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How Does The New Australian Consumer Law Affect My Business?

The Australian Consumer Law (the ACL) came into force from 1 January 2011, as the new single national consumer protection law. The ACL replaces the Trade Practices Act and specifically sets out rights of customers, which suppliers and manufacturers are obliged to meet. These rights are known as ‘consumer guarantees’. You cannot avoid your responsibility to meet the consumer guarantees, regardless of whether you operate your business online or not. This article focuses on those doing business online.
TYou must be aware of your requirements under the ACL, and what you and your customers may do, should the goods or services not meet the consumer guarantees.
Consumer guarantees: what are they?
The ACL sets out nine consumer guarantees for the sale of goods:

  1. That a supplier has the right to sell the goods and the goods come with clear title;
  2. That the consumer will have undisturbed possession of the goods;
  3. That the goods are free from undisclosed securities, charges or encumbrances;
  4. That the goods will be of acceptable quality. This means that the goods are safe, durable and free from defects; are acceptable in appearance and finish; and fit for all the purposes which goods of that kind are commonly supplied;
  5. That the goods are reasonably fit for any disclosed purpose. This means that the goods perform the function that the consumer was told they would do;
  6. That the goods correspond with their description;
  7. That the goods correspond with the sample or demonstration model in quality, state and condition;
  8. That the manufacturer will have reasonably available facilities for the repair of the goods and parts for the goods; and
  9. That the goods will comply with any express warranty given or made, including any extra promises made.

The ACL sets out three consumer guarantees for the supply of services:

  1. That the services will be rendered with due care and skill;
  2. That the services, and any product resulting from the services, will be reasonably fit for any specified purpose; and
  3. That the services will be supplied within a reasonable time.

What happens when goods or services don’t meet a consumer guarantee?
If your goods or services do not meet a consumer guarantee, your customer has a right to a solution to make the situation right. The type of remedy available depends on whether the problem is major (serious) or minor.
A major problem is when:

  1. a reasonable consumer would not have bought the goods, or acquired the services, if they had known about the problem;
  2. the goods differ from the description, sample or demonstration mode;
  3. the goods or services are substantially unfit for their normal purpose and cannot easily be made fit, or the goods are unfit for the purpose required;
  4. the goods are unfit for the purpose the consumer told the supplier about, and cannot easily be made fit;
  5. the services do not achieve the specific result or purpose requested; or
  6. the goods are unsafe or the services have created an unsafe situation.

If there is a major problem with goods or services, your customer may elect to:

  1. reject the goods and receive a refund;
  2. reject the goods and receive an identical replacement, or a replacement of similar value, if reasonably available;
  3. keep the goods and claim money for the decrease in value of the goods because of the problem;
  4. cancel the service contract and receive a refund; or
  5. continue with the service contract and claim money for the difference in the service provided and what was paid for.

Under the ACL, a minor problem with goods or services is a problem that is not a major problem. If the problem is minor, you may at your own discretion:

  1. offer a refund;
  2. replace the goods;
  3. fix the title to the goods, if required;
  4. repair the goods; or
  5. fix the service free of charge within a reasonable time.

If a major problem occurs and your customer chooses to either keep the goods or continue with the service and claims compensation for the problem, consumer protection agencies such as the Australian Competition and Consumer Commission (ACCC) and/or the various Offices of Fair Trading (OFT) may take action on a consumer’s behalf should you not resolve the problem or reach an agreement regarding compensation.
The ACCC and the OFT, in addition to the Australian Securities and Investments Commission (ASIC) are responsible for regulating the ACL. Australian courts and tribunals enforce the ACL.
As the new law has applied to the supply of goods and services from 1 January 2011, it is essential that you understand the consumer guarantees and have procedures in place if something does go wrong. By having specifically drafted policies on your website, this will direct your customer as to what to do in the event of a problem, and the options available to them.
Remember, you cannot avoid your responsibility to meet the guarantees just because you do business online. The future of your business lies in complying with the ACL as well as having good relations with current and future customers.
Are you exposing your business to risk as a consequence of not complying with the new Australian Consumer Law?