Transcript
Transcript - What is the ACL?
As a small business owner understanding your rights and responsibilities under the Australian Consumer Law (ACL) is essential to the success of your business.
National law
The ACL is a set of national consumer protection laws that provide protections for consumers and sets standards for how you should do business with them. It safeguards consumer rights and ensures fair trading.
The ACL applies the same way in each state and territory across the country. This means no matter where you are in Australia you can trust your obligations as a business and your rights as a consumer remain the same.
Highlights
Among other things, the ACL protects consumers from several types of unfair business practices, gives them rights when they buy faulty products and poor-quality services, and places certain obligations on your sales practices as a business. Some highlights include:
Consumer guarantees
Consumers have a basic set of rights when they buy products or services from you. Products you sell must do what they’re supposed to do, be of acceptable quality, match the description, and be fit for purpose; and your services must be provided with due care and skill, within a reasonable time, and be fit for purpose too.
If you sell a product or service that fails to meet a consumer guarantee, the consumer has the right to come to you for a repair, replacement or refund, and compensation for any damage or loss suffered due to the failure. The remedy you will have to provide depends on whether the failure is major or minor. For products - if it’s a minor problem, you can choose to repair it for free, replace the item or refund the cost; if it’s a major problem or can’t be fixed, the consumer gets to choose either a refund or replacement...or they can keep the item but be compensated if it’s worth less. For services - if it’s a minor problem, you can choose to repair it for free or offer a refund; if it’s a major failure or can’t be fixed, the consumer can choose to cancel the contract and get a refund...or continue it but pay a lower price that takes the problem into account.
Consumer guarantees apply regardless of any additional warranties you may offer at the time of sale, including extended warranties.
It’s illegal to mislead consumers about these basic rights - for example having a “No refunds” policy. However, you don’t have to provide a refund if a consumer simply changes their mind.
Small businesses can be consumers too and these rights apply in certain situations, including when you’ve bought products or services for your business costing less than $100,000.
For example, imagine you’ve bought a new $400 stainless steel microwave from Appliances R Us for the kitchen at your business. The ACL ensures that your microwave:
- actually cooks food
- doesn’t have any scratches, and
- is stainless steel and not white.
If the microwave fails to meet any of these guarantees, Appliances R Us will have to provide a repair, replacement, or refund, depending on whether the failure is major or minor.
Misleading or deceptive conduct
You must provide clear, accurate and truthful information about your products or services. You can’t take advantage of consumers or use unfair tactics – like not taking no for an answer – to get them to buy something, and you can’t accept payment for products or services you can’t or don’t intend to supply. You also cannot provide misleading or deceptive information about a consumer’s rights under the ACL, such as telling them they cannot return a faulty product because the packaging has been opened.
Unfair contract terms
You cannot use unfair contract terms in standard form contracts. These pre-written, non-negotiable contracts are offered to consumers on a ‘take it or leave it’ basis and are commonly used by businesses like telecommunications providers, gyms, motor vehicle hire companies and in the travel industry.
A contract term may be considered unfair if it allows you to:
- change prices or services at any time without allowing the customer to terminate the contract,
- automatically renew the contract without the consumer’s consent,
- limit the consumer’s right to sue your business, or,
- terminate the contract, but the consumer cannot.
As a business, you may have to enter into standard form contracts with other businesses for products or services – for example telephone and internet services, advertising, shop leases or equipment leases. The unfair contract terms law applies to many of these contracts, provided your business meets the small business thresholds set under the ACL. The Small Business Development Corporation (SBDC) can provide more information and assistance on this topic.
Telemarketing and door-to-door sales
You must comply with specific rules when selling products or services door-to-door, through telemarketing or other forms of direct selling. These include specific contact hours, providing a cooling-off period to allow consumers to reconsider their decisions, and providing documents to help them understand what they are agreeing to. Sales made using these methods are called unsolicited consumer agreements.
Product safety requirements
You must ensure your products are safe for consumers to use by complying with safety and information standards. You cannot sell banned or recalled products.
Please note this isn’t a comprehensive list of all your obligations under the ACL. And these are separate to other laws or regulations that may be in effect. It’s your responsibility to understand all the relevant rules and what they mean for your business. Ignorance of the law is not a defence for breaking the law.
Compliance & enforcement
The consequences for breaching the Australian Consumer Law may be significant and could include legal action and financial penalties. The ACL is enforced jointly by the Australian Competition and Consumer Commission (ACCC) and the state and territory consumer protection agencies – that’s us here in WA!
Where the ACL applies
Many people think the ACL only applies to retail shops or big box stores. Not true! Whether you’re a mechanic, hairdresser, real estate agent, tree lopper, personal trainer, or provide other services, and whether you’re licensed or not – these laws apply to you! It’s simply about making sure you treat consumers fairly.
Complaints & conciliation
So, what happens if things go wrong?
Mistakes can happen, but handling consumer complaints early and proactively can improve consumer outcomes and build trust in your business.
You should have a clear and easily accessible complaint process in place for consumers. When there is a problem with a product or service you’ve sold, you’re required to handle consumer complaints promptly and fairly. You cannot tell consumers to go to the manufacturer for a remedy.
If consumers have been unable to resolve an issue after reaching out to you, they often come to us for help. If we take on the complaint, a conciliation officer may contact you to gather information and record facts from your perspective, provide information about your rights and obligations under the ACL, and offer to help negotiate an outcome that works for you and the consumer. Participating in conciliation means you could reach an agreement without a lengthy court process, which can save you a lot of time and money.
If you have problems with products or services purchased from another business where your small business is considered a consumer under the ACL, the SBDC can help.
Closing
So, now you know the ACL is neither a huge legal hurdle designed to challenge you, nor the knee injury you’d get tripping over one!
The ACL is your guide to success in the marketplace – helping you minimise legal risks, build a positive business reputation and foster lasting relationships with consumers.
And when buying products or services, knowing your rights as a small business consumer under the ACL empowers you to make informed choices and recognise when another business isn’t doing the right thing.
For more information about the Australian Consumer Law and your rights and obligations, visit our website at consumerprotection.wa.gov.au or call us at 1300 30 40 54.
Also reach out to the SDBC at smallbusiness.wa.gov.au or call them at 133 140