The world of online shopping has grown significantly in recent years and is likely to continue on a similar trajectory. While shopping online offers consumers a unique experience compared with traditional stores, the consumer law obligations that apply to brick-and-mortar stores apply equally to online retailers. This article will discuss the consumer guarantees your online business must meet under the Australian Consumer Law (ACL) and the remedies you must provide if you do not meet them.
How Does The Australian Consumer Law Affect You?
Understanding your obligations under the ACL is crucial for online retailers. The ACL is the primary piece of law governing consumer law in Australia. It applies to both physical stores and online businesses in all Australian states and territories that sell goods or services. The Australian Competition and Consumer Commission (ACCC) enforces the ACL and investigates potential breaches.
Under the ACL, all online retailers must meet consumer guarantees and offer customers appropriate remedies when a product or service does not meet these guarantees.
Consumer Guarantees
A guarantee is an assurance that if you buy a product or service, it will work as expected.
The ACL provides a set of guarantees for all Australian consumers when they purchase certain goods or services. The guarantees apply to:
- goods or services typically purchased for personal or household use;
- goods or services inherently commercial in nature when they cost less than $100,000, including GST; and
- business vehicles and trailers used to transport goods on public roads,
However, they do not apply to goods purchased for:
- resupply;
- use or transformation in production or manufacturing; or
- repairing or treating other goods.
All businesses must meet these guarantees, in addition to any other warranties that they provide to consumers. A warranty is a promise that your business makes to a consumer. These guarantees are legally enforceable. Accordingly, consumers can take legal action against you and seek remedies when you do not honour these guarantees.
The ACL specifies appropriate remedies in cases where businesses do not fulfil consumer guarantees. This could be a:
- repair or replacement;
- refund; or
- compensation.
Guarantees for Goods
When a customer purchases a product, they are provided with an automatic guarantee under the law that the product:
- is of acceptable quality, safe and without faults;
- matches any description you provide (whether on packaging, labels, in promotions or advertising);
- matches any sample or demonstration model;
- comes with undisturbed possession (meaning that a third party cannot repossess, take the product back or prevent the customer from using it);
- is fit for the purpose advertised;
- will be entirely owned by the customer;
- carries no hidden debts, securities or charges; and
- meets any additional promises you make regarding performance, quality, or condition, such as a lifetime guarantee.
If appropriate, manufacturers and imports also must offer spare parts and repair facilities for a reasonable time after purchase unless they advise the customer otherwise before purchase.
Continue reading this article below the formGuarantees for Services
When a customer purchases a service, they are provided with an automatic guarantee that:
- you will provide the service with due care and appropriate skill;
- the service is fit for its intended purpose or gives the result agreed upon between you and the customer; and
- it will be supplied within a reasonable time (even if you did not specify a date or time).
Customer Rights
If you do not meet all your consumer guarantees, your customers can seek a remedy. For example, they may request a:
- repair;
- replacement; or
- refund.
The situations when a consumer can request these remedies vary depending on whether the problem is major or minor. For minor problems, you can provide a free repair instead of a replacement or refund. However, for major issues, customers can demand either a replacement or a refund.
The ACCC defines a major problem as a good or service that:
- has a defect or issue that would have stopped the customer from buying it if they had known about the problem;
- is significantly different from the sample or description (goods);
- is substantially unfit for its common purpose and cannot be fixed within a reasonable time (services); or
- is unsafe (goods) or creates an unsafe situation (services).
Sometimes, a consumer may also have the right to compensation for loss and damage. However, consumers cannot seek a remedy if they simply change their minds about an online purchase.
False, Misleading and Deceptive Conduct
The ACL prohibits businesses from making statements or representations that could be false and mislead or deceive their customers. Some examples of behaviours you must avoid include exaggerating product claims or benefits or including hidden fees.
Your business should ensure that:
- product descriptions and images accurately reflect the actual product;
- claims about a product or service are substantiated by evidence;
- pricing is clear with no hidden fees;
- testimonials and reviews from customers are genuine and unaltered; and
- you disclose the existence of commissions, paid promotions and any other potential conflicts of interest to consumers.
Unfair Contract Terms (UCTs)
If you have customers accept terms and conditions without providing them an opportunity to negotiate (meaning the contract is what’s referred to as ‘standard form’), you must avoid using unfair contract terms as there can be significant penalties for including or relying upon them.
Unfair contract terms are terms that:
- create a significant imbalance between the parties;
- are not reasonably necessary to protect the legitimate interests of the benefiting party; and
- cause detriment to the other party if relied upon or applied.
Some examples of UCTs include:
- penalty fees for minor breaches;
- high-interest rate charges for delayed payments;
- terms permitted for one party but not the other, such as a unilateral right to cancel the agreement; or
- terms that limit or exclude a party’s liability when it is market-standard for that party to be liable.
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Key Takeaways
As an online retailer, you are not exempt from your obligations under the Australian Consumer Law. Therefore, it is important that you are aware of your obligations to customers under the Australian Consumer Law. In particular, you must ensure that you meet consumer guarantees and provide an appropriate remedy in cases when you do not. Additionally, avoid any false, misleading or deceptive conduct. Furthermore, you must avoid using unfair contract terms, especially if you use standard form contracts.
If you need help complying with the Australian Consumer Law for your online business, our experienced e-commerce 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.
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