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We may think that the Australian Consumer Law (ACL) does not apply to charities and not for profit organisations because they do not ordinarily supply goods and services to consumers. However, that is not always the case, and charities and other not for profits should be aware of their obligations under the ACL. This article will explore how the ACL may apply to charitable fundraising and what your organisation can do to stay compliant.

How Can the ACL Apply to Charitable Fundraising?

The supply of goods and services is not limited to businesses that operate for profit. Does your organisation:

  • ultimately operate for profit;
  • engage in a fundraising activity which involves the supply of goods or services (generally in return for donations); or
  • undertake fundraising activities in a business-like way (i.e. if the activities are repetitive, organised and managed as if being run by a business)?

If so, then your organisation needs to be compliant with the ACL. 

The ACL prescribes conduct standards for organisations or people providing goods and services to consumers, which includes: 

  • requiring that goods and services meet certain consumer guarantees; 
  • making it an offence for organisations to engage in misleading and deceptive conduct and unconscionable conduct; and 
  • setting out rules relating to cooling-off periods. 

This article explores how these might apply to a charity below. 

Consumer Guarantees

Consumer guarantees are the rules that apply to organisations that sell goods or services. Additionally, they will apply to organisations that supply goods or services in return for charitable offerings, such as donations. Goods sold to consumers come with automatic guarantees, such as that the products will be: 

  • of acceptable quality; 
  • safe; 
  • fit for purpose; and
  • a match of the description or image advertised. 

Services provided to consumers come with automatic guarantees, such as that the service will be: 

  • provided with care and skill; 
  • fit for purpose; and
  • delivered within a reasonable time.

If organisations do not meet these guarantees, it may entitle the consumer to: 

  • repairs;
  • replacements;
  • refunds; 
  • cancellation of a service; and
  • compensation for loss and damages.

For example, a not for profit organisation sells books to raise funds for children’s literature programs. If there is fault or damage to the books, this would therefore likely entitle the consumer to a replacement or refund of the book. Another example would be if a not for profit organisation provides services at a discounted or reduced price. The services must still meet consumer guarantees. 

You should ensure that you understand the consumer guarantees and how they apply to businesses in general.

Misleading or Deceptive Conduct

All organisations, including charities and not for profit organisations, are prohibited from engaging in misleading or deceptive conduct. This conduct involves making representations to consumers that are likely to mislead or deceive, even if there is no intention to do so. 

Examples of conduct by a charity or not for profit that might be misleading or deceptive include:

  • telling people (whether in person or online) that all or a portion of the money collected will go to a certain purpose, where that is not true or cannot be substantiated;
  • telling people that you are a volunteer for a charity or not for profit, when in fact you are paid a commission for donations collected;
  • claiming that a good or service you are providing (even if in return for a donation) has certain characteristics that it does not; and
  • making someone think that they are making a one-off donation, but instead leading them to sign up to recurring monthly donations. 

Organisations need to ensure they do not engage in this type of conduct. If they do, the Australian Competition and Consumer Commission (ACCC) can issue severe penalties. Moreover, it may also harm your charity’s reputation.

Unconscionable Conduct 

The ACL prohibits conduct by organisations in trade or commerce that are harsh or oppressive and go against good conscience. To be considered ‘unconscionable conduct’ the conduct must be more than just unfair. 

An example of the conduct of a charity or not for profit organisation that might be unconscionable is as follows: 

A salesperson (or agent of the charity) approaches someone in a shopping mall with a view to collecting donations. The salesperson actively tries to target people who do not speak fluent English or may have difficulties reading English. As part of the form the person making the donation must complete, there is an option to make the donation recurring. The person donating asks what this means, and the salesperson tells them to select that option without explaining it. 

In this example, the consumer has been targeted because they are at a disadvantage in that they are not fluent in English and did not understand what they were agreeing to. This conduct may be unconscionable. 

Cooling-off Periods

The ACL also governs cooling-off periods, which may be relevant to a charity and not for profit organisation that engages in tactics like: 

  • telemarketing; 
  • door-to-door selling; or 
  • sales in public places. 

If those sales lead to a consumer signing a contract, and the selling of a good or service, then the ACL will apply. Further, under the ACL, consumers are permitted a cooling-off period for these types of contracts, where they are able to exit the contract with no penalties. 

You should ensure that you understand the rules that apply to businesses engaging in this type of marketing strategy.    

Key Takeaways

The ACL applies to charitable fundraising. Therefore, charities need to take care to ensure that they are honest with consumers. If you run a charity or not for profit organisation and want to find out more about the requirements of the ACL for charities, check out the ACL Guide for Fundraising and other activities of charities and not for profit organisations. For advice regarding the ACL, contact LegalVision’s consumer lawyers on 1300 544 755 or fill out the form on this page.

Frequently Asked Questions

Do the consumer guarantees apply to charitable organisations?

Consumer guarantees apply to organisations that sell goods or services. Therefore, they also apply to organisations that supply goods or services in return for charitable offerings, such as donations.

Do cooling-off periods apply to charities and not for profit organisations?

The ACL governs cooling-off periods. Therefore, they may be relevant to charities and not for profit organisations that engage in tactics like telemarketing, door-to-door selling or sales in public places.

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