Business owners should consider what action they need to take to ensure they are compliant with recent and upcoming changes to the Australian Consumer Law.

Background

It has been more than 10 years since the commencement of the Competition and Consumer Act 2010 (the Act), which introduced consistent consumer protection laws across Australia.

Schedule 2 of the Act is the Australian Consumer Law (ACL), which provides a number of safeguards to consumers when purchasing certain goods and services.

Since 1986, a person has been a "consumer" under the ACL if:

  1. the amount payable for the goods or services in question does not exceed $40,000; or
  2. if the amount payable is greater than $40,000, then the goods or services were of a kind ordinarily acquired for personal, domestic or household use or consumption.

If you are a 'consumer' under the ACL, you will have the benefit of certain rights and guarantees which cannot be excluded, including that:

  1. goods supplied are of an acceptable quality, fit for purpose and match any description given by the supplier; and
  2. services are rendered with due care and skill, fit for purpose and delivered within an agreed or reasonable time.

If a business fails to comply with these requirements, the consumer may be entitled to a range of remedies. Such remedies might include replacement, refund, repair, cancellation and/or compensation.

ACL review

A review of the ACL in 2016 and 2017 determined that:

  1. the protections afforded to consumers no longer captured the broad category of goods and services to which the ACL was originally intended to apply because the monetary threshold of $40,000 had not changed in three decades and therefore did not account for inflation; and
  2. there was a gap as the unfair contract terms protections did not apply to contracts regulated by the Insurance Contracts Act 1984 (Cth) (ICA).

Given these findings, a number of amendments were proposed to improve the scope of the ACL and balance the often unequal expertise and bargaining power between suppliers of goods and services and consumers.

ACL change

The most notable changes are to the definition of 'consumer', and an extension of the unfair contract terms provisions as follows:

  1. since 1 April 2021, the protections relating to unfair contract terms have applied to insurance contracts regulated by the ICA;
  2. from 1 July 2021, the $40,000 threshold discussed above will be increased to $100,000 for goods or services acquired from 1 July 2021; and
  3. from 1 July 2021, the monetary threshold increase will also be applied to the Australian Securities and Investments Commission Regulations 2001 (Cth), which mirror the ACL in terms of protections for consumers of financial products and services.

Key takeaways

In the next month, businesses should consider whether the impending significant increase to the ACL monetary threshold will result in their goods or services falling within the scope of the ACL. If so, then your business may need to revise its current procedures and any standard terms and conditions now to ensure compliance come 1 July 2021.

Further, you may wish to review your business' insurance policies to determine whether they are subject to the ICA and if so, whether they include any unfair contract terms that may now be void due to the application of the ACL.

If you think your business may be impacted by the ACL changes, CGLaw can review your current procedures and documents, and run training sessions with your staff to ensure you don't fall foul of the ACL.

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.