Australian Consumer Law (ACL): what businesses need to know
Running a business is exciting, but comes with risk, and many businesses struggle to understand their legal rights and obligations. Australian businesses must understand how consumer laws affect their businesses: whether you’re working with customers or businesses, providing services or selling goods. Penalties for breaches have increased in recent years, and even household-name companies get it wrong sometimes – for example, Telstra’s whopping $10m fine in 2018!
We’ve prepared a guide to what businesses need to know about the ACL to get you started – but of course, no two businesses are the same, so it’s in your best interests to understand how the ACL applies to your business specifically, and get expert legal advice both to set your business off on the right foot and continue on the right path.
The ABCs of the ACL
The Australian Consumer Law is a set of standards designed to protect the rights of consumers, which businesses are legally obligated to comply with. The ACL protects a consumer from, among other things:
- Misleading and deceptive conduct
- Goods having safety defects; and
- Misrepresentations made by suppliers.
The ACL is a national, generic law which applies to all sectors and in all Australian jurisdictions, meaning that all consumers in Australia enjoy the same rights and all businesses have the same obligations. This law also defines what compensation a consumer is entitled to in what circumstances, and who is responsible for compensating a consumer.
What does the ACL cover?
Some of the things that the ACL covers (for more information, see consumerlaw.gov.au):
- Consumer guarantees – supplier, manufacturer and importer responsibilities when there is a problem with goods and services.
- Sales practices – unsolicited supplies, unsolicited consumer agreements (door-to-door and telemarketing), lay-by agreements, pricing, proof of transaction and itemised bills, referral selling, pyramid schemes, harassment and coercion.
- Avoiding unfair business practices – misleading or deceptive conduct, unconscionable conduct, country of origin, false and misleading representations.
- Unfair contract terms – defining unfair terms, and which contracts are affected by the law.
- Compliance and enforcement – covers how regulators enforce the ACL.
- Consumer product safety – safety standards, recalls, bans, safety warning notices and mandatory reporting requirements.
Who is a consumer?
For the purposes of the ACL, a person is a ‘consumer’ if they acquire goods or services priced at less than $40,000, or if they acquire good or services priced at more than $40,000 which are ‘of a kind ordinarily acquired for personal, domestic or household use or consumption’. As a business, you have the responsibility to respect the rights of consumers.
And yes, the ACL can protect your business as well, where business purchases are valued at $40,000 or less, or some other circumstances such as when buying road vehicles or trailers which you will use principally for transporting goods on public roads. The ACL guarantees that these goods must be safe, durable, free from defects, fit for purpose, acceptable in appearance, match its description and match any sample or demonstration model. Furthermore, services you purchase must be delivered with care, skill and within a reasonable time. You are entitled to expect every business you deal with to honour its obligations under the ACL.
What are my obligations?
Your obligations to consumers as a business include but are not limited to:
· Using standard form contracts that do not have unfair terms
· Honouring consumer guarantees
· Ensuring the safety of products and services
· Complying with rules on sales practices, including those on prices, consumer information, lay-by agreements and unsolicited consumer agreements.
Can consumers waive their rights under the ACL?
No. It has long been accepted that these rights cannot be waived or contracted out of, and that contracts which attempt to waive these rights include “unfair terms” and can lead to penalties. The terms of the ACL will be read into a contract even if the contract seeks to specifically exclude them.
Where can I learn more?
The Australian Consumer Law website offers guides to help Australian consumers and businesses better understand specific consumer law topics, which you can read here; the ACCC’s Youtube channel also has a series of videos on Australian Consumer Law and Your Business.
You can also keep an eye on our blog as we release more posts on commercial law in the future, check out our fact sheets on commercial law, and get in contact with the commercial lawyers at Lynn & Brown Lawyers for expert and Perth-local legal advice as it applies to your business.
Looking for more insights on Australian Consumer Law from the expert commercial law team at Lynn & Brown Lawyers? Learn about the WA egg producer that was fined over $1m for misleading the public, lemon cars and consumer rights, and the trouble brewing between Gloria Jean’s and Keepcup.