The consumer guarantees in the Australian Consumer Law (ACL) give consumers access to a detailed list of rights for the goods and services they buy. You must not exclude consumer guarantees. Consumer guarantees are the basis for consumers to access a remedy when goods or services do not meet their expectations. This article provides an overview of how the consumer guarantees operate.

How Do I Provide a Guarantee to My Customers?

The ACL consumer guarantees automatically protect your customers or clients. Consumer guarantee rights exist regardless of any warranty you provide in relation to: 

  • goods you sell, lease, or hire; or 
  • services you provide.

The ACL consumer guarantees cover goods and services which are sold to consumers in trade or commerce. Trade or commerce means in the normal course of a supplier or manufacturer’s business, including a not-for-profit organisation or activity. A person who buys goods or services is a consumer if the:

  • goods or services cost less than $40,000 (or any future amount the ACL determines);
  • goods or services are more expensive than $40,000 but are used for personal, domestic or household purposes; or
  • good is a vehicle or trailer used primarily for transporting goods on public roads, irrespective of the cost.

The consumer guarantees also safeguard second-hand, leased or hired goods.

What Are the Consumer Guarantees?

There are nine guarantees relating to goods and three which are specific to services.

If you are selling, leasing or hiring goods, you must guarantee that goods meet the following guarantees:

  • When sale takes place the goods are of acceptable quality. ‘Acceptable quality’ is what a reasonable consumer, fully aware of the goods’ condition, would think taking into account the nature, price, any statements about the goods on any advertisement or packaging and any representations you have made about the goods. The reasonable person must find the goods fit for all common purposes, acceptable in appearance, free from defects, safe and durable.
  • Description of goods prior to sale is accurate. 
  • You must honour any promises or express warranties relating to the goods, such as performance or characteristics.
  • The goods are to be fit for any purpose disclosed by the seller or the buyer. It is reasonable for consumers to often lean on the know-how and expertise of the sales person. Goods must be fit for the purpose the consumer discussed with the seller prior to purchase.
  • The goods must accurately match any description, sample or demonstration provided. The consumer is allowed reasonable time to assess the goods in comparison with the sample.
  • Goods are sold with clear title, unless otherwise specified, meaning that the seller has the right to sell the goods.
  • No other party will attempt to repossess, take back, or prevent the use of goods purchased by a consumer.
  • Goods are not subject to undisclosed securities or charges.
  • The manufacturer of goods guarantees that repairs and spare parts will be available for a reasonable timeframe.

Where you provide services, you must guarantee that you provide your services: 

  • with due care and skill;
  • so as to meet for any stated purpose; and 
  • within a reasonable time.

What if I Fail to Meet a Consumer Guarantee?

If a good or service you provide fails to meet a consumer guarantee, you must provide a remedy to fix a fault, deficiency or failing to meet an obligation. A remedy might include:

  • a repair, replacement or refund;
  • service cancellation; or
  • compensation for damages and reasonably foreseeable consequential loss.

Consumers may ask you for a remedy directly or a consumer protection agency may take action against you on behalf of consumers.

What Can I Say to My Customers About Consumer Guarantees?

Neither you nor anyone who works for your business may exclude, limit or modify the guarantees in the ACL. You should not ask:

  • consumers to agree to surrender their consumer rights; or 
  • to apply the law of another country to the sale or provision of your goods or services.

Take care with what you say to consumers when producing signs, advertisements or other documents. Certain signs or notices, such as ‘no refunds’, may be unlawful. This is because they limit, or are seen to restrict, the consumer guarantees.

For example, a ‘no refunds’ sign suggests that a refund is not available in any circumstance. However, the consumer guarantees mean that a refund may be available if there is a major problem with the goods. A better sign might say, ‘no refunds for change of mind’.

You might like to alert customers of their rights to the consumer guarantees at your point of sale counter or reception desk. The state and territory consumer protection agencies and the Australian Competition and Consumer Commission (ACCC) encourage businesses to display a sign they jointly developed informing consumers of their rights and remedies under the ACL.

If a consumer takes you to court, you may receive an order to pay a monetary penalty. If the court finds you provided false or misleading information about consumer guarantees, the maximum payable amount at time of writing is: 

  • $1.1 million for a body corporate; and 
  • $220,000 for an individual.

Key Takeaways

It is important to understand your responsibilities to the consumers you interact with. The way in which the consumer guarantees affect you will vary depending on the nature of your business. Failing to meet the consumer guarantees can be costly and negatively impact your business’ reputation. Make sure you seek appropriate legal advice and comply with the consumer guarantee requirements. If you need advice on how to comply with the consumer guarantees, contact LegalVision’s regulatory and compliance lawyers on 1300 544 755 or fill out the form on this page. 

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