As a business providing goods or services, you need to know about proposed upcoming changes to the Australian Consumer Law (ACL). This article will list six of the expected changes to the ACL.
What Does the ACL Do?
The ACL applies across Australia to protect consumers. It applies to:
- goods or services less than $40,000;
- goods or services normally acquired for personal, domestic or household use or consumption; or
- a vehicle or trailer for use in the transport of goods on roads.
The ACL:
- provides automatic guarantees. For example, the quality of goods must be acceptable. Services must be provided with acceptable care and skill or technical knowledge;
- sets out remedies for the failure to meet consumer guarantees. This may include repair, replacement, refunds or cancellations; and
- allows a request for compensation for any damages or losses you may experience if such damages or losses would be foreseeable.
Understanding the upcoming changes will help your business make necessary preparations. You can update your business’ existing processes and procedures to ensure compliance with the ACL.
1. Penalties
If a business contravenes the ACL, the court may impose a penalty. Some situations where the court can impose a penalty include:
- unconscionable conduct;
- false or misleading conduct;
- pyramid selling; or
- a breach of product safety provisions.
To discourage businesses from engaging in this behaviour, the maximum penalties will increase:
- for companies, from $1.1 million to $10 million; and
- for individuals, from $220,000 to $500,000.
This puts your business at a higher risk if it does not comply with the ACL. Your business should also factor in higher penalties for any insurances you have in place.
Take steps to ensure that your business is unlikely to contravene the ACL. Ultimately, a hefty financial penalty under the proposed changes could severely impact your business operations and success.
Continue reading this article below the form2. Unconscionable Conduct
Unconscionable conduct is considered harsh or oppressive behaviour. Publicly listed companies cannot currently sue for unconscionable conduct. However, the proposed changes to the ACL will enable publicly listed companies to sue other businesses for unconscionable conduct.
Your business should be more aware of any dealings with publicly listed companies. Ensure you undertake all dealings with publicly listed companies in good faith. This means:
- putting processes in place to ensure the publicly listed company can undertake negotiation;
- ensuring contracts are in simple and understandable language; and
- your business should be open to resolving issues or complaints.
3. Advertising Prices
If your business advertises a product or service online, the headline price will need to disclose additional fees or charges associated with the price. This relates to the obligation for businesses not to engage in misleading or deceptive conduct.
Behaviour that gives a certain impression about a good or service must be true. If it is actually false or inaccurate, it may therefore be misleading or deceptive conduct.
4. Product Safety
Sometimes businesses have products that need to be recalled because they are defective or unsafe. If a recall occurs for one of your business’ products or services, your business needs to notify the relevant minister. In some circumstances, you will also need to notify the specialist regulator about the recall. Your business is not necessarily the only party that can initiate a recall. Suppliers may initiate recalls for your product or service. Further, the relevant Commonwealth, state or territory body may initiate recalls.
The proposed changes will include a definition for recalls to set out clearly when the obligations for notification will be required. The Australian Competition and Consumer Commission (ACCC) will have higher investigative powers. The ACCC may also request information from third parties associated with the product or service.
5. Warranties Against Defects
Your business may provide a representation about defective goods and services. These representations may include an offer to:
- repair or replace the goods;
- resupply;
- fix the problem; or
- provide compensation.
This is usually called a warranty against defects. Your business needs to include a mandatory text to make your customers aware that the warranty is additional to the consumer rights in the ACL.
At the moment, all businesses must provide the text for goods, but the proposed changes to the ACL will extend this obligation to services.
6. Admissions of Facts
A consumer that wishes to begin proceedings under the ACL may be able to rely on the admissions of facts in earlier proceedings. Check whether your business may have made factual admissions in earlier proceedings. Consumers may rely on the same facts in their proceedings against your business in the future.
Therefore, your business should be wary of any admissions it provides if it is involved in proceedings relating to the ACL.
Key Takeaways
This article provides a short summary of the proposed changes to the ACL. If you have a business that provides goods or services to consumers (including other businesses), be sure to keep on top of these developments. Additionally, update processes to ensure they are ACL compliant.
If you have any questions about how the ACL may affect your business, get in touch with LegalVision’s competition lawyers on 1300 544 755 or fill out the form on this page.
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