When you import products to sell in Australia, it’s easy to assume that the manufacturer has met the product safety standards. But if you sell products in Australia, you too have an obligation to ensure their safety. This is because, under the Australian Consumer Law (ACL), you are guaranteeing a product’s safety when you sell it to customers. If you don’t meet these product safety guarantees, you will breach the ACL — regardless of whether the manufacturer caused the problem. In this article, we unpack how the consumer guarantees apply to retailers that import products.
Consumer Guarantees and Product Safety
Under the ACL, consumers can expect any goods or services they purchase to be:
- safe;
- have no faults;
- look acceptable; and
- perform the functions normally expected of the product.
When your business doesn’t meet these standards, the consumer is entitled to a remedy such as a refund, replacement or repair. A faulty airbag is an example of a defect that would make the car unsafe.
If your business provides a solution to the customer for the safety defect, you can claim the amount you lost from the manufacturer. The best way to secure this right is through a manufacturing agreement setting out that the manufacturer will compensate you for any loss suffered because of their defect.
Manufacturer and Product Liability
In situations where your business cannot identify the manufacturer, you will generally be responsible for any safety defects. For example, if you are buying the products directly from a wholesaler, you may not know the manufacturer. In this situation, it’s important that your business has practices in place to reduce the risk of safety defects in your products. These can include:
- adopting product safety quality assurance procedures;
- conducting regular safety checks;
- providing clear safety instructions for consumers;
- providing a disclaimer and instructions for products which pose a choking hazard; or
- recalling any products which are defective or unsafe. If your products have only made it to the distribution centre of the retailer, ensure that you withdraw them from sale as soon as possible.
Product Bans in Australia
Bans are placed on products where there is a risk of serious injury, illness or death. They can be temporary or permanent. The Commonwealth Minister and state or territory ministers can impose a temporary ban on a product in the following circumstances:
- the product will or may cause injury through use or misuse; and
- another minister has imposed a ban on the product.
Interim Bans in Australia
When a Commonwealth Minister imposes an interim ban, it applies Australia-wide. Businesses have an opportunity to voice their concerns about the ban in a conference. But where it’s believed that there is an imminent danger to the public, a conference will not be held before the ban. Instead, businesses affected will be notified and have an opportunity to hold a conference when the ban is imposed or shortly after.
A state or territory ban will only apply to the relevant state or territory where the ban is imposed. In this situation, the minister does not need to notify the supplier or provide them with an opportunity to call a conference. Businesses can still take action against the manufacturer if the manufacturer caused the defect.
Permanent Bans in Australia
The Commonwealth Minister can also declare a permanent ban. A permanent ban applies nationally. If the Minister proposes a permanent ban, they must publish a ban notice online and invite affected suppliers to request a conference with the ACCC to discuss the ban.
How to Comply with a Ban
If your products are banned, it is unlawful for you to:
- offer to supply;
- sell;
- possess;
- manufacture; or
- have control of the product.
Businesses which export products which are banned in Australia should seek legal advice as special rules apply in these circumstances. For a list of the current banned products in Australia, please see this Product Safety Australia list.
A ban on a product applies to:
- importers;
- manufacturers;
- distributors;
- hirers; and
- retailers.
Mandatory Standards for Certain Products
Mandatory standards make safety and information features on products compulsory. They apply to certain products where they are reasonably necessary to prevent or reduce a risk of injury to a consumer. Some products which are subject to a mandatory standard include:
- baby bath aids;
- aquatic toys;
- baby dummies;
- baby walkers;
- balloon blowing kits;
- basketball rings and backboards; and
- bean bags.
A testing authority must then test your business’ products to ensure they meet the standard before they are sold (for example, the National Association of Testing Authorities Australia). It is an offence to supply products which do not adhere to the relevant mandatory safety standard.
Recalls and Mandatory Reporting
The ACL requires that a product is recalled where there is a risk that it will or may cause injury to a consumer. This also applies if a product does not comply with the relevant mandatory safety standard.
A seller is required to report where there is an awareness of death, serious injury or illness relating to the product supplied. The supplier must make a report within two days following the incident. All participants in the supply chain are required to make a mandatory report, including the supplier, manufacturer, importer or wholesaler. You can submit the report online using the ACCC’s form on the Product Safety Australia website.
Key Takeaways
Australian law imposes strict product safety obligations on suppliers. If your business operates in this space, it is crucial to meet your obligations. Consumers have a right to demand a refund for products with safety defects, and a business cannot refuse a refund in this situation. It is also important to adhere to the mandatory safety standards imposed on certain products. Failure to meet these standards will result in fines and a mandatory recall of the products.
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If you have questions on your obligations under the ACL, get in touch with our consumer lawyers today on 1300 544 755 or fill in the form below.
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