So what do you need to know about consumer guarantees as a business owner?
To avoid legal repercussions and hefty penalties imposed by the ACL, businesses must understand and adhere to consumer protection laws. Consumer guarantees are automatic and apply nationwide, ensuring that consumers are afforded certain rights when purchasing goods or services.
Understanding the Australian Consumer Law (ACL)
The ACL, outlined in Schedule 2 of the Competition and Consumer Act, is designed to foster fair trading and competition while safeguarding consumer rights. It establishes uniform standards for business conduct, prohibits unfair trading practices, regulates specific business-to-consumer transactions, and enforces consumer guarantees for goods and services. This law is applicable across consumer transactions in all sectors and jurisdictions in Australia, offering a level of protection to consumers irrespective of where the transactions occur.
What is a Consumer Guarantee?
Consumer guarantees encompass a broad spectrum of rights bestowed upon consumers when purchasing goods and services.
They provide assurance the acquired goods or services will perform as expected, free from defects, and meet the necessary standards. These guarantees outline the conditions under which a business must offer a remedy. Importantly, these guarantees cannot be excluded by businesses in their policies, and they hold precedence regardless of any other warranties provided.
Identifying the Consumer
Defining who constitutes a ‘consumer’ under the ACL is pivotal for businesses.
According to the ACL, “Section 3(1) provides, a person is taken to have acquired particular goods as a consumer if, and only if:
(a) the amount paid or payable for the goods, as worked out under subsections (4) to (9), did not exceed:
- $40,000; or
- if a greater amount is prescribed for the purposes of this paragraph — that greater amount; or
(b) the goods were of a kind ordinarily acquired for personal, domestic or household use or consumption; or
(c) the goods consisted of a vehicle or trailer acquired for use principally in the transport of goods on public roads.
Obligations for Compliance with Consumer Guarantees
Ordinarily, businesses that supply goods or services to Australian consumers must comply with these consumer guarantees, regardless of whether they operate as brick-and-mortar stores or in the e-commerce realm. Those applicable suppliers and manufacturers must ensure compliance with these guarantees for goods they sell, hire, or lease and for services they provide.
The responsibility of suppliers to uphold consumer guarantees was emphasised in a case involving Big W and Target in 2019. Both entities were found in breach of consumer guarantees for redirecting customers to manufacturers for returns beyond stipulated timeframes. This case underscored the suppliers’ obligation to ensure remedies are available for consumers beyond arbitrary time limits.
Application of Consumer Guarantees to Goods and Services
Consumer guarantees for goods entail that they are of acceptable quality, fit for purpose, accurately described, and meet any express warranties. Manufacturers and importers, in addition to suppliers, are obligated to guarantee the quality, description, express warranties, and provision of spare parts and repair facilities for a reasonable period.
For services, providers must ensure they are delivered with due care and skill, fit for the consumer’s specified purpose, and within a reasonable timeframe.
Remedies for Breach of Consumer Guarantees
When goods or services fail to meet consumer guarantees, consumers are entitled to remedies. Depending on the nature of the problem, consumers have the right to repair, replacement, refund, compensation for damages, or loss.
Exceptions to Consumer Guarantees
Certain exceptions apply, such as some goods for business use, goods sold privately or at traditional auctions, or instances where consumers change their minds, misuse goods, or were aware of faults before the purchase.
Need Support & Guidance?
Compliance with consumer guarantees under the ACL is imperative for Australian businesses that are covered by the ACL. These guarantees form an automatic and broad set of consumer rights for purchased goods and services and should not be avoided by businesses.
Contact Greenhalgh Pickard’s professionals for a business health check to ensure your business’ warranties and policies are compliant with the ACL.
The information contained in this article is for general informational purposes only and is not intended to provide legal advice or substitute for the advice of a professional. This information does not consider your personal circumstances and may not reflect the most current legal developments. Should you need advice, please contact our firm for targeted information relating to personal your situation.
Greenhalgh Pickard’s Litigation Team