The term ‘consumer’ carries with it broad connotation of individuals who purchase goods and services, usually for a relatively low sum. However, with the new Australian Consumer Laws (‘ACL’) set to take effect from 1 July 2021, the definition of a ‘consumer’ could affect a greater number of transactions as they will be covered by the ACL consumer guarantees. In this blog, we provide an overview of the Australian Consumer Law (‘ACL’) and the changes set to take place this year.

What is the Australian Consumer Law?

The ACL is the primary area of law that regulate the sale of goods and services. The ACL applies nationally and in all States and Territories, and to all Australian businesses. The ACL is administered by the ACCC and state and territory consumer protection agencies and is enforced by all Australian courts and tribunals.

Under the ACL, products and services must meet strict requirements. For example, products must be safe, long lasting, lack faults, look acceptable, carry full ownership, be fit for purpose, match descriptions, have spare parts and repair facilities available and do everything someone would normally expect them to do. Likewise, services must be provided with acceptable skill and care or technical knowledge and taking all necessary steps to avoid loss and damage, be fit for purpose and be delivered within a reasonable time when there is no agreed end date.

The ACL provides consumers protection in the areas of:

  • Unfair contract terms
  • Consumer rights when buying goods and services
  • Product safety
  • Unsolicited consumer agreements covering door-to-door sales and telephone sales
  • lay-by agreements

What’s changing?

The ACL has previously defined a ‘consumer’ as someone who purchases goods or services for under $40,000 or the purchase of goods and services greater than $40,000 if they are acquired for personal, domestic or household use or consumption. However, the recent changes to the law will increase this threshold to capture all goods and services under $100,000.

The changes will also see the amendment of the definition of “consumer” under the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).

These changes come in response to a review conducted by Consumer Affairs Australia and New Zealand into the effectiveness of the ACL in protected the modern consumer. It found that inflation and the rising cost of goods and services meant that purchases that were previously covered by the ACL are no longer, leaving consumers unprotected.

In essence, this change in definition will operate to expand consumer protections afforded by the ACL to a greater number of consumers. Whilst this gives purchasers more rights and bargaining power, it increases the need of businesses to ensure that they are compliant with the new ACL requirements as more customers may be covered by its protections.

How do I prepare for these changes as a business?

These changes provide a good opportunity to assess your current goods or services and whether they are subject to the ACL. You should also conduct a thorough review of your current contracts, policies, terms and conditions and existing (and now new) obligations.

You should seek legal advice if you wish to find out more information about the changes, how they affect your business and to ensure your business is complying with its obligations under the ACL. The team at Etheringtons Solicitors are highly skilled in business law and are ready and willing to assist you with your enquiry.  If you would like further information, please do not hesitate to contact one of our experienced solicitors on 9963 9800 or via our contact form. For more articles, please see our blog here.