Consumer Law Reform

consumerThe Consumer Law Reform Bill is almost ready to be passed into law. The Commerce Commission signals the new law might be in place as early as 1 October 2013. It will change the way we all do business and enlarge consumer rights. All businesses, especially those that sell to the public, will need to be across these changes.

The goals are:

  • A fair trading environment
  • With effective competition
  • Where businesses and consumers participate confidently

Businesses that also operate in Australia will feel less of a shift, as the changes bring us closer to our neighbours in a number of key areas, as part of moving towards a single shared market.

A number of existing laws are amended:

  • Sale of Goods Act
  • Fair Trading Act
  • Consumer Guarantees Act
  • Weights and Measures Act
  • Carriage of Goods Act
  • Second-Hand Dealers and Pawnbrokers Act

Some existing law is replaced completely:

  • Auctioneers Act
  • Door to Door Sales Act
  • Lay-By Sales Act
  • Unsolicited Goods and Services Act

There are new rules prohibiting unsubstantiated representations, that go further than current law. The changes are directed at ensuring we can as consumers trust promises that are made to us. There will be a new line between acceptable creative advertising and prohibited conduct.

If you contract with consumers on standard terms you must review these. Unfair terms in standard contracts will be able to be challenged via the Commerce Commission. Examples include one-sided termination rights or liability limitations – these are very common. There has been some discussion as to introducing a new law prohibiting unconscionable conduct. The answers seems to be, for the moment, no. Instead we will wait and see what Australia does here first.

“Uninvited direct sales” will be more tightly controlled, regardless of whether door-to-door or initiated in another manner e.g. unsolicited phone call, approach in the street. These goods or services will not need to be paid for.

New disclosure requirements are brought in for extended warranties. There are concerns that consumers are paying for extended warranties that do little more than cover the consumer’s statutory legal entitlements.

Auctions conducted by traders via the Internet will be made subject to the Consumer Guarantees Act. Goods must be of acceptable quality, clear title must be provided and goods must comply with the description. Traders must identify themselves as second-hand goods will be excluded.

The distinction between business to business and business to consumer transactions is retained, allowing some contracting out when it is B2B, including new rights to do so in the context of Fair Trading Act requirements. But there are new requirements that these provisions are fair and reasonable.

To ensure these changes have teeth enforcement powers and remedies for consumers are all strengthened too – penalties as high as $200,000 for individuals and $600,000 for corporates for Fair Trading Act breaches.

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