Australian Consumer Law

One year on, we take a look at the successes and downfalls of the ACL in its debut year.
 
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01 .Introduction

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Undeniably the biggest overhaul of consumer rights in decades, the Australian Consumer Law (ACL) has been a breakthrough for consumers. 

But all is not well with the law introduced on 1 January 2011. One of its biggest problems is that so few Australians know anything about it.

In this article you'll find:

For more information about Legal, see Shopping and legal.

Consumer rights across Australia

ACL combined 20 different state and federal laws into a single piece of legislation to offer uniform consumer rights across the country. Using its new powers under the ACL, the Australian Competition and Consumer Commission (ACCC) has already investigated unfair contracts of airlines, telecommunications and car-hire companies (see Cracking down on car-hire companies) – industries with the highest level of consumer complaints. 

And, for the first time, the ACCC and state and territory fair trading offices can issue infringement notices.

There have already been some wins. In July 2011, the Federal Court fined Optus $5.3 million for misleading advertising of its broadband plans. The ruling judge said this will act as a deterrent to Optus and other traders who see misleading advertising as a profitable strategy.

Seeking clarity

Discovering that the new laws exist is one thing; understanding them is another. Though clarity was a goal, the fact that the laws define “consumer” in four different ways gives some idea of their complexity. Consumer law experts agree they turned out less than user-friendly.

Professor Stephen Corones from the Queensland University of Technology, who was involved in deciding how product warranties should be worded in the new laws, told CHOICE there were a number of different views about what the consumer definition should be during consultation but in the end it was agreed “we should adopt one definition uniformly”. 

He believes the decision to steer away from the single definition was unfortunate because it detracts from the clarity of the law and cost effectiveness of compliance.

Professor Gail Pearson from the University of Sydney told us “the legislation does not fully realise the expectations of the community of simple, easily accessible rules”.

The Legislative and Governance Forum on Consumer Affairs Chair, John Rau, told us the ongoing education of both consumers and traders will be crucial to making the laws work. A key goal for consumers, he said, is “to be aware where they can get help when things go wrong”. Consumers can access fact sheets about the law and how it affects them on a daily basis at www.consumerlaw.gov.au.

Despite the shortcomings, the government appears to be behind the spirit of the new laws from both a consumer and business standpoint. Parliamentary Secretary to the Treasurer, David Bradbury, told CHOICE that “markets work more effectively when consumers are confident that they can transact with business knowing that there are clear rights and responsibilities, and when businesses are free to compete and innovate to serve consumer needs”.

The goal of the new consumer protections is laudable and long-awaited, but the effect of the new laws on transactions in the consumer marketplace will only be known as each new provision is put to the test.

 
 

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02.Cracking down on car-hire companies

 
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Car-hire crackdown

As part of its investigation into the car rental industry, the ACCC started proceedings against Europcar Tasmania in November last year, alleging the company overcharged customers to repair damage and failed to refund overcharged amounts due to unfair clauses in contracts.

Linda Whittaker experienced a similar situation with Europcar Canberra. In September 2011 she paid $1305.12 to hire a Toyota Commuter van for eight days, which included a $283.60 peace-of-mind fee to limit damage liability to $990, as well as a 22% location surcharge, 3.5% administration fee and 1.5% credit card surcharge. 

After one of the van’s windows was smashed by vandals, Linda sought quotes for repair before returning the van to Europcar and filing an incident form.

The following week, Linda’s credit card was charged $1270.71. Europcar had recalculated the total amount owing, adding the maximum damage liability to the vehicle hire so that the location surcharge (22%), admin fee (3.5%) and credit card surcharge (1.5%) were all calculated on the total of both these charges, with GST (10%) then added on top. Europcar charged Linda the maximum $990, despite her quotes to repair the window falling between $300 and $458.  

A Europcar representative claimed the damage liability fee was subject to additional fees and charges before GST. Linda alleges Europcar failed to verbally disclose these details to her when selling the peace-of-mind protection.

Fortunately, under the new ACL Linda can lodge a complaint with the ACCC to resolve her dispute.

 

What's in the new law?

Unfair contract terms are now regulated A court can void a consumer contract if it deems a term causes significant imbalance between parties and is not necessary to protect the legitimate interests of the signatories.

ACL provides you with express rights when purchasing goods and services It includes 12 consumer guarantees across goods and services. From the beginning of this year, all warranties against defects, including manufacturer’s warranty and extended warranties will include information about your guaranteed protections under the ACL, including replacement, refund and compensation for goods not of an acceptable quality.

Tighter regulation for door-to-door sales This includes set hours when a door-to-door salesperson can visit you, as well as the inclusion of a cooling off periods and guidelines for delivery of goods and pickup of unwanted goods.

Clearing the confusion

For those of you confused about where you stand with the legal terminology, here is an explanation of the most common terms you are likely to come across:

Consumer of goods or services You are considered a consumer of goods or services under the ACL if the amount paid for the goods or services was under $40,000 or the goods or services were of a kind ordinarily acquired for personal, domestic or household use or consumption.   

Consumer contract A consumer contract is a contract for the supply of goods or services or the sale of land to an individual who acquires the goods, services or land wholly or predominantly for personal, domestic or household use. 

Misleading and deceptive conduct This breach covers a raft of behaviours – the most common being a manufacturer or retailer making false or misleading representations about the certain quality, standard or value of a certain product.

Unconscionable conduct Behaviour that is not just or reasonable. The court will examine a number of factors, including power imbalances, the legitimacy of claims and undue influence or pressure exerted on a consumer. Under the ACL, pecuniary penalties now apply to unconscionable conduct.

Unfair term A term of a consumer contract is unfair if it would cause significant imbalance in the parties’ rights and obligations under the contract, is not reasonably necessary in order to protect legitimate interests and is potentially detrimental to a party.

Your post-Christmas ACL info page

Where do I stand if I need to return something?

For Christmas gifts with major failures you may reject the goods and get a refund or an identical replacement. There is a major failure with a product when you would not have purchased it had you known about the problem, it is significantly different from the description, sample or demonstration you were shown, it is substantially unfit for its normal purpose or it is unsafe. 

For Christmas gifts with minor failures the seller may choose to offer you a refund, replacement or repair.  This must be provided free of charge and within a reasonable time period. In this case you cannot immediately reject the goods and demand a refund, you must give the supplier a chance to fix the problem. Minor failures include small problems with products that do not fit into the major failure categories, for example, loose threads on clothing. 

You do not have the automatic right to a refund if you change your mind, although many retailers will offer you this option if you return the product within a certain time period. 

Watch out for these common breaches of your rights:

No refund – store credit only

Consumers are entitled to a refund for products found to have a major fault. Under the ACL, a major failure with a product is when: you would not have purchased it had you known about the problem; it is significantly different from the description, sample or demonstration you were shown; it is substantially unfit for its purpose; or it is unsafe.

Out of warranty = no remedy

Regardless of lapsed warranties, consumer guarantees require a product to be of “acceptable quality” throughout its reasonable life.  This length of time can be determined by the court, however it may often be longer than the warranty period, especially in the case of an expensive product such as an oven or fridge.

You signed the contract, now you’re bound by it

Courts now have the power to cancel unfair contract terms. This this can include unfair behaviour hidden away in terms and conditions fine print.   

Extended warranty = better protection

An extended warranty may charge you for protection you are already entitled to under the law, so be aware these are not always worthwhile.

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