The fast-paced retail environment poses a high risk for businesses to make false, misleading or deceptive representations about products and consumer rights under the Australian Consumer Law (ACL). With the Australian Competition and Consumer Commission (ACCC) having the power to impose considerable pecuniary penalties, businesses should be aware of their obligations under the ACL and ensure that staff are given adequate training.
The ACL provides that certain guarantees attach to goods and services sold, leased or hired in Australia that have a retail value of less than $40,000, or are valued at over $40,000 but have been purchased for personal or household use.
Notably, retail goods sold in Australia are guaranteed to:
- be of acceptable quality i.e safe, not faulty, have an acceptable appearance, and perform at the level that would be normally expected of a product at that price point;
- be fit for purpose i.e. the goods are suitable for their advertised purpose, or that the consumer made known to the business prior to making the purchase;
- correspond with their description i.e. reflect descriptions provided by the salesperson, on packaging or labelling, in advertising and/or align with any sample or demonstration model that the consumer requested;
- meet any additional representations made about performance, condition and quality i.e. lifetime or money-back guarantees; and
- have spare parts and repairs available for a reasonable period of time after purchase of the product, unless the consumer is told otherwise at the point of purchase,
(together, the Consumer Guarantees).
If a product does not meet one or more of the Consumer Guarantees, a customer is entitled to receive:
- at minimum, a free repair where the product has a minor problem i.e. the issue can be easily fixed. If the business does not provide the free repair within a reasonable time or cannot fix the problem, the consumer may pass on third party repair costs, request a replacement or refund, and/or recover compensation for the good’s loss of value; or
- the consumer’s choice of a replacement or refund for major problems i.e. if knowledge of the problem would’ve stopped the consumer from making the purchase, the product differs from the sample or description, it is unfit for its common purpose and the defect can’t be easily fixed within a reasonable period, or it is unsafe.
The ACCC specifically states that businesses must not display signs that state ‘no refunds or exchanges’ or otherwise contradict consumer rights under the ACL. Additionally, any verbal representation made by retail employees will be found to be the conduct of the employing business, and where the information provided to consumers is untrue or inaccurate, liability can be incurred for engaging in false, misleading or deceptive conduct, which is prohibited by the ACL.
- Businesses are not able to contract out of requirements under the ACL, including Consumer Guarantees that automatically attach to products, and must provide consumers with a suitable remedy if a minor or major problem arises.
- Businesses are not required by law to provide consumers with a refund or exchange if they change their mind, find the product at a cheaper price elsewhere or have damaged the product through improper use, and may have a store policy that sets out the remedies available for those situations.
- New and existing employees of retail businesses should receive periodic training on the products they are selling, consumer rights and the business’s policy on returns, replacements and refunds, to minimise risk of breaching the ACL.
This post was co-authored by Alexandra Moore (Graduate), Josephine Gardiner, Valiant Warzecha, Lucy Meadley (Consultant) and Melinda Upton.