Customers of larger Australian business will have access to greater protections under the Australian Consumer Law (ACL) in the new financial year. This comes as the threshold for what constitutes a “consumer” under the ACL is reformed.
Who is currently a consumer?
As mentioned in a previous article a consumer is currently defined under the ACL as a person who acquired a good or service for less than $40,000, or, if the good or service was acquired for more than that, a person who acquired a good or service for ordinary personal, domestic, or household use or consumption.
The ACL sets out protections for consumers known as statutory consumer guarantees. The guarantees stipulate that goods will:
- Be of an acceptable quality;
- Be fit for purpose;
- Comply with their description;
- Correspond with the sample or demonstration (if given);
- Comply with any express warranties;
- Have clear title;
- Be free from securities; and
- Come with undisturbed possession.
They also require that services be:
- Provided with due care and skill;
- Fit for a particular purpose; and
- Delivered within a reasonable time.
Breaching these guarantees entitles consumers to remedies under the ACL such as repair, replacement, refund, cancellation and compensation.
What is happening?
Amendments to the ACL effected by the Treasury Laws Amendment (Acquisition as Consumer—Financial Thresholds) Regulations 2020 have increased the monetary threshold for determining whether a person acquires goods or services as a “consumer” under section 3(1)(a) of the ACL from $40,000 to $100,000. This same increase will also become apparent in section 12BC(3)(a) of the Australian Securities And Investments Commission Act 2001 (Cth).
These changes will take effect on 1 July 2021.
What does this mean?
This increase in threshold will have several implications on suppliers of goods and services (particularly those regularly dealing with transactions between $40,000 and $100,000):
- Contract terms that misrepresent these new consumer rights’ will be void under the ACL and suppliers could incur potential penalties.
- Warranties must comply with consumer protection regulations which incorporates mandatory text that must be included in the document.
- Employees may not be up to date with new consumer guarantees.
Businesses whose goods and services have traditionally fallen outside the scope of the ACL because of the current monetary threshold should do the following:
- Review standard supply contracts and warranties to ensure no misrepresentations are made and the appropriate limitation of liability provisions are in place;
- Ensure staff are re-trained in compliance with the consumer guarantees to make certain they do not misrepresent or mislead consumers; and
- Consider your business’ expanded range of obligations, and check whether you need to implement any new processes or reallocate funds to prepare for the changes.
If you have any questions or concerns related to consumer guarantees or the ACL, please do not hesitate to contact us.