Changes to consumer guarantees – is your business up to scratch?

From 1 July 2021, the Australian Consumer Law (ACL) will be expanded. The Australian Competition and Consumer Commission have stated they will take an aggressive stance to non-compliance from this date.

Accordingly, now is the time for your business to review its practices and procedures and consider whether any changes need to be made to comply with the ACL.

What are the changes?

Previously, the consumer guarantee provisions applied where a customer purchased goods for an amount that did not exceed $40,000 and the goods were of a kind ordinarily acquired for personal, domestic or household use or consumption, with some exceptions.

From 1 July 2021, the monetary threshold will be increased from $40,000 to $100,000.

What are the consumer guarantee provisions?

The ACL provides that certain guarantees must be provided to consumers when a business provides goods or services or a combination of both. These guarantees cannot be contracted out of, meaning they apply regardless of what terms and conditions or agreements you have in place and they even apply to sale or discounted items.

The guarantees relating to goods are as follows:

  • Goods must be of acceptable quality taking into account what would normally be expected for the type of product and the cost charged;
  • Goods must match descriptions given by salespeople or made in promotions or advertising;
  • Goods must match any demonstration or sample provided;
  • Goods must be fit for purpose;
  • You must provide full title and ownership of the goods to the consumer;
  • The goods must not carry hidden debts or extra charges;
  • The goods must come with undisturbed position;
  • Any representations made regarding performance of the goods or condition and quality must be met such as lifetime guarantees;
  • Goods must have spare parts available or be able to be repaired for a reasonable time after purchase unless you told the consumer otherwise prior to purchase.

The guarantees relating to services are as follows:

  • Services must be provided with acceptable care and skill or technical knowledge;
  • The service provider must take all necessary steps to avoid loss or damage;
  • Services must be fit for the purpose or provide the results you agreed to provide;
  • Services must be delivered within a reasonable time if you have not otherwise agreed on a date for them to be provided by.

There are certain exceptions to when the consumer guarantees will apply however these exceptions are due to become much narrower in light of the broad increase to the definition of consumer.

Mandatory wording

There is mandatory wording which must be included in terms and conditions for the provision of goods and services in line with the consumer guarantees. The mandatory wording has recently been updated.

We strongly recommend that you have your business terms and conditions reviewed to ensure they are compliant if you have not done so recently.

It is important that businesses be aware of the consumer guarantees and adhere to same to avoid claims against them under the ACL. Up to date terms and conditions and an awareness of how the consumer guarantees apply to your business will assist to avoid same.

Please do not hesitate to contact our office to discuss how the changes will apply to your business.

_____

The content of our news articles are provided for information purposes only and do not constitute legal advice. We recommend that you seek professional legal advice for your specific circumstances.