The $100,000 Question: Are you a “consumer” for the purpose of the Australian Consumer Law?

The definition of “consumer” under the Australian Consumer Law is changing and it could well impact you.

With new consumer laws in effect from 1 July 2021, the meaning of “consumer” in respect of consumer guarantees under the Australian Consumer Law (ACL) is set to change.

The ACL has previously defined a “consumer” to include anyone who purchases good or services for under $40,000. The changes to the law will see the monetary threshold increased from goods or services under $40,000 to capture goods and services under $100,000.

That means protection under the ACL will now be extended to an even greater number of consumers.

As businesses begin to plan for the year to come, now is an opportune time for them to review and build an understanding of their existing and extended obligations to consumers, and the rights and entitlements of consumers under the ACL.

What is the Australian Consumer Law (ACL) and why are these changes important?

The ACL is the primary body of law that regulates the sale of goods and services from businesses to consumers. The ACL extends to both Australian businesses, as well as to businesses based outside of Australia who sell to consumers within Australia.

In doing so, the ACL provides statutory protections for consumers and imposes a number of obligations on businesses (as suppliers of goods and services). These are commonly known as consumer guarantees and include:

1. that goods will be:
1. of acceptable quality;
2. fit for purpose;
3. comply with any express warranties;
4. comply with their description;
5. correspond with the sample or demonstration (if given);
6. have clear title;
7. be free from securities; and
8. come with undisturbed possession
   
   
2. that services will be:
1. fit for purpose;
2. provided with due care and skill; and
3. delivered within the stated time or, if no time is stated, within a reasonable time.

How is the definition of “consumer” changing?

The consumer guarantees under the ACL currently apply to certain transactions involving consumers. The ACL provides that consumer transactions captured by the ACL currently include:

1. the purchase of goods and services (other than excluded transactions) less than $40,000, including goods or services purchased for commercial use; or
2. the purchase of goods and services greater than $40,000 if the goods or services are of a kind ordinarily acquired for personal, domestic or household use or consumption. This is unless they are goods purchased for resale, such as wholesale goods purchased for retail sale.

From 1 July 2021, the monetary threshold in the circumstances outlined above will increased from $40,000 to $100,000. This will mean that a greater number of transactions will be covered by the ACL consumer guarantees.

How do I prepare as a business?

Where your business sells good or provides services for under $40,000, the ACL will continue to apply as it always has done to your consumer transactions. However, now is a good time to ensure that your business meets its current obligations under the ACL.

Where your business sells any goods or provides services for over $40,000, you will need to make sure your business is equipped to navigate these changes. Consumers will from 1 July 2021 have access to further entitlements under the ACL, as well as avenues for recourse where your business fails to meet the standards set by the consumer guarantees, and it is important to make sure your business and employees understand your obligations under the ACL.

Please contact Russell Kennedy should you wish to discuss the changes and ensure that you and understand the obligations which apply to your business under the ACL, and that your contracts comply with these obligations.

You should also:

1. assess whether (and what) goods or services you provide are subject to the ACL;
2. consider whether your policies are up to date;
3. check that your contracts (including sale and supply contracts) currently and will comply with the ACL (prior to 1 July 2021 and following);
4. check that your terms and conditions are up to date and capture the requirements of the ACL;
5. spend some time to make sure you understand your obligations when a consumer requests a remedy and educate your employees in relation to the existing and new obligations.

How we can help

It is important for businesses and consumers to be aware of their obligations and rights under the ACL. To check whether your business is compliant with the ACL, or for any other consumer law questions, contact Suzanne Rieschieck, Andrew Parlour, Rohan Harris and Erin Meeking or a member of our Corporate and Commercial or Dispute Resolution team. 

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