Consumer Law: Who Does It Protect?

Consumer laws are designed to protect consumers from unfair business practices and ensure they receive certain guarantees when purchasing goods or services. In Australia, these laws are outlined in the Australian Consumer Law (ACL), which applies to all businesses operating in the country, including overseas companies. The ACL sets out consumer guarantees, which are basic rights that consumers automatically receive when buying goods or services. These guarantees include the right to a refund, repair, or replacement if a product or service is faulty, as well as protection from unfair contract terms and misleading or deceptive conduct by businesses. While it is assumed that consumer law does not apply to business-to-business (B2B) transactions, the ACL states that it can depend on certain conditions, such as the type of goods or services involved and the amount of money paid. Therefore, it is important for businesses to understand their rights and obligations under consumer law to ensure compliance and avoid legal penalties.

Consumer guarantees

Guarantees for Products

• Acceptable quality: Products must be safe, durable, free from defects, have an acceptable appearance and finish, and perform all the functions that similar products are commonly used for.
• Matching description: Products must match their written or spoken description provided by the business.
• Matching demonstration model: If a product is purchased based on a sample or demonstration model, the actual product must have the same quality and features.
• Express warranties: Businesses must honour any extra promises or representations made about the product's quality, performance, condition, or characteristics.

Guarantees for Services

• Due care and skill: Services must be provided with an acceptable level of care and skill, at least as good as what a competent service provider would provide.
• Fit for specified purpose: Services and any resulting products must be fit for any stated purpose.
• Reasonable time: Services must be supplied within a reasonable time if no specific timeframe is set.

Resolving Issues

Businesses cannot deny consumers their rights by displaying signs like "no refunds" or "no refunds on sale items". These guarantees may apply even after the manufacturer's warranty period has ended.

Consumer rights

Australian Consumer Law

The Australian Consumer Law (ACL) is a national law that protects consumers and applies to any business operating in Australia, including those based overseas. The ACL outlines several consumer guarantees that businesses must meet. These guarantees include:

• Acceptable quality: Products must be of acceptable quality and perform as expected.
• Matching description: Products must match their provided description, including any express warranties made by the business.
• Fit for purpose: Products and services must be fit for their intended purpose and meet the consumer's expectations.
• Services provided with due care and skill: Services must be provided with the appropriate level of care, skill, and professionalism.
• Timely service: Services must be provided within a reasonable time frame if no specific time is set.

Unfair Business Practices

Consumer Education and Empowerment

Business-to-business transactions

In general, when a business purchases goods or services from another business, it has similar rights to a consumer, unless there is a contract that contradicts this. These basic rights can be excluded from business-to-business contracts, so it is important to ensure that the terms and conditions of the contract do not put your business at a disadvantage.

In the case of goods, unless otherwise stated, you are entitled to demand that your purchases correspond with the seller's description, are of satisfactory quality (safe, in working order, and free of minor defects), and are fit for purpose (capable of doing what they are meant to do).

Similar rights apply when purchasing services. You can expect services bought from other businesses to be carried out with reasonable care and skill, within a reasonable time (where not fixed by contract), and for a reasonable charge (where not fixed by contract).

It is important to note that these rights also cover transactions such as hiring, hire purchase, and part exchange. Additionally, businesses can claim reasonable business losses if this has not been disclaimed by the supplier.

In Australia, the Australian Consumer Law (ACL) within Schedule 2 of the Competition and Consumer Act 2010 provides that products must be of acceptable quality and do all the things that someone would normally expect them to do. This law applies to business-to-business transactions when a business acquires goods or services as a 'consumer', which typically means purchasing goods or services that cost less than $100,000. However, the ACL also applies if the goods or services cost more than $100,000 but are of a kind ordinarily acquired for domestic, household, or personal use or consumption, or if the goods are commercial road vehicles or trailers used primarily to transport goods on public roads.

Unfair business practices

In Australia, unfair business practices are regulated under the Australian Consumer Law (ACL) and enforced by the Australian Competition & Consumer Commission (ACCC). The ACL is a national law that protects consumers and applies to anyone conducting business in Australia, including overseas businesses.

Unfair practices relate to how businesses promote, sell and deliver products and services, the terms they use in contracts, and how they take payment from consumers.

Examples of Unfair Business Practices

Unfair Contract Terms

The ACL protects consumers and small businesses from unfair terms in standard form contracts. A standard form contract is a contract between two parties where one party has little to no opportunity to negotiate the terms. To be considered unfair, a contract term must meet three conditions:

• It would cause financial or other detriment to the consumer or small business if enforced.
• It significantly imbalances the rights and obligations between the business and consumer or small business.
• It is not reasonably necessary to protect the interests of the business.

False or Misleading Claims

Businesses must ensure that any claims they make about their products or services are accurate, true, and based on reasonable grounds. It is against the law to make false or misleading claims.

Not Delivering Products and Services

Businesses must not accept payment for products or services that they do not intend to supply.

Pressuring and Harassing Consumers

It is against the law for a business to use physical force, coercion, or undue harassment against consumers. Coercion can include using threats of force to restrict someone's choice or freedom to act, or exploiting known facts or circumstances to force someone to act. Undue harassment refers to unnecessary or excessive contact or communication that intimidates, tires, or demoralises an individual.

Pyramid Schemes

It is against the law to participate in or persuade someone to join a pyramid scheme. Pyramid schemes are structures where individuals must pay to join and are promised payment for recruiting others. Only a small number of people at the top of the scheme receive financial benefits, which are derived from recruitment rather than the sale of a genuine product or service.

Unconscionable Conduct

Unconscionable conduct refers to behaviour that is so harsh that it goes against good conscience. While there is no precise legal definition, courts consider whether the conduct is against the morals and principles of the community. Businesses must not act unconscionably towards consumers or other businesses, especially those experiencing vulnerability.

Reporting and Enforcement

The ACCC accepts reports of potential unfair business practices and uses them to inform their education, compliance, and enforcement work. They can investigate and take compliance or enforcement action against businesses that are found to be engaging in unfair practices. However, it is important to note that the ACCC does not resolve individual complaints or provide legal advice on unfair practices.

Consumer product safety

Consumer laws are designed to protect consumers from unfair practices and unsafe products. In Australia, the Australian Consumer Law (ACL) is the national law that protects consumers and is administered by the Australian Competition and Consumer Commission (ACCC) alongside state and territory consumer protection agencies.

The ACL governs product safety in Australia, ensuring that products supplied are safe and meet consumer guarantees. Businesses have a responsibility to sell safe products, comply with standards, and take action if a safety issue occurs. This includes recalling products that present a safety risk or do not comply with mandatory safety standards or bans. If a product has caused a death, serious injury, or illness, businesses are required to submit a mandatory injury report to the Commonwealth Minister within two days of becoming aware of the incident.

The ACL provides guidelines for specific types of sales, such as selling tickets to events, telemarketing, and door-to-door sales. It also covers rules for the use of credit cards, interest-free offers, buy-now-pay-later services, and lay-by agreements.

In the United States, the Consumer Product Safety Commission (CPSC) protects the public from unreasonable risks of serious injury or death from consumer products under its jurisdiction, including those that pose fire, electrical, chemical, or mechanical hazards or can injure children. The CPSC investigates product safety issues and issues recalls and safety alerts when necessary.

In Canada, the Canada Consumer Product Safety Act outlines the requirements for consumer products, including incident reporting, recalls, safety alerts, and product safety education. Online marketplaces have signed a pledge to strengthen the safety of consumer products sold online.

Consumer Rights and Guarantees

Consumer guarantees are a fundamental part of consumer law, ensuring that products are of acceptable quality, match their description, are fit for purpose, and satisfy any express warranties. These guarantees apply automatically, regardless of any other warranties provided by the business. Consumers have the right to a refund, replacement, or repair if a product fails to meet these guarantees, and they may also be entitled to compensation for damages and loss.

Businesses must honour any extra promises or representations made about a product's quality or performance, and these are covered under consumer guarantees. For example, claiming that a table can hold up to a certain weight.

Unfair Business Practices

Consumer laws also address unfair business practices, such as unfair contract terms, unconscionable conduct, unsolicited supplies, and accepting payment without intending to supply. These practices are prohibited, and businesses found engaging in them may face penalties.

Frequently asked questions