Big changes are coming to the Australian Consumer Law (ACL). From 1 July 2021, the definition of a 'consumer' will increase from $40k to $100k. For those in the financial products and services game - the ASIC Act also got a matching shake up from $40k to $100k.

The practical impact of the increased threshold

The definition of consumer determines which transactions are subject to the ACL consumer guarantees. These are non-excludable guarantees which apply to goods and services supplied to a 'consumer'. They cover goods being fit for purpose and of acceptable quality, and service being provided with due care and skill. Importantly, they give the customer an automatic right to a remedy where the guarantees aren't met.

To recap, someone buys goods as a 'consumer' when:

  • between now and 30 June 2021, the price is under $40k;
  • from 1 July 2021, the price is under $100k; or
  • the goods or services are normally for personal, domestic or household use.

Importantly, the definition excludes supplies where the buyer purchased goods:

  • for the purpose of resupply; or
  • for the purpose of using them up or transforming them in the course of production or manufacture, or in the course of repairing or treating other goods or fixtures to land.

Even with these exclusions, the big thing to note is that a business can be a consumer, as long as the transaction fits into one of the above categories.

What you need to do before 1 July 2021

So what should you do to get your house in order?

  • Modify your training – any staff dealing with customers need to be aware of the statutory guarantees and which transactions will be covered.
  • Double check those contracts and make sure your T&Cs are up to date.
  • Consider your business' risk profile given the expanded range of obligations, and check whether you need to implement any new processes or divert some extra funds from the budget in preparation.

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