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The world of online shopping has expanded in recent years and its growth is set to continue. While shopping online offers consumers a different kind of experience to 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 that must be met and the remedies that online businesses must provide if these guarantees are not met under the Australian Consumer Law (ACL).

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 bricks and mortar and online businesses in all Australian states and territories. The Australian Competition and Consumer Commission (ACCC) enforces the ACL and investigates potential breaches.

The ACL applies to Australian businesses who sell goods or services online. 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.

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 up to $40,000;
  • goods or services over $40,000 typically purchased for domestic, household or personal purposes; and
  • business vehicles and trailers used to transport 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, which means that consumers can bring you in front of a court and seek remedies when you do not fulfil them.

The ACL specifies appropriate remedies in cases where business do not fulfil consumer guarantees. This could be a:

  • repair or replacement;
  • refund; or
  • compensation.

You cannot contract out of these obligations. This means that you cannot avoid your obligation to provide consumer guarantees and the appropriate remedies by stating otherwise in your contracts.

Guarantees for Goods

When a customer purchases a product, your online business must guarantee that it:

  • is of acceptable quality, safe and without faults;
  • matches any description you make (on packaging, labels, in promotions or advertising);
  • matches any sample or demonstration model;
  • comes with undisturbed possession. This means that another person cannot repossess, take back the product or prevent a consumer from using it;
  • is fit for the purpose advertised;
  • comes with full ownership;
  • carries no hidden securities or charges;
  • meets any additional promises you make regarding performance, quality, or condition (such as a lifetime guarantee); and
  • has (if appropriate) spare parts and repair facilities available for a reasonable time after purchase unless you inform the consumer otherwise before purchase.

Guarantees for Services

When a customer purchases a service, your online business must guarantee that:

  • you will provide the service with acceptable care and appropriate skill;
  • the service is fit for the purpose or gives the result agreed 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 of your consumer guarantees, a customer has the right to seek a remedy, for example, 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 choose to provide a free repair instead of a replacement or refund. However, customers will be entitled to ask for a replacement or refund for major problems.

The ACCC defines a major problem as a good or service that:

  • has a problem 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).

In some cases, a consumer may also have the right to compensation for loss and damage. A consumer cannot seek a remedy if they simply changed their mind about an online purchase.

Key Takeaways

As an online retailer, you are not exempt from your obligations under the ACL. It is therefore important that you are aware of your obligations to customers under the ACL. In particular, you must ensure that you meet consumer guarantees and provide an appropriate remedy in cases when you do not. If you have any questions about your obligations under the ACL, get in touch with LegalVision’s e-commerce lawyers on 1300 544 755 or fill out the form on this page.


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