How will the 2021 changes to the Australian Consumer Law impact your business?
The recent changes dramatically increase the threshold for consumer transactions, signalling a new era for consumer laws in Australia
The Australian Consumer Law (ACL) underpins consumer transactions throughout Australia, providing standards for businesses and safety nets for consumers. Since 2017, ACL has undergone a series of reforms, the most recent of which came into force on 1 July 2021.
What are the 2021 changes to the Australian Consumer Law?
The 2021 changes have increased the threshold for consumer transactions from $40,000 to $100,000.
This means that suppliers of goods and services automatically give guarantees in relation to supplies with a value below $100,000, including business-to-business transactions.
The significant increase in the value cap seeks to address the effects of inflation since the cap was last increased in 1986. It seeks to ensure that consumers who were intended to be protected by the key provisions of the ACL are being afforded such protections.
What are consumer guarantees?
The ACL contains protective provisions known as consumer guarantees which, if breached, give the consumer a right to remedies such as repair, replacement, refund or compensation for goods supplied. Consumer guarantees provide that goods must, amongst other things:
- Be fit for any disclosed purpose;
- Be of acceptable quality;
- Correspond with their item description; and
- Be in line with samples or demonstration models provided.
What is the meaning of consumer in the ACL?
Prior to the 2001 amendments, a person was considered a consumer for the purposes of the ACL if:
- Ordinarily, they purchased goods or services for domestic, household or personal use or consumption; or
- The purchased goods or services cost up to $40,000
From July 2021, the definition of consumer is expanded to include purchasers of goods or services costing up to $100,000.
What are the implications for businesses?
The increased monetary threshold will result in many more transactions being captured by the ACL, in particular business-to-business transactions.
Given the consumer guarantees will now apply more widely, the liability risk for businesses supplying goods and services and the number of potential claims will likely increase. It is therefore important that suppliers and businesses ensure they understand their obligations to consumers under the ACL and review their terms and conditions to ensure compliance.
To find out more about the 2021 changes to the Australian Consumer Law, Click here