement and remedies

What Conduct is Covered under the ACL ?

 The ACL covers a range of conduct, including:

  • misleading and deceptive conduct (Chapter 2);
  • unconscionable conduct (Chapter 2);
  • unfair contract terms (Chapter 2);
  • unfair practices (Chapter 3):
    • false or misleading representations;
    • unsolicited goods or services;
    • participating in pyramid schemes;
    • practices involving the display of prices;
    • referral selling;
    • harassment or coercion
  • consumer transactions (Chapter 3):
    • consumer guarantees;
    • unsolicited consumer agreements;
    • lay-by agreements
  • safety of consumer goods and services - Product Safety Australia (Chapter 3). 
  • information standards (Chapter 3);
  • liability of manufacturers for goods with safety defects (Chapter 3).

How is the ACL Administered ?

 The ACL is administered and enforced by the Australian Competition & Consumer Commission (ACCC) and the State and Territory consumer protection agencies, eg. Office of Fair Trading.

Enforcing Breaches of the ACL

Depending on the nature of a breach of the ACL, such breach can lead to:

  • being charged with a criminal offence;
  • fines and pecuniary penalties;
  • consumer protection agencies, eg. Office of Fair Trading:
    • entering into enforceable undertakings with the offender;
    • can issue substantiation notices;
    • may issue public warning notices;
    • might issue infringement notices.

General Protections under the ACL

The ACL provides a number of general protections for consumers arising from particular types of conduct. For example, behaviour amounting to:

  • misleading and deceptive conduct; or
  • unconscionable conduct; or
  • use of unfair contract terms, 

may result in the affected consumer seeking appropriate remedies, which may include:

  • injunctions;
  • damages;
  • compensatory orders; or
  • other legal rights

Specific Protections under the ACL

Apart from the General Protections, the ACL provides consumer protection in regards to certain specific forms of conduct. For example, consumers have protection under the ACL arising from the following types of behaviour:

  • false or misleading representations;
  • unsolicited goods or services;
  • participating in pyramid schemes;
  • practices involving the display of prices;
  • referral selling;
  • harassment or coercion;
  • lay-by agreements.

The ACL also covers other forms of specific conduct, including:

  • safety of consumer goods and services;
  • manufacturer liability in respect of unsafe products;
  • information standards.

Consumer Guarantees

Consumer guarantees are specifically dealt with under Chapter 3 of the ACL.

The guarantees include, that:

  • the supplier has the right to sell the goods;
  • the goods are of acceptable quality;
  • the goods match their description;
  • the goods are fit for any purpose that the consumer makes known to the supplier;
  • repairs and spare parts for the goods are reasonably available;
  • the services are carried out with reasonable care and skill; and
  • the services are completed within a reasonable time where there is no agreed date.

Under the ACL, if a good or service fails to meet a guarantee, a consumer will have certain remedies available to them, depending on the nature of the breach. For example, a consumer may have the right to:

  • a refund;
  • replacement;
  • repair;
  • cancellation of a service;
  • compensation for damages and loss.

In order for a person to make use of the remedies available under the consumer guarantees:

  • they need to meet certain criteria - such as, they must fall within the definition of a "consumer", as set out in the ACL; and
  • the good or service must not be excluded from the guarantee provisions - such as, one-off sales by private sellers, eg. at garage sales. 

In order to determine what remedy may be available to a consumer due to breach of the guarantees, it is also necessary to ascertain the seriousness of the problem. That is, whether it is categorised as a "major failure" or "minor failure". Determining tis will depend on various factors.

In addition, a consumer cannot reject a good or service in all circumstances. There may be reasons which result in a consumer being barred from the consumer guarantee protections under the ACL. For example:

  • if a rejection period has passed; 
  • the good was damaged after being delivered to the consumer;
  • the consumer has used the good in an abnormal way, which caused the defect.

Express Warranties

In addition to consumer guarantees, manufacturers will often also provide express warranties (sometimes called manufacturers warranties or warranties against defects).

Where an express warranty is given by a manufacturer:

  • manufacturers must comply with the express warranty; and
  • the warranty must be in the form prescribed by the ACL.

For example, from 9 June 2019, Regulation 90 of the Competition and Consumer Regulations 2010 (Cth) amended the wording that is required to be given to consumers where the ACL applies and a warranty against defects is being given:

A.  Supply of Goods ONLY - wording

"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 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".

B.  Supply of Services ONLY - wording

"Our services come with guarantees that cannot be excluded under the Australian Consumer Law. For major failures with the service, you are entitled:
  • to cancel your service contract with us; and
  • to a refund for the unused portion, or to compensation for its reduced value.
You are also entitled to be compensated for any other reasonably foreseeable loss or damage. If the failure does not amount to a major failure you are entitled to have problems with the service rectified in a reasonable time and, if this is not done, to cancel your contract and obtain a refund for the unused portion of the contract".

C.  Supply of supply of Goods AND Services (eg. bundled together)

"Our goods and services come with guarantees that cannot be excluded under the Australian Consumer Law. For major failures with the service, you are entitled:
  • to cancel your service contract with us; and
  • to a refund for the unused portion, or to compensation for its reduced value.
You are also entitled to choose a refund or replacement for major failures with goods. If a failure with the goods or a service does not amount to a major failure, you are entitled to have the failure rectified in a reasonable time. If this is not done you are entitled to a refund for the goods and to cancel the contract for the service and obtain a refund of any unused portion. You are also entitled to be compensated for any other reasonably foreseeable loss or damage from a failure in the goods or service".

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Pecuniary penalties can be imposed on a company which does not comply with the above requirements under Regulation 90. Also, non-compliance, such as by failing to include the prescribed text or otherwise making representations which do not reflect the obligations under the consumer guarantee provisions (if applicable), can amount to misleading or deceptive conduct or false representation.

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In addition:

  • the consumer guarantees apply regardless of whether a good is covered by an express warranty; and
  • consumer guarantees may continue to provide protections after even after the express warranty has expired.  

For further information or assistance with consumer law, contact Greyson Legal.

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