Australia: Australian Consumer Law changes – Competition and Consumer Act 2010

Legal Directions
Last Updated: 17 March 2011
Article by Liam Casey


The Australian Consumer Law ('the ACL') resulted from extensive government consultation and review of the existing legislative framework. This review was undertaken with a view to improving uniformity and consistency between Australian jurisdictions, and to ensure that customers are adequately protected when entering into a contract with a business for the supply of a good or service.

Broadly speaking, the primary objectives of the ACL are to:

  • Introduce new civil pecuniary penalties for contravention of certain consumer protection provisions
  • Prohibit unfair contract terms in standard form consumer contracts
  • Introduce new enforcement powers for the Australian Competition and Consumer Commission ('ACCC') and the Australian Securities and Investments Commission ('ASIC').

This article is intended to be a brief overview of the key changes and new concepts which came into force on 1 January 2011, with the enactment of the Competition and Consumer Act 2010 (Cth), replacing the Trade Practices Act 1974 (Cth) ('the TPA').

History of the Australian Consumer Law

The Trade Practices Amendment (Australian Consumer Law) Act (No. 1) 2010 (Cth) was the first of two Acts to implement the new Australian Consumer Law. The Act was passed by the Commonwealth Parliament on 17 March 2010. On 24 June 2010, the Trade Practices Amendment (Australian Consumer Law) Bill (No. 2) 2010 (Cth) followed.

When the amendments came into force on 1 January 2011, the Trade Practices Act 1974 (Cth) changed its name to the Competition and Consumer Act 2010 (Cth), and the new Australian Consumer Law came into existence.

These two enactments, along with the passage of State and Territory laws applying the ACL and new Trade Practices Regulations have reformed Australia's previously inconsistent Commonwealth, State and Territory consumer laws.

The changes

Some of the more significant legislative changes included:

  • A single set of definitions and interpretive provisions, some of which differ from those in the TPA (Ch 1)
  • A unified regime for unfair contract terms (Ch 2, Pt 2-3)
  • Unified provisions addressing unfair practices and fair trading, including amendments and additions which reflect existing provisions in State and Territory consumer laws (Ch 3, Pt 3-1)
  • New consumer guarantees provisions, replacing the existing statutory implied conditions and warranties (Ch 3, Pt 3-2, Div 1)
  • A national regime for unsolicited consumer agreements, which replaces existing State and Territory laws on door-to-door sales and other direct marketing (Ch 3, Pt 3-2, Div 2)
  • A national regime for lay-by agreements (Ch 3, Pt 3-2, Div 3)
  • A national product safety legislative regime (Ch 3, Pt 3-3)
  • National provisions addressing information standards which apply to goods and services (Ch 3, Pt 3-4).

The reforms are wide-ranging and will have a significant impact on all businesses. The prudent company will be required to review their business-consumer agreements, standard form terms and conditions, document retention policies and procedures that are currently in place, in the event an investigation is conducted by a regulator.


New civil pecuniary penalties

The ACL introduced civil penalties up to a maximum of $1.1 million for corporations and, $220,000 for individuals, relating to contraventions of particular provisions of the former TPA, such as the unconscionable conduct provisions and provisions relating to false or misleading representations.

This change will have significant ramifications. Until now, there had only been scope to seek criminal fines, requiring the prosecution to establish the claim 'beyond reasonable doubt.' A civil penalty regime has a lower onus of proof (the 'balance of probabilities') and also allows the ACCC to commence Court actions.

Stronger enforcement powers

The ACL has strengthened the ACCC's enforcement powers (and those of ASIC, in relation to financial services and products). Under the TPA, because the regime was strict and the penalties severe, cases commenced by the ACCC were reasonably rare. The ACL has now empowered the ACCC to:

  • Apply for a Court order disqualifying a person from managing corporations following a contravention of certain consumer protection provisions
  • Seek a Court order to redress loss or damage to consumers arising out of contravention of certain consumer protection provisions
  • Issue 'substantiation notices' requiring the recipient to provide information and / or documentation to substantiate representations made by the recipient
  • Issue 'infringement notices' containing a financial penalty for suspected contraventions of certain ACL provisions. It should be noted that payment is voluntary, however if paid the company will avoid a Court action being commenced in relation to the conduct
  • Issue 'public warning notices' relating to consumer protection in certain circumstances.

Unfair contract terms regime

The ACL introduced a new unfair contract regime that operates to void a term in a business-consumer standard form contract where the term is deemed to be unfair. A term will be deemed unfair where:

  • It would cause a significant imbalance in the parties' rights and obligations arising from the contract
  • The term is not reasonably necessary to protect the legitimate interests of the business party who would be advantaged by the term
  • It would cause detriment to a party if it were relied upon.

This regime means that businesses should consider all purposes for which a customer may be acquiring goods or services rather than simply the nature of the good or service itself. This will cause a significant shift in the consumer landscape, with mobile phone contracts, for example, likely to come under the microscope.

As financial products and services fall under the Australian Securities and Investments Commission Act 2001 (Cth) and the Corporations Act 2001 (Cth), these pieces of legislation have been amended accordingly.


Unfair contract provisions are found within Schedule 1 to Competition and Consumer Act 2010 (Cth), while the remainder of ACL can be found in Schedule 2 of the Act.

Chapter one – introduction

This chapter sets out the relevant definitions of terms used in the ACL and explains key concepts.

Chapter two – general protections

We now move into the area which is often the source of litigation. This chapter addresses consumer protections including misleading and deceptive conduct, unconscionable conduct and the new addition to the Act, unfair contract terms.

Misleading and deceptive conduct

The ACL prohibits misleading or deceptive conduct in trade or commerce. Although worded slightly differently, the ACL will provide the same broad protection as section 52 of the TPA.

Unconscionable conduct

The ACL includes provisions prohibiting persons from engaging in unconscionable conduct towards consumers or businesses. The ACL adopts the unconscionable conduct provisions from the TPA directly.

Unfair contract terms

The ACL includes provisions that address the use of unfair contract terms in standard form consumer contracts. There is a long and difficult history in defining this area of the law, such that it warranted attention in the ACL. In determining unfairness, a Court will have regard to the contract as a whole and the extent to which the term is transparent, that is:

  • Expressed in reasonably plain language
  • Legible
  • Presented clearly
  • Readily available to any party affected by the term.

Importantly, there is a rebuttable presumption that the term is not reasonably necessary to protect the business' legitimate interests. This means that a business would need to demonstrate on the balance of probabilities that its legitimate interest is convincing enough to overcome any detriment that may be caused to the consumer.

Chapter three – specific protections

This chapter contains a number of protections:

  • Banning specific unfair practices in trade or commerce – this provision addresses detrimental behaviour such as false and misleading representations and wrongly accepting payment for goods and services not actually supplied
  • Dealing with consumer transactions for goods or services – this protection creates a single set of statutory consumer guarantees to replace the existing system of implied conditions and warranties in the TPA in respect of consumer agreements, unsolicited consumer agreements and lay-by agreements
  • On the safety of consumer goods and product related services – there is now a national enforcement framework which should allow for greater control by the ACCC
  • On the making and enforcement of information standards – this protection unifies the information requirements to be made known when supplying goods and services
  • On the liability of manufacturers for goods with safety defects – given that there is usually no direct contract with consumer, the specific statutory protections found in Part VA of the TPA were incorporated in the Act.

Chapter four – offences

The ACL creates a criminal offence regime for certain provisions of Chapter three and includes:

  • Defences to offences under the ACL
  • Prosecution timeframes
  • Compensation for those harmed
  • Penalties for offences of the same nature.

Under the ACL, a corporation convicted of an offence could be liable to having a criminal conviction recorded and paying a fine of up to $1.1 million. An individual could face having a criminal conviction recorded and paying a fine of up to $220,000.

Chapter five – enforcement and remedies

The ACL has created new and maintained existing enforcement powers and remedies at the disposal of the ACCC including enforceable undertakings and adverse publicity orders, up to disqualifications and criminal convictions. These provisions have significantly strengthened the enforcement powers of the ACCC and ASIC.


Perhaps the most important thing to consider is that these new national provisions are expected, at least in theory, to simplify and provide a clearer framework for consumer law, for both consumers and businesses. This, in turn, should allow consumers to make more informed choices when entering into business transactions.

The ACL has also been drafted to allow the regulator to keep close control of the marketplace and the conduct of business.

Time will tell whether these goals will ultimately be achieved.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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