The Australian Consumer Law

The ACL covers general standards of business conduct, prohibits unfair trading practices,
regulates specific types of business-to-consumer transactions, provides basic consumer
guarantees for goods and services , and regulates the safety of consumer products and
product-related services.

The ACL includes:

 Chapter 1 – Introduction: a single set of definitions and interpretive provisions about

consumer law concepts.

 Chapter 2 – General protections: general protections, which create standards of

business conduct in the market, including:

 a general ban on misleading and deceptive conduct in trade or commerce;

 a general ban on unconscionable conduct in trade or commerce and specific

bans on unconscionable conduct in consumer and some business transactions;
and

 a provision that makes unfair contract terms in consumer contracts void.

 Chapter 3 – Specific protections: specific protections which address identified forms

of business conduct, including provisions:

 banning specific unfair practices in trade or commerce;

 dealing with consumer transactions for goods or services;

 on the safety of consumer goods and product related services;

 on the making and enforcement of information standards; and

 on the liability of manufacturers for goods with safety defects.

 Chapter 4 – Offences: criminal offences relating to certain matters covered in Chapter

3.

 Chapter 5 – Enforcement and remedies: national enforcement powers and remedies

relating to consumer law.

To assist in understanding the ACL and its provisions the Treasury has prepared:

 The Australian Consumer Law: An Introduction [PDF 635KB][RTF 922KB], which

briefly explains the content and context of the ACL; and

 The Australian Consumer Law: A Guide to Provisions [PDF 939KB][RTF 1.8MB],

which contains a detailed explanation of the provisions of the ACL.
 ACL Regulations

Regulations made under the ACL are set out in Parts 6 and 7 of the Competition and
Consumer Regulations 2010.

The ACL Regulations give practical effect to the ACL provisions dealing with:

 prescribed requirements for asserting a right to payment;

 agreements that are not unsolicited consumer agreements;

 requirements for warranties against defects and repair notices; and

 reporting requirements for goods or product-related services associated with death,

serious injury or serious illness.

Further information about the ACL Regulations is set out in the Explanatory Statement

Most of the provisions of the ACL either forbid a particular form of conduct or direct
businesses to act in a certain way. Many of these provisions overlap. Accordingly, in some
circumstances a business that engages in conduct that breaches one provision of the ACL
may also be at risk of breaching other provisions of the ACL.

misleading or deceptive

Section 18(1) of the ACL states a person must not, in trade or commerce, engage in conduct
that is misleading or deceptive or is likely to mislead or deceive.

The law against misleading or deceptive conduct applies to any individual or business
engaging in 'trade or commerce'.
In other words, it embraces any form of business activity, including:

 making claims about goods or services

 advertising and other forms of promotion
 making representations during business negotiations
 using social media for commercial purposes
 expressing opinions or statements about the future.

Activities that are not considered to be in 'trade or commerce' and therefore are not subject to
the law against misleading or deceptive conduct include:

 political statements
 private sales (such as at a garage sale)
 private statements not in connection with any business activity, for example personal
comments on your face-book page
Section 18 of the ACL also does not apply to conduct relating to the provision of financial
services (for example, representations made by financial advisors, banks or insurance
companies). Representations made by financial service providers are covered in identical
terms by section 12DA of the Australian Securities and Investments Commission Act
2001 (Cth) (ASIC Act).
There is also a limited exception for the media, created by section 19 of the ACL, in relation
to the publication and broadcasting of news items.

Silence can amount to misleading conduct, where that silence causes its customers or
suppliers to be misled.
Example – Silence can be misleading
A supplier of wood shavings (to be used for the export of live crayfish) was guilty of
misleading conduct because the supplier failed to inform the buyer that a toxic chemical had
been used to treat the wood.
See: Forwood Products Pty Ltd v Gibbett (2002) ATPR 41-870

 repeating information can amount to misleading conduct. A business that passes on

incorrect information provided by someone else will break the law about misleading or
deceptive conduct if the business gives the impression that the information is its own.
However, if the business makes clear that it was merely passing on the information and did
not give any assurance about the accuracy of that information, it will not be legally
responsible.
Example – Repeating information can be misleading
A real estate agency innocently relayed to a prospective buyer, incorrect information
provided by the vendor as if it was the source of that information. The agency was
subsequently found to have engaged in misleading or deceptive conduct.
See: Argy v Blunts and Lane Cove Real Estate Pty Ltd (1990)26 FCR 112.

 statements about the future can be misleading or deceptive. A business will be liable for
engaging in misleading or deceptive conduct if it makes a statement about the future that later
proves to be incorrect, unless the business had reasonable grounds for making the statement.
Examples – statements about the future can be misleading or deceptive
The court ruled that the following statements about the future (that later proved to be
incorrect) were misleading or deceptive:
All the shops in the shopping centre will be let when the centre opens.
See: Lyons v Kern Konstructions (Townsville) Pty Ltd (1983) 47 ALR 114

Investors could expect capital growth of around eight per cent per annum/.
See: ACCC v Oceana Commercial Pty Ltd (2004) ATPR (Digest) 46-244.
Examples – advertisements using an existing name or design
Adopting the same promotional designs and images as a rival firm may cause consumers to
be misled into thinking that the businesses are cooperating, or that one has endorsed the
other, or that their products are now the same.
See: The Kettle Chip Co Pty Ltd v Apand Pty Ltd (1993) 46 FCR 152.
Using the name or imagery associated with a well-known personality without permission may
mislead consumers into thinking that the personality has endorsed the product, or that there is
some form of cooperation between them and the business.
See: Pacific Dunlop Ltd v Hogan (1989) FCR 553.

Promoting a new product using a television presenter and slogan previously associated with a
well-established rival product may cause consumers to be misled into thinking that the two
products are connected in some way, or that the original business has introduced a new
product line.
See: R & C Products v SC Johnson & Sons (1993) 42 FCR 188.

Comparative advertising occurs when businesses seek to promote their products by:

 favourably comparing them, or their price, with those of a rival business

 Examples – Comparative advertising
 An advertisement saying that a product would last as long as those of a rival was
misleading because the statement was correct only in relation to one of the rival s
range of products, but not others.
See: Energizer Australia Pty Ltd v Remington Products Australia Pty Ltd (2008)
ATPR 42-219;
but compare Gillette Australia Pty Ltd v Energizer Australia Pty Ltd (2002) 193 ALR
629.
 An advertisement favourably comparing the price of the advertiser s products with
those of a rival was misleading because it did not disclose that the rival s customers
were entitled to a rebate which reduced the amount they would actually pay.
See: Luxottica Retail Australia Pty Ltd v Specsavers Pty Ltd (2010) ATPR 42-423.

 An advertisement showing a contest between rival products in which one completely

devastated the other and caused it to emit smoke was misleading because in five of
the six takes of the advertisement both products emitted smoke and the advertiser s
product was just as badly affected by the contest as the other.
See: Makita (Australia) Pty Ltd v Black & Decker (Australasia) Pty Ltd (1990) ATPR
41-030.

Advertisements and fine print: fine or small print qualifying statements made in an
advertisement will only protect the advertiser from liability if they prevent the advertisement
from misleading its audience.
For example, if a product is advertised at a cheap price, but the fine print says that this price
is available only if the consumer buys another product, the advertisement will contravene
section 18 unless that requirement to buy another product is so clear and prominent that it
prevents the dominant message (the cheap price in this example) from being misleading
See: ACCC v TPG Internet Pty Ltd [2010] VID1099/2010

Advertisements and sales puffery: it is not misleading or deceptive For example, many cafés
advertise that they have 'the best coffee in town'; however a reasonable consumer is likely to
recognise this as advertising puffery and is unlikely to rely on that statement or find it
misleading.

Advertisements and price claims: as price is an important factor in consumer decision

making, special care should be taken to ensure that statements about price are not misleading.
For example, consumers may be misled if products are offered 'free' but on closer
examination 'conditions apply', or if price is specified however GST is not included.
See: ACCC v Nationwide News Pty Ltd (1996) ATPR 41-519 and ACCC v Signature Security
Group Pty Ltd (2003) ATPR 41-908.
It is also important that a firm doesn't mislead its customers about the potential savings that
may be available for its products or services. For example, businesses often advertise a sale
by using statements such as "$99 $49.50" or "WAS $275 NOW $149".

Representations about products or services

The ACL prohibits businesses from making a number ofspecific false or misleading
representations about products or services. Section 29(1) states that:

A person must not, in trade or commerce, in connection with the supply or possible supply of
goods or services or in connection with the promotion by any means of the supply or use of
goods or services:

1. make a false or misleading representation that goods are of a particular standard,

quality, value, grade, composition, style or model or have had a particular
history or particular previous use; or

Example – False or misleading representations about the composition, style or model of

goods

Audi admitted that it had made false or misleading representations with respect to the
standard or quality of certain vehicles when it pictorially advertised them with seven seats
even though these vehicles only contained five seats.
See: ACCC v Audi Aust Pty Ltd [2007] FCA 1990

2. make a false or misleading representation that services are of a particular standard,

quality, value or grade; or

Example – False or misleading representations about the standard or quality of goods

The respondent was found to have made false and misleading representations by claiming in
its advertising that it had a government affiliation when this was not true and therefore
represented a standard or quality it did not possess.
See ACCC v Optell Pty Ltd (1998) 41 IPR 49; ATPR 41-640

3. make a false or misleading representation that goods are new; or

4. make a false or misleading representation that a particular person has agreed to
acquire goods or services; or
5. make a false or misleading representation that purports to be a testimonial by any
person relating to goods or services; or
6. make a false or misleading representation concerning:

i. a testimonial by any person; or

ii. a representation that purports to be such a testimonial; relating to goods or
services; or
7. make a false or misleading representation that goods or services havesponsorship,
approval, performance characteristics, accessories, uses or benefits; or

Example – False or misleading representations about the performance characteristics,

uses or benefits

The respondent made false or misleading representations about the performance

characteristics, uses or benefits of its mobile network services by promoting and selling the
service in remote areas where the mobile coverage was not available.

See: ACCC v EDirect Pty Ltd (in liq) [2012] FCA 976

8. make a false or misleading representation that the person making the representation
has a sponsorship, approval or affiliation; or
9. make a false or misleading representation with respect to the price of goods or
services; or

Example – False or misleading representations about the price of goods or services

The respondent was a builder who pictorially represented the homes it could build in
brochures. The respondent admitted to making false or misleading representations about the
price of goods by showing pictures of features of the homes that were only available at a
higher price than what was advertised.

See ACCC v Metricom Homes Qld Pty Ltd [2012] FCA 797

10. make a false or misleading representation concerning the availability of facilities for
the repair of goods or of spare parts for goods; or
11. make a false or misleading representation concerning the place of origin of goods; or

Example – False or misleading representations about the place of origin of goods

The respondent made false or misleading representations about the place of origin of goods
by advertising that its footwear was 'made in Australia' when the footwear was made in
China.

See ACCC v Marksun Aust Pty Ltd [2011] FCA 695

12. make a false or misleading representation concerning the need for any goods or
services; or
13. make a false or misleading representation concerning the existence, exclusion or
effect of any condition, warranty, guarantee, right or remedy.

Summary

It is unlawful for a business to make promises, statements or representations in trade or

commerce that are misleading or deceptive or would be likely to mislead or deceive.
Statements about the future, including opinions and predictions, can be misleading or
deceptive if the person making the statement did not have reasonable grounds for making it.
Failing to disclose relevant information can also be misleading or deceptive.

Businesses cannot rely on small print and disclaimers as an excuse or contract out of their
obligations under the ACL.

It is also unlawful for a business to make false or misleading representations about specific
things about products or services, the sale of land, employment or business transactions. False
or misleading representations about these particular things can attract civil and criminal
penalties.
  In situations such as this one, an employer is responsible for any misleading conduct
or false representation made by an employee. It is not a defence that the incorrect
statement was a mistake, nor can the dealership exclude its obligation for
contravening provisions of the ACL by relying on a clause in its contract of sale.
Therefore the court is likely to find the dealership liable for misleading or deceptive
conduct and making a false representation.

The ACL contains a number of provisions that prohibit specific unfair selling practices.
These prohibitions supplement, and in some instances overlap with, the prohibitions dealt
with in Module 7.

Section 32 of the ACL prohibits a business from offering a rebate, gift, prize or other free
item to promote the sale of goods, services or land if there was no intention of providing it as
offered, or if it is not provided in accordance with the offer.
Example
It is unlawful to run a 'buy one get one free' promotional campaign if the price of the item
being sold was increased from its usual selling price to offset the cost of providing the second
item.
Wrongly accepting payment

Examples
It would be unlawful for a business to accept payment for providing advertising space when
there were no reasonable grounds for believing that the space will be available.
See: CCP Australian Airships Ltd v Primus Telecommunications Pty Ltd (2005) ATPR 42-
042.

It would be unlawful for a business to accept payment for providing telecommunications

services when it had reasonable grounds for believing that it could not actually provide
services to someone in the consumer's location.
See: ACCC v EDirect Pty Ltd (2008) ATPR 42-216.

Seeking payment for unrequested goods or services

Sections 40 and 43 of the ACL prohibit a business from engaging in false billing. That is, a
business must not supply goods or services to a person who has not requested them, and then
 claim they must be paid for. Small businesses are especially vulnerable to these practices
because they assume that the goods or services must have been requested.
Examples
If a consumer arranges for a garage to carry out particular repairs and the garage carries out
other repairs as well, the consumer does not have to pay for those additional repairs even if
they were necessary.

If a small business is advertised in a trade magazine or business listing without requesting

that these advertisements be placed, the small business cannot be billed for this and is not
obliged to pay an invoice.
The ACL further protects consumers who receive goods or services they did not request by
providing that:

 they are not liable for any loss or damage to the goods unless this was caused by their wilful
and unlawful conduct
 after a period of time the goods will become the property of the recipient, unless they
unreasonably prevent the sender from recovering them
 they are not liable for any loss or damage resulting from the supply of the services.
Key points
Businesses must not:
 seek payment for goods or services that were not requested
 seek payment for an entry in a publication that was not requested
 provide a customer with extra services they have not requested and expect to be paid for
them.

Component pricingis used to attract customers by drawing attention to the price of the
item they are interested in and ignoring the other costs and charges they will have to
pay. For example:

 quoting the price of a new stove as $1000 without including the $100 GST the
consumer will be charged

 quoting the price of a flight without including the taxes and other charges for
which the consumer will have to pay.

Component pricing creates the false impression that the goods or service are available
for a lower price than they really are. It is prohibited by section 48 of the ACL unless
the business specifies in a prominent way and as a single figure the total amount the
consumer must pay to obtain the goods or services being sold or promoted.

Referral selling
 Businesses are prohibited from inducing a customer to acquire goods or services by
promising them a benefit of some kind if they assist the business to secure other
customers, and is prohibited by section 49 of the ACL. For example, if the customer
receiving the benefit depends upon other customers agreeing to buy goods or services
from the business, then the conduct will be prohibited.

Harassment and coercion

Section 50 of the ACL prohibits anyone from using physical force, undue harassment or
coercion in relation to the sale of, or payment for, goods, services or land.

Examples
A creditor entering a consumer's premises without consent and pinning him to the ground to
recover goods, even though the creditor has a contractual right to recover the goods.
See: ACCC v Davis [2003] FCA 1227.

A creditor using personal abuse, obscene language, or conveying demands for payment
through uninvolved family members (especially if they are children).
See: ACCC v McCaskey (2000) 104 FCR 8.

Unconscionable conduct
The ACL prohibits 'unconscionable' conduct, or conduct that is so unreasonable it defies
good conscience. The ACL does not define unconscionable conduct, but the courts have
found transactions to be unconscionable when they are deliberate, involve serious misconduct
or contain an element that is clearly unfair and unreasonable.
Generally, to be considered unconscionable, conduct must be more than simply unfair - it
must be against conscience as judged against the norms of society. What is considered
unconscionable conduct depends on the circumstances.
Examples include:

 not properly explaining the conditions of a contract to a person who, for example, the
supplier knows does not speak English or has a learning disability
 not allowing sufficient time to read an agreement, ask questions or get advice
 putting undue influence or pressure on the person, such as refusing to take 'no' for an answer
 using a friend or relative of the customer to influence the customer's decision
 taking advantage of a low-income consumer by making false statements about the real cost of
a loan
 failing to disclose important or unusual terms in a contract
 not honouring a cooling-off period.
 There are a number of factors a court will consider when assessing whether conduct in
relation to the selling or supplying of goods and services to a customer, or to the supplying or
acquiring of goods or services to or from a business, is unconscionable.
These include:

 the relative bargaining strength of the parties

 whether any conditions were imposed on the weaker party that were not reasonably necessary
to protect the legitimate interests of the stronger party
 whether the weaker party could understand the documentation used
 the use of undue influence, pressure or unfair tactics by the stronger party
 the requirements of applicable industry codes
 the willingness of the stronger party to negotiate
 the extent to which the parties acted in good faith.
Examples
Vacuum salespeople called upon the homes of elderly people under the premise of
conducting a free vacuum cleaner maintenance check, but once inside the homes engaged in
unfair and pressure sales techniques to induce them to purchase a new vacuum cleaner. The
court found that the conduct was unconscionable, and that consumers must be dealt with
honestly, fairly and without deception and unfair pressure.
See: ACCC v Lux Distributors Pty Ltd [2013] FCAFC 90.

Craftmatic was found to have used misleading and unfair sales tactics to sell beds to elderly
people during the course of home presentations. Craftmatic's sales and promotional materials
were designed, scripted and conducted to unduly influence potential customers and to create
and take advantage of an unequal bargaining position and, as a result, its conduct was
unconscionable.
See: ACCC v Craftmatic Australia Pty Ltd [2009] FCA 972.

Door-to-door and telemarketing sales

section 90 ACL gives consumers additional rights (which cannot be waived) and
imposes on businesses additional obligations that do not apply to sales made at their
premises.

Under the ACL, an unsolicited consumer agreement takes place when:

 it results from negotiations by phone or at a location other than the seller's place of
business, and

 a seller, or their sales agent, approaches or calls a customer uninvited, and

  the total value is more than $100 or cannot be determined at the time the agreement is
made.

Exceptions

Regulations 81 and 88 of the Competition and Consumer Regulations 2010 provide that
certain agreements (for example, business agreements and agreements to renew existing
supply contracts) are not to be treated as unsolicited consumer agreements and that some
related provisions do not apply to emergency repair contracts entered into following the
declaration of a state of emergency after a fire, storm, flood or similar event.

Unfair contract terms

Under section 23 ACL, a term of a standard form consumer contract has no effect at law if
the term is unfair. An example of a term that might be unfair includes those that allow the
business to cancel, avoid or limit performance of the contract, vary the terms of the contract,
or renew the contract, but not allowing the consumer to do the same.

consumer guarantee

A consumer can seek to claim a remedy in relation to goods directly from the manufacturer or
importer if the goods do not meet one or more of the following consumer guarantees:

 the goods are of acceptable quality

 the goods match the description

 any extra promises made about such things like performance, condition and quality

 repairs and spare parts - the manufacturer is responsible for ensuring that spare parts
and repair facilities (a place that can fix the consumer's goods) are available for a
reasonable time after purchase unless the consumer was told otherwise. How long is
'reasonable' will depend on the type of product.

A consumer can claim a remedy from a retailer if the product purchased fails to meet any one
or more of the consumer guarantees, with the exception of availability of spare parts and
repair facilities. The remedies that can be sought from a retailer are more extensive, and
include repair, replacement or refund.

There are nine consumer guarantees relating to goods. They are summarised as follows:

1. The seller has the right to sell the goods

 2. The consumer has the right to undisturbed possession of the goods

3. There are no undisclosed securities attached to the goods

4. The goods are of acceptable quality

5. The goods are reasonably fit for the consumer's particular purposes, as disclosed by
the consumer to the supplier

6. The goods match the description given to them

7. The goods don't differ from any sample or demonstration model shown to the
consumer

8. Repair facilities and spare parts are reasonably available

9. Any additional express warranties provided will be complied with

Section 54(2) ACL provides that goods are of acceptable quality when a reasonable consumer
would regard them as being:

 fit for all of the purposes that goods of that kind are commonly supplied

 acceptable in appearance and finish

 free from defects

 safe, and

 durable.

Examples
Contaminated food is not of acceptable quality.
See: Ryan v Great Lakes Council (1999) ATPR (Digest) 46-191.

Custom made carpet that was not uniform throughout a house is not fit for one of the
particular purposes for which the carpet had been acquired, when uniformity had been
specifically required and the consumer relied on the skill or judgment of the supplier.
See: Rasell v Cavalier Marketing (Australia) Pty Ltd [1991] 2 QdR 323.

It does not apply in instances where the consumer purchased the goods via auction.

Examples
Second-hand farming equipment was not fit for the purpose for which it had been acquired
when, because of a number of defects, it soon became unworkable, which is contrary to what
a reasonable purchaser would expect in the circumstances.
See: Zuvela v Geiger [2007] WASCA 138..

New underwear was not fit for purpose because the presence of a harsh chemical caused the
purchaser severe dermatitis.
See: Grant v Australian Knitting Mills Ltd [1936] AC 85.

The goods match the description given to them

For example, if a promotional catalogue says the goods have certain features and the
consumer relies on the catalogue when buying them, the business responsible for the
catalogue will be liable if the goods do not have the features described.

The goods don't differ from any sample or demonstration model shown to the consumer

For example, if a hobby (i.e. not professional) farmer purchased a small tractor for less than
$40,000 after being shown a demonstration model in the dealer's showroom, there would be a
guarantee that the tractor would have all the features shown on the demonstration model and
that there would be an opportunity to compare the tractor with that model.

This guarantee also does not apply when goods are purchased via auction.

Repair facilities and spare parts are reasonably available

This guarantee applies unless the manufacturer notifies consumers that repair facilities or
spare parts will not be available, or will be available only until a specified time.

Any additional express warranties provided will be complied with

Examples
A retailer says it will not be beaten on price. This is an express warranty and section 59 of the
ACL creates a consumer guarantee that the supplier will comply with that warranty.

A retailer says it will replace or repair any of its goods if they are defective. This is a
warranty against defects and the retailer must comply with the warranty and prescribed
formalities.

3 consumer guarantees relating to services

There are three consumer guarantees relating to the supply of services. A summary of these
guarantees and who must comply with them is as follows:

1. Providing services with due care and skill

 2. Providing services for a particular purpose or desired result

3. Providing services within a reasonable time

Providing services with due care and skill

Examples
A home security company installing a security alarm system must carry out the work in such
a manner that the alarm will be activated should a burglary occur.
See: Mayne Nickless Ltd v Crawford (1992) 59 SASR 490.

A garage that agrees to repair a car must properly diagnose what is wrong with the car and
skilfully carry out the work needed to repair it.
See: Read v Nerey Nominess Pty Ltd [1979] VR 47.

Providing services for a particular purpose or desired result

However, the guarantee does not apply:

 if the supplier's skill and judgement was not relied upon by the consumer, or it was
unreasonable for the consumer to do so, or
 to professional services provided by a qualified engineer or architect (ACL section 61(4)).
Example
Rides in an amusement park must be reasonably safe when operated by the patrons the
proprietor can anticipate will use them.
See: Gharibian v Propix Pty Ltd [2007] NSWCA 151.

Providing services within a reasonable time

There is a guarantee that they will be supplied within a reasonable time. What is reasonable
will depend on the nature of the service to be provided.

Remedies for when guarantees are not met

If goods or services do not comply with a consumer guarantee the consumer has a remedy
against the supplier and in some cases the manufacturer. The type of remedy, and who must
provide it, will depend on the problem and which consumer guarantee was not met.

The remedies available for failing to comply with a consumer guarantee are summarised in
this flow chart:
Remedy from the supplier

The remedies include rejecting the goods (and getting a refund or replacement) or keeping the
goods and obtaining damages as compensation for the drop in value caused by the problem
(claims for which must be brought within six years). These remedies:

 operate in addition to any other remedies the consumer may have under their contract
of supply, or under an express warranty they have been given

 cannot be excluded or reduced by reference to a notice, sign, contract or express

warranty

 are available to the consumer and:

o (against the supplier) to anyone to whom the consumer has given the goods as
a gift
 o (against the manufacturer) to anyone who acquires the goods (other than for
re-supply), or title to the goods, from the consumer.

The consumer guarantees do not apply if a consumer simply decides they no longer want the
goods or services. In such a case, the seller may choose to give a refund, or exchange the
goods, but is not obliged to do so.

Remedy from the manufacturer

Manufacturers who supply goods directly to consumers must comply with all the consumer
guarantees applicable to suppliers. Their liability for non-compliance is the same as that of
suppliers. Manufacturers who do not supply directly to consumers nevertheless incur
significant responsibilities to the consumer and to anyone who acquires the goods from the
consumer. Also, the manufacturer is liable to reimburse any supplier who has paid damages
to a consumer, or incurred a cost, because their goods did not comply with the consumer
guarantees for acceptable quality or correspondence with description. Actions against
manufacturers must be commenced within three years after the day on which the affected
person first became aware, or ought reasonably to have become aware, that the guarantee to
which the action relates has not been complied with.

A consumer's right to reject goods

A consumer who is entitled to reject goods because of non-compliance with a consumer

guarantee:

 must notify the supplier, within a reasonable time, that they wish to do this and the
grounds they are relying upon, and

 must return the goods to the supplier. However, if the goods cannot be returned,
removed or transported without significant cost to the consumer because of the nature
of the failure to comply with the guarantee to which the rejection relates, or the size or
height, or method of attachment, of the goods, then the supplier must collect the
goods within a reasonable time and at the supplier's expense.

However, the consumer will lose the right to reject the goods if:

 they do not do so within a reasonable time

 the goods are lost or damaged, or

 the goods have become attached to land and would be damaged if detached.

Although a consumer may be unable to reject the goods, the supplier remains obliged to pay
compensation for their reduced value and for any consequential loss or damage the consumer
may have suffered.
 Attempts to limit consumer guarantees
Suppliers and manufacturers cannot in any way exclude, limit or avoid the consumer
guarantees. Section 64 makes void any term in a contract purporting to do this and sections
29(1)(m) and 151(1)(m) make it unlawful to represent (e.g. with a sign or advertisement) that
this is possible. Should a representation of this kind be made, civil or criminal penalties can
be imposed of up to $1.1 million for bodies corporate and $220,000 for individuals.
Examples
A notice in a retail shop saying that it has a 'No refund policy' is unlawful. The store must
give a refund if there is a major failure to comply with a consumer guarantee.
A notice in a retail shop stating 'No refunds in case of change of mind' is lawful. This policy
does not attempt to limit the ability of a consumer to seek remedies under the consumer
guarantees.
A notice in a retail shop saying 'No refunds on sale items – exchange only' is unlawful. This
is because the notice purports to restrict the remedies available to a consumer, should the
goods be defective, to less than those given by the consumer guarantees.

It is unlawful for a supplier to say that, because of an express warranty, it only has to repair
defective goods and nothing more. This is because, in the event of non-compliance with a
consumer guarantee, consumers have a greater range of remedies available to them than this.
Suppliers and manufacturers are not prevented from giving consumers rights that go above
and beyond the consumer guarantees. For example, a retail store can say it will give
consumers a refund, or exchange goods, even though they are not defective. Suppliers may
not need to meet the guarantee that goods or services are fit for a disclosed purpose if they
make it clear that they do not have the skill or judgement to determine whether the product is
able to perform the specific function that the consumer requests.
Key points
 As a supplier or manufacturer, you cannot exclude, limit or avoid the consumer guarantee
obligations you have to consumers under the ACL and it is unlawful to try to do so.
 A business cannot expressly or by implication represent that consumers have fewer rights and
remedies than the ACL provides.

Exceptions
In two situations, suppliers or manufacturers can limit their liability for non-compliance with
a consumer guarantee.
First, the CCA allows the suppliers of recreational services to include terms in their contracts
that exclude, restrict or otherwise modify their liability for death, personal injury (physical or
mental) or illness resulting from non-compliance with a consumer guarantee relating to
 services. However, they cannot do this in relation to property damage or loss, or in respect of
significant personal injury caused by the supplier's reckless conduct.
Second, if the goods or services supplied are not normally acquired for personal, domestic or
household use or consumption, the ACL allows suppliers to contractually limit their liability
to:

 repairing or replacing the goods or reimbursing the consumer for repairing or replacing the
goods
 resupplying the services or paying the costs of having the services supplied again.
However, such a term will not be effective if the supplier's reliance upon it is unfair or
unreasonable.

Goods or services acquired before 2011

The ACL commenced on 1 January 2011. Consumers who acquired goods or services before
1 January 2011 are still protected under the Trade Practices Act 1974 (TPA) by a number of
conditions and warranties implied into their contract with the supplier. They are similar to the
consumer guarantees and provide the consumer with similar rights and remedies. The TPA
also gave consumers direct rights and remedies against manufacturers similar to those now
available under the ACL.

NOTE: -Suppliers cannot in any circumstances exclude their liability for not complying with
consumer guarantees in respect of goods costing less than $40,000, or which are normally
acquired for personal use or consumption. However, in respect of non-consumer goods,
section 64A of the ACL allows them to limit their liability to repairing or replacing the goods
or paying for this to happen.

The store is offering an additional warranty that the prices of its goods will not be higher than
any other stores' prices. Section 59 of the ACL requires a supplier or manufacturer to comply
with any express warranty given in relation to the goods. The supplier must comply with the
terms of its express warranty. If the warranty does not relate to the quality of the goods (as is
the case here) then the supplier must comply with its terms, regardless of whether the goods
are defective. To be enforceable, there is no requirement that the express warranty has
influenced the consumer to acquire the goods to which the warranty relates. This made no
reference to its promise depending upon the unreasonableness of the price it charged.

There is no automatic right to a refund or replacement if a consumer changes their mind.

 Suppliers cannot in any circumstances exclude their liability for not complying with
consumer guarantees in respect of goods costing less than $40,000, or which are normally
acquired for personal use or consumption. However, in respect of non-consumer goods,
section 64A of the ACL allows them to limit their liability to repairing or replacing the goods
or paying for this to happen.

Product safety laws

The Australian Consumer Law (ACL) establishes a uniform national product safety law.

A manufacturer of unsafe goods (whether or not they are consumer goods) may be liable to
compensate anyone who suffers injury, loss or damage from use of the goods.

The national product safety law applies to all businesses in a supply chain for 'consumer
goods' or 'product-related services'. Manufacturers, wholesalers, hirers and retailers are all
responsible for complying with the product safety law.

It is a supplier's responsibility to ensure consumer goods comply with relevant mandatory

safety standards.

Example
A retailer was held liable because it supplied dressing gowns for children that did not comply
with a prescribed safety standard which required a low fire hazard warning label to be
stitched to part of the gowns.
See: ACCC v Dimmeys Stores Pty Ltd (2011) ATPR 42-351.
Supplying goods and services that do not comply with an information standard is an offence.

Bans can be placed on dangerous consumer goods or product-related services in certain

circumstances. There are two types of bans – an interim ban and a permanent ban.

An interim ban lasts for 60 days but may be extended for a further period of up to 60 days. A
ban may be revoked at any time by the minister who imposed it. An interim ban imposed by
the Commonwealth minister applies throughout Australia. A state or territory minister can
only impose interim bans that apply in their own state or territory.

Only the Commonwealth minister can impose a permanent ban. A permanent ban may be
imposed if an interim ban is in force. A permanent ban applies throughout Australia. It does
 not have an expiry date and will remain in force unless the Commonwealth minister revokes
the ban. This may be done at any time.

A state, territory or Commonwealth minister may issue a compulsory recall of consumer

goods. A supplier may also do this voluntarily. A minister can order a recall when the product
poses a safety risk and the supplier is not prepared to recall the goods voluntarily.

The ACCC can bring a representative action on behalf of one or more consumers who suffer
loss or damage as a result of unsafe goods.

When do goods have a 'safety defect'?

Examples
A manufacturer of caustic soda was held liable because it did not warn consumers of the
danger of mixing the product with hot water. Although the caustic soda was not defective, it
was unsafe without such a warning.
See: ACCC v Glendale Chemical Products Pty Ltd (1998) ATPR 41-632.

A manufacturer of a garage roller door was held liable for injuries sustained by a consumer as
a result of the door coming off its mountings and falling on her. Liability arose because the
manufacturer's installation instructions were inadequate.
See: Skerbic v McCormack [2007] ACTSC 93.

Defences available to manufacturers

There are four defences available to businesses that have manufactured unsafe goods:

 the cause of the goods being unsafe did not exist when they were supplied by the actual
manufacturer
 the goods were only unsafe because they complied with a mandatory standard
 because of the state of scientific or technical knowledge at the time the goods were supplied
by the manufacturer, it was not possible to discover the cause of the goods being unsafe
 the defect is in a component of the defective goods and the defect is only attributable to the
design of the component, the label on the component or the instructions or warnings given
with the component.

Remedies and related matters

A manufacturer of unsafe goods must pay compensation to a person injured, or who suffers
loss or damage by the goods. Consumers who suffer loss or damage because of defects in a
manufacturer's goods can take action themselves, or the ACCC can bring a representative
action on their behalf. If the loss or damage has two causes – (i) the unsafe goods and (ii) the
person's own act or omission – the amount of compensation recoverable may be reduced in
proportion to their share of responsibility for it occurring.
Key point
The manufacturer of goods with a safety defect is liable to compensate anyone injured by
those goods, or whose consumer goods are damaged by them.

Penalties and other remedies

Under the ACL a supplier who fails to comply with the product safety law may be found
guilty of a criminal offence. A court does not have to consider a person's intentions before
finding them guilty

This deals with the application of the Australian Consumer Law (the ACL) to social media
and the role of the Australian Competition and Consumer Commission (the ACCC) in
ensuring compliance with the law.

Social media’s use falls within the scope of the ACL. As a result, businesses may be liable if
they use social media and engage in conduct that is prohibited under the ACL. For this
reason, it is important for you to be aware of how and when using social media will
contravene the ACL.

A business can be held responsible for posts or testimonials made by others on the business's
social media pages which are false or misleading or likely to mislead or deceive consumers.
Example
In 2011, a court found that a company accepted responsibility for misleading fan posts and
testimonials on its social media pages when it knew about them and decided not to remove
them.
See: ACCC v Allergy Pathway Pty Ltd [2009] FCA 960

Fake online reviews

Online reviews are being used increasingly by consumers carrying out research prior to
purchasing goods or services.

Example
In August 2011, an infringement notice was issued against Citymove in respect of misleading
reviews posted on a review website. Citymove paid a $6,600 penalty and gave a court
enforceable undertaking to implement and maintain a trade practices compliance program.

Who can be liable?

The following businesses and individuals may be liable if social media is used in a manner
contravening the ACL.

Businesses using social media: for example, businesses making false or misleading claims
about their products as part of a marketing or promotional campaign conducted on Facebook
or Twitter.

Employees and officers: the employees or officers of businesses who, for example, use their
personal social media sites to make false or misleading claims about their employer's
products or business or those of its competitors. In these situations, both the business and the
employees or officers responsible for the conduct in question could be liable for contravening
the ACL.

For example, using social media to promote a pyramid scheme to raise money for a local
sporting club or charity and making false or misleading allegations about a business as part of
a campaign against its activities may contravene the ACL.

Penalties and remedies

The ACL also prohibits numerous business practices that are false or misleading which can
give rise to both criminal and civil liabilities.

 The maximum criminal and civil penalties (fines) for making false or misleading
representations are $1.1 million for businesses and $220,000 for individuals.

Other civil remedies include:

 an injunction (a court order) ordering the business to stop the conduct that is
breaking the law

 an award of damages (compensation) provided to those suffering loss or damage as

a result of the contravening conduct

 ordering the liable business to establish a compliance or training program for staff
to reduce the risk of further contraventions, publish corrective advertising or disclose
specified information.

 disqualification order made by a court prohibiting a person from managing

corporations for a specified period.
  infringement notices (penalty notice): if the ACCC has reasonable grounds to
believe that a business has made a false or misleading representation (other than
misleading or deceptive conduct under s.18), it may issue an infringement notice,
which in effect is a fine.

The infringement notice must explain the area of law that the business is alleged to have
breached and state the penalty amount that the business must pay. If the business does not
pay the specified penalty amount, court proceedings can then be taken against it.

What is a scam?

A scam has been defined by:

 the UK Office of Fair Trading (2006: 12) as:

"…an act of persuasion based on misrepresentation…a misleading or deceptive
business practice where you receive an unsolicited or uninvited contact and false
promises are made…"; and

 the Australian Bureau of Statistics (2012:6) as:

"…a fraudulent invitation, request, notification or offer, designed to obtain someone's
personal information or money or otherwise obtain a financial benefit by deceptive
means."