Australian Consumer Law Review

By Caroline James

Consumer Affairs Australia New Zealand (CAANZ) has recently undertaken a comprehensive review of the Australian Consumer Law (ACL), a law that forms part of the Competition and Consumer Act 2010 (Cth) and aims to provide vital protections to consumers.

Currently, a person is taken to have acquired goods as a consumer if:

• the amount paid for the goods was less than $40,000; or
• the goods were of a kind ordinarily acquired for personal, domestic or household use or consumption; or
• the goods consisted of a vehicle or trailer acquired for use principally in the transport of goods on public roads,

except where, among other things, the person acquired the goods, or held himself or herself out as acquiring the goods for the purpose of resupplying them.

The ACL aims to protect consumers by providing them with automatic guarantees regarding the purchase of goods; including that the products must be of acceptable quality, match descriptions made by salespeople, on packaging, and in advertising and be fit for the purpose (as told to them by the seller).

In respect of services, the guarantee is that the services must be rendered with acceptable care and skill and be delivered within a reasonable time when there is no agreed end date.
Currently, the ACL says that where there is a major failure of a good, the consumer is entitled to have the product replaced or obtain a refund. Short of a major failure, a consumer is only entitled to have the item repaired or be compensated for the costs of repair. Remedies for faulty services include cancelling a service and/or compensation for damage and loss.

CAANZ have made recommendations about the ACL which will increase the current protections to “consumers who are most vulnerable or at a great disadvantage”.

Some of the recommendations are as follows:

1. The $40,000 threshold in the definition of consumer be increased to $100,000.According to CAANZ, this will broadly reflect the effects of inflation since the original threshold was set in 1986. CAANZ also proposes to monitor the need for any future revisions.
   

   This change will increase the number of businesses deemed to be consumers and assure them of certain minimum standards for the goods and services they purchase up to the $100,000 limit.

2. If the goods fail to meet a consumer guarantee within a short period of time (such as 30 days), a consumer is entitled to have the product replaced or obtain a refund without needing to prove a major failure. This excludes perishable foods and consumable goods that can be used up (like cosmetics).The change is intended to provide a simpler approach to remedies for goods that fail early, and provide incentives for manufacturers to ensure adequate quality control processes.
3. Multiple non-major failures of a good should amount to a major failure, entitling the consumer to a refund or replacement.This aims to reduce costs and time spent by consumers and traders in disputes about multiple non-major failures, and help suppliers to make claims against manufacturers who have supplied faulty goods.
4. Traders that provide extended warranties for their goods for which a fee is charged should be required to:

• provide the extended warranty in writing;
• ensure that the warranty clearly sets out the consumer’s rights under the ACL in comparison to what is being offered; and
• provide a cooling-off period (in relation to the extended warranty) of 10 business days from the time the consumer receives the written warranty, or an unlimited time if the trader/supplier has not met its disclosure obligations.

Although this recommendation would involve increased compliance costs for traders in developing and providing the additional information, CAANZ considers that these costs are likely to be outweighed by the benefits gained by helping consumers compare extended warranties with their existing legal rights and giving consumers the opportunity to consider their decision to purchase the extended warranty after they have purchased the good.

Consumer Affairs Ministers through the Legislative and Governance Forum on Consumer Affairs are considering the report and experts consider it highly likely that the majority of the recommendations proposed will be accepted by the Commonwealth government in 2018.

Watch this space for further updates on the progress of this report.