Consumer protection

Protecting your business online

Consumer law is managed by the ACCC and Fair trading agencies. This topic covers your obligations and legal requirements regarding your customers.

Key learning outcomes:

  • Consumer Guarantees
  • Misleading and Deceptive conduct
  • Fair Payment Terms
  • Unfair Contract Terms
  • Safety

Please note that the information presented in this section is general information only and not to be acted on. If you have a particular problem to your circumstances, please seek professional advice.

Video Presentation: Consumer Protection

Consumer Protection

Hello. My name is Jeanette Jifkins from Onyx legal. And today we are speaking about why consumer protection is important for your business.

But before we get started a little bit about Onyx legal. We are a local commercial boutique law firm located in North lakes. And our focus is to help people who do business online. We aim to be practical and to make life easier for you to cover the legal stuff you need to for your business. We have a small team and all of the senior people in our team have run their own small businesses. So they understand the challenges that you face in running a small business. So we try to be practical and help you out. We've all done a lot of study and we've got lots of letters after our names. And I have also written a book that might help you out called cover your arse online. So that's a little bit about us.

Consumer guarantees and why they're important for your business

Now what we're covering today is, we're talking about consumer guarantees and why they're important for your business, misleading and deceptive conduct, fair payment terms. what that means for your business, unfair contract terms and product safety. Some of the things that people don't always think about when they're either getting started in business, or they've been running business for a little while and never had that problem before.

Just so you know, this is only general information. Don't act on this information because it's not enough to be relevant to your specific circumstances. If you have a problem, get advice, you need to speak to a lawyer and don't use this information to tell other people what they should do. They need advice specific to their circumstances as well. The purpose of this information is just to raise your awareness and to help you flag issues that might be important for you.

Consumer guarantees

So the first thing we're going to look at is consumer guarantees. Now consumer law is managed by the ACCC, which is the Australian competition and consumer commission. It's also managed by fair trading organisations around the country. So they're all state-based, there are the called consumer affairs or fair trading, and they're different in each state and territory. And otherwise it's the ACCC. And the main piece of law in this area is called the Australian consumer law.

So the consumer guarantees are set out in the Australian consumer law, and they set out your responsibilities as a small business offering products or services to consumers. Consumer guarantees, apply to all products that are valued under $40,000. And if they are valued over $40,000, then it still applies to those products or services, but only if they are purchased for personal domestic or household use. Okay. So that's the two differences.

1. Must provide clear title

In terms of products, your consuming guarantees are that you must provide clear title. Now what that means is there isn't someone in the background that has a retention of title cause who could seize those goods after they're sold.

The most common example in this circumstance is used cars. People who purchase a used car expect to own that car. If there is finance against that car and they haven't checked, then it's the finance company that has the first right to that vehicle. So, a lawyer I know recently, was complaining because they purchased a car from someone and it got seized and they just didn't check. It's very easy to check those sorts of things. But that's, that's what I mean by clear title. You've gotta be able to give over the whole of the ownership to the purchaser.

2. Must be of acceptable quality

The goods in this instance have to be of acceptable quality. So for example, if you purchase something for $10, you wouldn't necessarily expect the quality of that item to be the same as something you purchased for $10,000. And you wouldn't necessarily expect it to last as long. So it's all relative. But, you purchase a TV for a hundred dollars. If it goes bust in six months. The supplier may not be in breach of consumer guarantees. If it's a $10,000 TV and it goes bust in six months, it needs to be replaced or refunded, because that would be a breach. Cause that's a substantial sum of money to pay for an item, an item, and you expect it to, you know, work for a lot longer period of time.

3. Must be timely delivery

They must be timely delivery. So for example, a friend of mine purchased just a sofa and they were waiting for delivery and it was six months before they got there sofa. And in the meantime, the person, or the company that sold it to them, offered them cushions and scotch guarding, and they ended up with an extra arm chair all because they were trying to keep the customer happy because they weren't able to, to provide timely delivery and they didn't want to give a refund.

4. Must be fit for purpose

The products have to be fit for purpose. So for example, you do not sell a rake to be used as a shovel. It's not going to work. That's what it, that's what it means by being fit for purpose. You know, you sell the shovel because the purpose for which you use a shovel is specific things, you know, and rake's just not going to do that.

5. Product must match description

The product must match the description or sample and I experienced this quite some time ago. I purchased a dress online. It was made overseas and, it was supposed to be a sequenced, even dress. And it came when it arrived, it looked like a clown's outfit. Obviously that did not match the description. It didn't match the photos. It didn't look anything like what I expected it to look like, and I returned it and I got a full refund. So that's matching the description on the sample.

6. You must be able to provide access to repairs or spares

And you must be able to provide people with access to repairs or spares. So if you can't do that, then you've got to make it very clear that it's provided without that warranty. And a marketplace that does consumer guarantees very, very well in Australia is Kogan. If they're not able to promise that there are, will be spares or servicing available in Australia, they make that very obvious before the point of purchase. So it's a big warning and people can clearly understand that before they purchase, and then they take responsibility for that themselves.

So, I've had a client recently who provides products, and they rely on manufacturer's warranties. So what they do is if they have to repair or replace a product, they refer it back to the manufacturer. But in their circumstance because they sell the products, they're still the first sort of person responsible for making sure there are spares and repairs available.

Service guarantees

In terms of services, again $40,000 value. Anything up to $40,000, has consumer guarantees applied. And if it's over $40,000 and used for personal domestic or household use, then the consumer guarantees still apply. So business to business transactions don't get consumer guarantees.

1. Must be delivered with due care and skill

Services must be delivered with due care and skill. So if somebody is a bit, lackadaisical in the way in which they provide services, then that's not due care and skill. And that may be a breach of a consumer guarantee. Services must be fit for purpose. So it's very important for, particularly in the coaching industry, that your clients understand the purpose for which they're, purchasing your coaching and what they expect to receive, you know, what benefits they expect to receive as a result of that coaching.

I get very nervous when, coaching clients come to us and say, Oh yeah, I'll give a guarantee that they'll achieve X, Y, Z. What if they don't? What do you do then? Oh, everybody does. No. Everybody doesn't. There's to be a client at some point in time that doesn't meet their own expectations in terms of getting the services from you. And you don't want to either have to continue to provide services to them indefinitely, or have to refund all the money for all of the services you've provided, because you've offered a guarantee that you just can't stand behind.

We try and put conditions around guarantees. So if, particularly in coaching, if people don't do anything, if they don't take any of the recommended actions or they don't fulfill some sort of expectation, then the guarantee falls away. Because in that circumstance, as the coach, you do not have full control over the results. You are dependent on the participant's result, involvement to get those results. So careful how you make guarantees. Guarantees a different from the consumer guarantees. So there'll be something else you, you offer in addition.

2. Must be delivered in a timely way

And services have to be delivered in a timely way. So a common horror story, not common, but a horror story that occurs in the legal industry is, you know, people don't hear back from their lawyer for 12 months. That's not services delivered in a timely way. So, thinking about, if you're a service provider thinking about those three guarantees, you can't get out of those guarantees. They're enshrined in law and you have to be able to offer them if the services are valued at either 40,000 or if over, after personal domestic or household use.

Consumer protections

Consumer protections. So, the ACCC has a small business education program, which I highly recommend. And you'll see on this slide, there is a URL for it. It's just a really great resource, plain English that helps you understand a lot of the obligations you have as a business owner. I highly recommend it. Please do go and check it out. It's just really well presented information. Government websites. My experience is that a lot of the government websites and are providing really useful, easy to consume information and it's worth going and having a look and doing some research.

Misleading and deceptive conduct

In terms of misleading and deceptive conduct as a product or service provider. So as a small business, you must not participate in misleading or deceptive conduct. And what falls in that category, are for example, making representations that are untrue. So a really famous example from Australia is Ribena used to advertise that there was more vitamin C in Ribena than there was in oranges.

And then a high school student in New Zealand did a test in their chemistry class and discovered that there is actually no vitamin C or there was previously, no vitamin C in Ribena at all. As a result, Ribena had to publish a whole lot of apologies, pay a whole lot of fines, they sold the business to a, I think it now belongs to a Japanese beverage company. And they now do add vitamin C to Ribena as far as I understand.

So that was a misrepresentation and that was a marketing ploy and marketing is fine as long as you don't overstep the mark. And in that instance, they overstepped the mark cause they couldn't back up the claims made and that's what you need to be able to do. If you're going to make claims in your advertising, be able to back them up, be able to substantiate what you say.

Avoid statements that can confuse

Statements that can confuse customers. So for example, an example I came across recently was, in hire car insurance. So an international website was offering what looked to be insurance for when you hire a motor vehicle.

Now you would probably know that if you hire a vehicle locally, they offer you insurance that will reduce the liability cap to say $5,000 or reduce it to zero, or you can have an open liability cap. Now this website suggested that they had that insurance, but they didn't. In fact, what they were doing was taking money for a warranty and there was no substance behind it. And there was actually no way to make a claim. And that is misleading, deceptive conduct, because your putting forward information that people are going to expect to be insurance, but there's nothing to back it up. There is nothing there. That's a confusion in the marketplace and that's misleading and deceptive conduct.

Ensure approvals or endorsements are legitimate

Anything that suggests that a business has approval or endorsement or affiliation that it doesn't have. So for example, a lot of people use the logos about the businesses on their websites to say, here's the kind of people we work with. Or we've done this in the past or they might reference and say, this particular business uses this and we sell it.

If that suggestion cannot be backed up and cannot be substantiated, then you shouldn't be making it, because it is potentially misleading and deceptive conduct.

And using made up testimonials. I can't believe it happens, but apparently it does. Don't use testimonials that aren't from real people.

Don't make promises you can't keep

More examples, making promises you can't or don't keep. So I did see a promoter in Queensland offer education in a certain area. I think it was around, delivering webinars. And they charged a large some of money for that service, but then only delivered half of the deliverables that they said they would. And they at the time they took payment from, the people who signed up for it, they had no intention of delivering all of the deliverables. So that's misleading and deceptive conduct.

Using words like ‘cure’. You can't say you're going to cure something unless there's a scientific basis that it does. This is most prevalent in the allied health area. So people providing natural remedies. Don't make promises that aren't scientifically backed up because if you do get sued, the fines are substantial.

We were aware of someone who came up to us after they'd been through the whole court proceeding where the a ACCC sued them because of representations they made about a health service, which they believed to be true, and which they believed were able to be backed up with scientific basis, but they didn't provide any of that evidence to the court. And they, their business was fined $250,000. And they individually, as a director was fined $50,000. So don't say things that sound good, that you can't back up a promise.

Promising results or returns when there's no basis for that. So for example, one of the carwash franchisers made a whole lot of representations about the fact that you could make so much money in this franchise and the average franchise return was X amount per month. That representation was made on average figures across a number of sites. And it didn't take into consideration where people might purchase a franchise and set it up. And the ACCC found that to be misleading and deceptive.

And claiming a person has qualifications or experiences that they don't have experience that they don't have. So a recent example I've seen that is someone who, at 23 years of age, claimed they were a psychologist. Now, I don't know about you, but psychologists study six to eight years to get their qualifications, and then they get experience on top of that. So someone at 23 is not a psychologist. That person's actually being prosecuted now.

Fair payment terms

Looking now at fair payment terms. So. It's actually illegal to say no refunds. Do not put any signs up or anything in your own in your website content that says no refunds. There are circumstances where you must give a refund, which is where there's a breach of consumer guarantees. So there's consumer guarantees we talked about earlier for products and services. If one of those is breached, then you must be able to give a refund.

So something I’ve seen, there’s a boutique that I am a customer of about once a year. And they've sent me an email recently and it's got end of line stock and it says, end of line stock is not eligible for returns or refunds. Now I'm going to send them a little message today and let them know that they can't actually say that. What they can say though, is ‘this end of line stock is not eligible for returns or refunds if you pick the wrong size or change your mind’. Okay. So there's the difference? That's fine. They can say that, but to just say there's no returns or refunds, you can't say that, because it has to meet, you have to, if there is a consumer guarantee breached.

You don't have to provide refunds if people change their mind, and that that's a common thing, you know? Oh, I decided I don't want it. Can I have my money back. In a big value transaction, so people, because we do a lot of work with people doing business online, a lot of our providers are education providers, in the health and well being space or the wealth space. The education programs that they provide are often thousands of dollars. And they usually come to us and say we want to know refunds policy. Well, there are circumstances. If it doesn't meet the service guarantees, then you have to provide a refund. But if it is because someone changed their mind, then here's how we protect you to ensure that you don't have to provide a refund.

There's all sorts of mechanics around that. And we normally say to people, it's going to be cheaper to provide a refund than argue. But it, you know, that depends on your business and the risk profile of your business. And we're happy to discuss that with you if you're interested. But that's a really good example where people don't want to offer refunds, but you must be able to.

Actually in that space with products. Some people say we won't give her a refund if it's not in the original packaging, that's also a breach of consumer guarantees. You can't say that if the, if the product is faulty in some way, you still must be able to provide an exchange or refund. So even if it's not in the original packaging, so just having awareness around that in terms of displaying prices of products or services, I've got a client that frustrated it's me terribly, because the way they like to talk about their prices, I personally find very, very confusing because they want to talk about the value and they want to talk about the individual prices and they want to talk about the package prices. And when you put all of that information together and you don't explain it, and it's just written, it looks confusing cause people go, well, what price and my pain, if you're gonna just don't do it. Get someone independent of you to have a look at the way in which you're explaining your prices. And if they don't get it, then perhaps consider changing it and making it easier.

And another instance in this space is it frustrates me that people put price plus GST, just put the GST inclusive price. If you're collecting GST, you know, it's confusing for people and people don't always see the plus GST, especially if you put it in little tiny writing, you know, at the bottom just don't.

Pricing must be clear and accurate

So prices must be clear. They must be accurate and they must be not misleading to customers. If you're passing on a payment surcharge from a bank, so all those credit card surcharges that you incur. If you're going to pass them on to your customers, you cannot recover more than you pay and they can't be substantially more than what you pay, and you must make it clear to the customer that that's going to end up on their bill. Cause there, there were instances, these changes came in and a couple of years ago, and before these changes came in, there were people who were passing on a surcharge that may have had no relation to what they were paying. and they were essentially profiteering.

So that's why those laws came in. And you can't agree prices with your competitors? so I was having a conversation, A client is trying to go into a joint venture with another business. And part of the conversation was, well, you can't sell what we're delivering for less than this amount. That's price fixing, and you can't do it. you can set a recommended retail price and you can have a look at other people's recommended retail prices, but you can't set minimum prices, and you can't agree as a collective that today we're all going to have a special and everything will be this price with your competitors. Okay. So please don't do that.

In terms of displaying prices as well. Some businesses trying to get customers off their competitors will discount below cost. Now there are reasons where it's okay to do that. And there were reasons where it's not okay and it's not okay if your intention is to somehow put your competitor out of business because it's anti-competitive behavior.

If you're trying to clear end of line stock that you're not going to otherwise sell, and it's got nothing to do with your competitors. That's fine. But there are rules around selling below cost. So just be aware of that.

Component pricing. So a few years ago, when the law changed, you might have become aware that instead of saying phone plans are $49 per month. They became $49 per month, over 24 months, a total of X dollars. And the reason they do that is because it's now law that you, you put the total price payable if you're going to do component pricing. So if you're an educator online, like a lot of the people we work with and you have a minimum subscription period of three to six months, then you need to say it's X dollars per month. Say it's, you know, $49 per month for six months. It's a total of $294. And you have to explain that in your pricing.

Unfair contract terms

Okay. Unfair contract terms. So the purpose behind unfair contract law terms. Is so the people with the power don't disempower, the people who don't have it.

So unfair contract terms have applied in business to consumer transactions for a number of years. And then recently they came into effect between business to small business transactions. So an agreement between your business and your customers could potentially be unfair. But also as between a business and a small business where it's the supply of goods or services, the contract is worth less than $300,000, or if it's for more than a 12 month term, it's worth less than a million dollars and one of the parties to the transaction is a small business with less than 20 employees. In those instances, it can apply. And the kind of things that could be unfair are terms that enable one party but not the other to avoid a limit, avoid or limit their obligations under the agreement, and where it's not reasonably necessary for the operation of the business.

Terms that enable one party to terminate, but not the other party. Term's that penalize one for breaching, but don't penalise the other party for breach and, something that allows one party to vary the terms of the contract. So for example, when you purchase a subscription and you purchase it for $49 per month. And the company that you purchase it from has terms and conditions that say, we may change the price at any time. Well, no, they can't. They can change the price, but then they have to give you the option to opt out. And any minimum periods don't then apply if you change the price. And if they don't give you that opportunity, then it could be an unfair contract term.

If the terms of the contract are not clear and transparent. So people who use a lot of legalese and I'm saying businesses that copy American template. So anything that's full of whereas, or hereis, or hearin and all those sorts of words. That is more likely than not, to be an American template and probably incomprehensible for the normal lay person.

If you don't understand something you want to use as terms and conditions in your business, then don't use it because your clients or customers won't understand it either. Put things in plain English. If people are on the same page, they don't end up in the, or they're less likely to end up in dispute. Make sure you understand your terms and conditions so that your customers and, and clients do understand them as well.

If the terms and conditions are not reasonably necessary to protect the legitimate interests of your business then they could be found to be unfair. And if they cause financial other detriments such as a delay to another business, then they could also be unfair.

So an example recently was a company, they had terms that were five-year subscription to, and you had to, you had to sign up for five years. That was it. You didn't have minimum terms and that five-year dollar amount. They said the whole amount is payable and you can't terminate earlier than five years. And if you want to end it at the F you know, at the end of five years, it'll automatically renew, unless you terminate within a specified period, all of that sort of thing. The court found that that those terms to be unfair because people were getting, you know, maybe three years in saying our business has changed. We no longer need the service we want to terminate. And employsure was coming back and saying, well, we need the balance two years paid. And the court said, well, no. The balance of those fees is actually for services, not yet provided, so you can't charge for them. So you have to give that money back. So that's an example where it's an unfair contract term. The courts determined that there was an imbalance of power, and it wasn't able to be enforced.

And that's the thing. If the term is found to be unfair, it's got to be a decision of the court at the moment, but the ACCC is lobbying to have the power to make those decisions itself. And if they do, if the ACCC has granted that power, then they'll be able to issue penalties if they consider a contract term to be unfair. But at the moment you have to go to the court and if it's determined to be an unfair contract term, then that provision in the contract will be deemed void and unenforceable, so it'll have no effect at all, so be aware of that.

Product safety standards

Okay. Safety, gee, this one's taken a little bit of time. Isn't it? A product safety standards. There is a whole lot of information about product safety standards on the ACCC website. I recommend you check it out if you're concerned at all about your products. Safety standards may be Commonwealth or state-based. So have an awareness that it's not just in one place, the information relevant.

Some products are banned from sale in Australia. Because they don't meet Australian safety standards. Don't think, Oh great, I want to go into business and I'm just going to sell this product and I'll import it from overseas and it'll be great. If you import it from overseas and it's a particular type of product and it doesn't meet safety standards, you're asking for world of problems. There are mandatory reporting obligations to report deaths, serious injury or illness associated with consumer goods that come into the country. Unsafe products can be seized and destroyed without any compensation to you. And you can in fact, be required to pay those seizure and destruction costs.

And this becomes a really big thing every Christmas. People import, you know, particularly children's wear. Which it doesn't meet fire safety standards or children's toys, which don't meet safety standards. So if you're interested in setting up a side gig and you want to sell those kinds of products, you very much need to be aware of product safety standards, and what can apply to you, so that you don't end up costing yourself a whole lot of money instead of making some money on the side.

If you would like our help, you can check us out on That's our website, just, or, give us a quick call and find out how we can help you. So, consumer guarantees and consumer protection, please be aware of it. It is important to your business and thank you for today.


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