Consumer guarantees apply to businesses that sell, lease or hire goods or for goods purchased “in trade or commerce”. Furthermore, even where you provide a good as a gift, there are still provisions to protect consumers. Therefore, businesses must be aware of their obligations if they intend to give away goods for free. This article will explore consumer guarantees, when they apply and when they do not, and what other rules govern goods that are given away for free.
Who Do the Consumer Guarantees Apply To?
Generally speaking, the consumer guarantees do not apply to individual consumers. Rather, they apply to individuals or businesses when they purchase, hire or lease any good or service that is:
- less than $100,000 in value;
- valued above $100,000 but is purchased for domestic, household or personal use or consumption; or
- a commercial vehicle or trailer acquired for the primary purpose of transporting goods on public roads.
Conversely, businesses must provide the consumer guarantees for the same goods and services in the above list. There is no way for a business to exclude themselves from these guarantees. To clarify, if a consumer purchases an expensive watch worth over $100,000, the consumer can rely on consumer guarantees regardless of any attempts by the business to exclude this responsibility.
What Are the Consumer Guarantees?
For suppliers and manufacturers, different consumer guarantees apply.
A supplier is usually the business or shop you purchase the good from. They guarantee that:
- goods will be of acceptable quality;
- goods are fit for a particular purpose;
- goods will match their description;
- goods will match the sample or demonstration model;
- the supplier will honour any express warranties;
- the consumer will have title to the goods;
- the consumer will have undisturbed possession of the goods; and
- there are no undisclosed securities on the goods.
The manufacturer is the entity that creates or manufactures the goods, and may also be the supplier. They guarantee that:
- goods will be of acceptable quality;
- goods will match their description;
- the manufacturer will honour any express warranties; and
- the manufacturer will provide repairs or spare parts for a reasonable time.
When Do the Consumer Guarantees Apply?
It is important to clarify that the consumer guarantees apply to almost every good the average consumer purchases. They even apply to gift recipients or the purchase of second-hand products. For example, suppose your friend purchases you a bicycle for your birthday but the wheel breaks. The consumer guarantees still protect you even though you did not purchase the bicycle. As the recipient of the gift, you will still have the same consumer protections as the purchaser of your gift.
Different laws also apply to:
- financial products;
- insurance products; and
- goods purchased before 2011.
What Rules Apply to Goods Given Away for Free?
The Australian Consumer Law (ACL) mandates obligations on businesses offering goods for free to consumers. It is illegal to offer rebates, gifts, prizes or other free items without intending to provide them. Businesses must provide any goods for free as promised. If they do not, then the business is required to offer a rebate within the specified time or otherwise, within a reasonable time. If a business does offer gifts or goods for free, there are still requirements for the goods to match their description.
There are further regulations that businesses must follow that protect consumers regardless of the goods or services offered. These include:
- prohibitions against misleading and deceptive conduct;
- unconscionable conduct;
- false or misleading representations;
- harassment or coercion; and
- unsolicited consumer agreements.
Similarly, if a business offers a free good or service to a consumer with the intention to offer an additional paid product, the business may be engaging in unsolicited consumer agreements.
ACL Regulators
At a national level, the ACL is governed by the Australian Competition and Consumer Commission. Additionally, each state has its own regulator, and some states have specific rules and regulations that outline further consumer protections.
The ACL regulators in each state are:
- NSW Fair Trading in New South Wales;
- Access Canberra in the Australian Capital Territory;
- Office of Fair Trading in Queensland;
- Consumer and Business Services in South Australia;
- Consumer Affairs Victoria in Victoria;
- WA Consumer Protection-Department of Mines, Industry Regulation and Safety in Western Australia;
- Consumer Affairs and Fair Trading in Tasmania; and
- Consumer Affairs in Northern Territory.
It is important to consider if any state-based regulations apply to the provision of your goods or services. Conversely, as a consumer, you should consider whether you have additional protections that you can rely on.
As a franchisor, you must not engage in misleading and deceptive conduct. We explain what it is and how to avoid it.
Key Takeaways
Consumer guarantees apply to specific goods and services under Australian Consumer Law. As a business owner, you must be aware that these regulations extend to free products and services as well. Failure to comply with these requirements will result in action from the relevant ACL regulator.
If you have any concerns about you ACL compliance, our experienced consumer lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
The consumer guarantees are protections afforded to consumers by businesses. Businesses cannot exclude them.
If you offer free goods, you are obliged to provide them to the consumer within a reasonable period, other than in circumstances out of your control.
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