The Australian Consumer Law (ACL) is a national law that applies to all businesses throughout Australian jurisdictions. The national law provides consistency to consumers across Australia, so that all consumers have the same rights, and all businesses owe the same obligations.
Where is the ACL found?
The ACL is found in Schedule 2 of the Competition and Consumer Act 2010, which replaced the Trade Practices Act 1974.
What does the ACL cover?
The provisions of the ACL provide numerous rights to consumers which protect them in their dealings with businesses in different ways.
For instance, within the ACL there are rules that protect consumers from unfair contract terms in standard form and small business contracts. Standard form contracts are those that are not negotiated by the parties, usually offered by a business to another party on set terms and conditions for the acquisition of goods or services. The standard form contract rules apply to both consumer contracts, where the contract is wholly or predominantly for personal, domestic or household use, and small business contracts.
A contract term is unfair if it would cause significant imbalance in the parties’ rights and obligations, is not reasonably necessary to protect the legitimate interests of the party advantaged by the term, and it would cause detriment to a party if relied upon. Examples of terms that would be unfair include terms that exclude liability of the supplier, make a consumer liable for damage to delivered goods or require exit fees.
The ACL also provides automatic guarantees for consumers when buying goods and services where the products or services are either valued under $100,000 or are normally bought for personal or household use.
The guarantees for products require that goods be of acceptable quality, including that they last. In determining what is acceptable quality, the type of product and cost is relevant. Services must be provided with acceptable care, skill and technical knowledge while taking all necessary steps to avoid loss and damage. If a product or service fails to meet a guarantee, a consumer has the right to ask for repair, replacement, or refund under the ACL, depending on the failure involved.
The ACL sets out the circumstances in which a consumer might cancel a service contract. Subject to the ACL, you may cancel a service where there is an unacceptable level of care and skill, the service is unfit for the purpose of the service, or the service is not delivered within a reasonable time.
There are also provisions that provide relief where a business engages in unconscionable conduct or makes false or misleading representations.
In addition to the consumer protections under the ACL, the legislation also has provisions that provide for compensation for loss and damage where a supplier could have reasonably foreseen an issue. Compensation under the ACL may extend to lost time or productivity.
Enforcement of the ACL
The ACL is enforced by the Australian Competition and Consumer Commission (ACCC) together with State and Territory consumer protection agencies, such as NSW Fair Trading, Consumer Affairs Victoria, Access Canberra, Consumer and Business Services South Australia, the Tasmanian Consumer, Building and Occupational Services, Northern Territory Consumer Affairs, Queensland Office of Fair Trading, Western Australia Department of Commerce, Consumer Protection. In addition, the Australian Securities and Investments Commission (ASIC) may become involved on relevant matters.
Each of the enforcement agencies is enabled by its own legislation and may investigate a business as a result of complaints from consumers or competitors, marketplace intelligence, information from whistle blowers, or as a result of targeted compliance operations.
The tools available to the regulation agency to enforce compliance are broad, ranging from education and formal warnings to civil or criminal actions resulting in fines, compensation orders or injunctions.
How does the ACL affect my business?
If you are in business, it is important that you understand your obligations under the ACL to ensure that you comply with those obligations. For instance, you cannot have a policy that you will not provide a refund for a faulty item, even if it is on sale as this is inconsistent with the ACL and would be unlawful.
Alternatively, if you rely on standard form contracts with your clients, you might not be able to rely on some of the terms if they are found to be unfair.
In addition to the remedies for consumers, where a business is found to have engaged in unconscionable conduct or made false or misleading representations, heavy penalties may apply.
The good news is that the ACL also provides protections for small businesses in their dealings under the unfair contracts regime if you enter standard form contracts with other businesses.
The ACL provides certain rights to consumers which protect them in their dealings with businesses, as well as protections for small businesses when dealing with other entities.
Business owners should be aware of the implications of the ACL to their business and seek professional advice if they are unsure of their responsibilities or require assistance with compliance obligations.