30 June 2021
You may recall that back in July 2020 we wrote an article on upcoming changes to the meaning of a “consumer” under the Australian Consumer Law (ACL) and how to prepare your business for this change before the deadline. Well, we are here to remind you that that deadline, being 1 July 2021, has arrived.
The purpose of this article is to provide a recap of this change to the ACL, namely the increase to the consumer price ceiling from $40,000 to $100,000, what this means for businesses and how to ensure your business is compliant (if it isn’t already).
Meaning of consumer under the ACL and the consumer guarantees
Under the ACL, a person is generally taken to have acquired goods or services as a “consumer” if:
Where a customer, be it an individual or business, is deemed to be a consumer, they will have the benefit of certain non-excludable rights and guarantees, including that:
Failure by a provider of goods or services to comply with these guarantees entitles the consumer to various remedies, which may include repair, replacement, refund, cancellation and compensation.
Consumer price ceiling increase from $40,000 to $100,000
From 1 July 2021, the consumer price ceiling of $40,000 will be increased to $100,000. This means that goods and services costing $100,000 or less will now come within the scope of the ACL and its consumer guarantees. The purpose of this increase is to ensure that the ACL remains fit for purpose by addressing the rising prices of consumer goods and services, as well as the inequalities in bargaining power between those that produce and or supply them vis-à-vis the small businesses and individuals who acquire them.
It should be noted that this increase (including the start date), has also been mirrored in legislation applying to the provision of financial products and services.
Implications for businesses
The implication of this increase to the consumer price ceiling is that the ACL and the consumer guarantees contained within it will apply to significantly more consumer transactions than previously. This may mean that you need to consider the application of the ACL consumer guarantees to a significantly expanded class of customer transactions than before. For some businesses, this may mean that the provision of goods and services by you is now subject to the application of the ACL consumer guarantees where this wasn’t the case before.
What should you do now?
If your business provides goods or services which generally cost $100,000 or less, then now (if you haven’t already) is the time to check your business’ compliance with the ACL and the consumer guarantees, including, but not limited to:
It is important that these measures are implemented as soon as possible. This is particularly because the relevant legislation has already given businesses 12 months to prepare for this change, so the ACCC are more likely to enforce with full force from 1 July 2021 onwards.
Additional considerations for businesses that operate in NSW
Businesses operating in NSW, including those that are based outside of NSW but supply to customers in NSW, also need to be aware of the additional disclosure obligations operating in the State. These disclosure requirements came into effect in July 2020 and include the requirement that businesses take all reasonable steps to ensure consumers are aware of the substance and effect of terms and conditions which may substantially prejudice their interests, before they enter into these transactions. We’ve previously discussed these changes. Broken down, these laws require businesses to:
The legislation also requires intermediaries, such as agents and brokers, who receive financial incentives to take all reasonable steps to ensure the consumer is aware the arrangement that provides for the financial incentive exists. What amounts to taking "reasonable steps" in these circumstances is the same as those for goods and services providers.
Failure to comply with the disclosure obligations in NSW can result in hefty fines of up to $22,000 for individuals and $110,000 for corporations.
Holding Redlich is here to help your business
If you think your business will be affected by these changes and you either haven’t prepared your business for this change or aren’t sure if the measures you have implemented sufficiently ensure the compliance of your business, we would be happy to assist.
Authors: Nathan Cecil & Melanie Long
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.