Presentation 6 - Australian Consumer Law

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Competition and
Consumer Act 2010
 It incorporates a nationally-agreed set of
consumer protections, the Australian Consumer
Law (ACL), meaning there’s now consistency in
consumer protection strategies across all
Australian states.
 Secondly, it provides much more specific rules
regarding perennial annoyances such as
telemarketers.

A person is a ‘consumer’ if they acquire goods
or services that are priced at less than
$40,000.

A person is also a ‘consumer’ if they acquire
good or services that are priced at more than
$40,000 but they are ‘of a kind ordinarily
acquired for personal, domestic or household
use or consumption’.

A person who acquires a vehicle for use in the
transport of goods on public roads,
irrespective of price, is also considered to be a
consumer for the purposes of the Australian
Consumer Law

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Part 2.1: Misleading or deceptive conduct
Part 2.2: Unconscionable conduct
Part 2.3: Unfair contract terms

Part 3.1: Unfair practices
 Division 1—False or misleading representations
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etc.
Division 2—Unsolicited supplies
Division 3—Pyramid schemes
Division 4—Pricing
Division 5—Other unfair practices
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Part 3.2: Consumer Transactions
 Division 1—Consumer guarantees
 Division 2—Unsolicited consumer agreements
 Division 3—Lay-by agreements
 Division 4—Miscellaneous
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Part 3.3: Safety of consumer goods and product
related services
 Division 1—Safety standards
 Division 2—Bans on consumer goods and product
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related services
Division 3—Recall of consumer goods
Division 4—Safety warning notices
Division 5—Consumer goods, or product related
services, associated with death or serious injury or
illness
Division 6—Miscellaneous

Part 3.4: Information standards

Part 3.5: Liability of manufacturers for goods
with safety defects
 Division 1—Actions against manufacturers for
goods with safety defects
 Division 2—Defective goods actions
 Division 3—Miscellaneous
General Protections
Power Balance
“Performance
Technology”
Improves:
• strength
• balance
• flexibility
• performance

Section 18 of the ACL prohibits a person, in
trade or commerce, from engaging in
misleading or deceptive conduct.

No matter how a business communicates with you,

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packaging
advertising
logos
endorsements
sales pitch
you have the right to receive accurate and truthful
messages about the goods and services that you buy.

There are laws in place to protect you from false,
misleading and deceptive selling practices.

There is a very broad provision in the
Australian Consumer Law that prohibits
conduct by a corporation that is misleading or
deceptive, or would be likely to mislead or
deceive you.

It makes no difference whether the business
intended to mislead or deceive you—it is how
the conduct of the business affected your
thoughts and beliefs that matters.

If the overall impression left by an
advertisement, promotion, quotation,
statement or other representation made by a
business creates a misleading impression in
your mind—such as to the price, value or the
quality of any goods and services—then the
conduct is likely to breach the law.

the law also says businesses must not make
false claims about:
 the quality, style, model or history of a good or
service
 whether the goods are new
 the sponsorship, performance characteristics,
accessories, benefits and uses of goods and
services
 the availability of repair facilities or spare parts
 the place of origin of a good (for example, where
it was made or assembled)
 a buyer's need for the goods or services
 any exclusions on the goods and services.

If a business makes a false or misleading
claim or representation about one of the
issues on this list, then the conduct is likely to
breach the law.

The price of a good or service is often a good
indication of its quality or its availability of
supply.

Price comparisons can also give you an
indication of whether you are getting a good
deal or a bargain.

A business risks breaching the law if it:
 makes inaccurate or misleading price comparisons
(for example 'was' and 'now' prices)
 represents that an advertised price is the total
price that you will have to pay when in fact it is
not services at a specific price when it is, or should
have been aware, that it would not be able to
supply enough of the good at the price for a
reasonable amount of time - This is called bait
advertising.

advertises products at a specific price when it
does not have a reasonable supply for
consumers to purchase

makes inaccurate or misleading price
comparisons

represents that an advertised price is the
total price that you will have to pay when it is
not

'Bait advertising' describes the situation when a
trader advertises goods at a certain price
(usually a 'sale' price) but does not have a
reasonable supply.

What is a 'reasonable supply' will depend on
several things, including the type of product and
the way it was promoted or advertised.

If a trader has genuinely underestimated the
popularity of a sale product, it may not be
considered bait advertising.

Comparative pricing is a marketing tool used by
traders to compare current selling prices to their
former or future prices and must be accurate
and must not mislead or deceive consumers.
Types of comparative pricing:
 Was–Now advertising
 Strike-through pricing
 Comparisons with the recommended retail price
(RRP)
 Component pricing

Products or services advertised with a 'was
now' price claim should accurately reflect a
comparison between the previous price
('was') and the current price
('now') being offered.
59.95
47.96

The actual previous price must have been
offered for a reasonable period prior to the
discount offer commencing so that it is a
genuine offer and not just a price that has
been inflated to make a sale price seem more
attractive.

Strike-through pricing is where the higher
price of a product is crossed out and a second
lower price is offered.

The trader must have offered
these goods at the higher price
for a reasonable period of
time—that is, it must be a genuine
pre-sale price.

Advertising or promotions of 'savings' or
'discounts' on the RRP of goods and services
are designed to convince you that you are
getting a good deal because the price is less
than the RRP.

If traders do not normally price their goods at
the RRP, it may be misleading to give you the
impression that they do.

When advertising or promoting the price of
products or services, traders must specify a
single total price that you will have to pay.

It is unlawful for traders to represent that an
advertised price is the total price when it is
not.

Puffery is a term used to describe wildly
exaggerated, fanciful or vague claims for a
product or service that nobody could possibly
treat seriously, and that nobody could
reasonably be misled by.

Examples of puffery include 'best food in town'
or 'freshest taste ever'.

Puffery in advertising is a practice that is
generally not prohibited by the Australian
Consumer Law.

Complain to the Australian Consumer
Competition Commission(ACCC) or

Complain to the Australian Securities and
Investment Commission (ASIC) –the
consumer protection regulator for financial
products

Organisation’s can be prosecuted be the
commissions

If the consumer has suffered a loss as a result
of a business' misleading or deceptive
conduct or misrepresentation, you may have
a private right of action under legislation.

Courts can order damages, injunctions and
other orders against businesses found to
have engaged in misleading or deceptive
conduct.

Power Balance Australia Pty Ltd (Power Balance)
claimed that their wristbands and pendants
improve balance, strength and flexibility and
worked positively with the body’s natural energy
field. It also marketed its products with the
slogan “Performance Technology”.

These claims made by Power Balance were not
supported by any credible scientific evidence
and therefore Power Balance has admitted that
it has engaged in misleading and deceptive
conduct
General Protections

Unconscionable conduct is unfair or
unreasonable conduct in business
transactions that goes against good
conscience.

This can occur in transactions between
businesses or in transactions between
businesses and consumers.

The exact meaning of ‘unconscionable
conduct’ is not defined in the ACL.

The ACL lists several factors that the court
considers when deciding if a party has acted
unconscionably.

However, the court is able to consider any
other matters it believes are relevant.

This section applies to transactions between
businesses and consumers, for goods bought
for household use.

The courts may consider the following factors
when determining whether unconscionable
conduct has occurred - although the court is
free to include any factors it thinks are
relevant.

the relative bargaining strengths of the
business and the consumer
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whether the business required the consumer
to comply with conditions that were not
reasonably necessary to protect the
legitimate interests of the business
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whether the consumer understood any
documentation that may have been used
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whether the business used undue influence,
pressure, or unfair tactics
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the price and terms on which the consumer
could have acquired the same or equivalent
goods elsewhere.
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The most effective way to avoid behaving
unconscionably is to treat all consumers
fairly.

Avoiding harsh or oppressive conduct not
only benefits your reputation among
consumers, but it also greatly reduces the risk
of treating any consumer unconscionably

If the court determines that you have
breached the unconscionable conduct
provisions of the ACL, a variety of remedies
may be ordered, including:
 compensation for loss or damage
 having the contract declared void in whole or in
part
 having the contract or arrangement varied
 a refund or performance of specified
General Protections

Although businesses may use standard terms
in consumer contracts to protect their
legitimate commercial interests and improve
efficiency, the ‘Unfair Contract Terms’ laws
are designed to ‘level the playing field’ in
circumstances where consumers may suffer
loss or other detriment due to a fundamental
imbalance in bargaining power

a ‘consumer contract’ is a contract for:
 the supply of goods or services or
 the sale or grant of an interest in land to an
individual who acquires it wholly or predominantly
for personal, domestic or household use or
consumption.

a standard form contract will typically be one
that has been prepared by one party to the
contract and is not subject to negotiation
between the parties

Standard form contracts are typically used for
the supply of goods and services to
consumers in many industries
Terms
Expressed
Terms
Written
Oral
Implied
Terms
Written &
Oral
Custom or
usage
Statute
By the
courts

A term in a standard form consumer contract is
unfair if:
 it would cause a significant imbalance in the parties’
rights and obligations arising under the contract; and
 the term is not reasonably necessary to protect the
legitimate interests of the party who would be
advantaged by the term; and
 it would cause detriment (whether financial or
otherwise) to a party if it were to be applied or relied
on.
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When deciding whether a term is unfair, the
court must also consider the contract as a
whole, and how transparent the term is
within the contract.
Specific Protections

Every time you purchase, lease or hire a good or
service, anywhere around Australia, you are
automatically given certain rights. These rights are
known as consumer guarantees.
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When you have a problem and one of the guarantees
has not been met, you are entitled to a remedy. The
type of remedy depends on the circumstances but
may include a repair, replacement, refund or having a
service performed again.
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The consumer guarantees only apply to goods
and services purchased on or after 1 January
2011. Purchases made before this time may be
covered by the laws that applied before 1
January 2011.

Consumer guarantees are different to a
warranty, which is a voluntary promise offered
by the person or business who sold the goods or
service to you, or the manufacturer of the goods.
You have consumer guarantees regardless of
any warranty you purchase or are given
There are nine consumer guarantees that apply
to goods you purchase:
 You will have title to the goods
 You will have undisturbed possession of the goods
 There are no undisclosed securities on the goods
 Goods will be of acceptable quality
 Goods will be fit for a particular purpose
 Goods will match their description
 Goods will match the sample or demonstration
model
 Spare parts and repair facilities will be available
for a reasonable time
 Any express warranties will be honoured

There is a guarantee that when you buy goods,
the ownership rights are passed to you.
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The seller must tell you when there are other
rights over the goods.
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This guarantee also applies to goods you buy
through private transactions but it does not
apply to goods that are leased or hired (because
you don't expect to own these outright).
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There is a guarantee that no one will try to
repossess or reclaim a product you buy. This
guarantee also applies to private transactions.
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For goods that are hired or leased, the
guarantee applies only to the period of the hire
or lease.

If the goods are purchased under a payment
plan and you fail to make the agreed payments,
the seller may be able to repossess the goods

There is a guarantee that the goods will be
free of any undisclosed securities or charges,
unless you are clearly told otherwise before
you purchase.
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This guarantee also applies to goods you buy
through private transactions, but it does not
apply to goods that are leased or hired.
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Goods are of acceptable quality if they:
 are safe, durable and free from defects
 are acceptable in appearance and finish
 do everything that they are commonly used for.

Goods will be suitable for any particular
purpose that you make known to the seller
before you buy.

If you explain to the seller that you want the
product for a particular purpose, and you buy
it based on their claims or expertise, the seller
guarantees that it will meet your particular
purpose.
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Any description of a product—whether made
verbally or in writing—must be accurate

If you have chosen goods based on a sample
or demonstration model the goods must
match in quality, state or condition

If a seller or manufacturer makes extra
promises—either verbally or in writing—about
the quality, condition, performance or
characteristics of goods, these promises must be
met.

Common types include money-back guarantees
and lifetime guarantees.

Express warrantees apply in addition to the
consumer guarantees

When you purchase a product the manufacturer or
importer must provide spare parts and repair facilities
for a reasonable time after purchase.

This applies even if you did not purchase the goods
directly from the manufacturer or importer.

How long is 'reasonable' will depend on the type of
product.

This guarantee does not apply if you are advised at
the time of purchase that repair facilities and spare
parts will not be available after a specified time.

As a consumer, most services you purchase will
be covered by the consumer guarantees
provisions of the Australian Consumer Law.
 You are covered by the law if the services you
purchase cost less than $40 000.
 If the services cost more than $40 000 but are
normally used for personal, domestic or household
purposes (such as landscape design), the guarantees
will still apply.
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This means the consumer guarantees can
apply to purchases that a business might
make, for example installation of air
conditioning.
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If you receive the services as a gift, you have
the same rights as the person who purchased
them.
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You are also covered when you use 'recreational
services' involving physical activities – for
example, fitness classes at a gym, working out
with a personal trainer, bungee jumping and
horse riding.
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However, people or businesses providing this
kind of service can sometimes limit their
responsibilities.
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You should read any terms and conditions in
contracts for these services carefully.
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Who guarantees the service?
What do they guarantee about the service?
Due care and skill
Fit for a particular purpose
Reasonable time, if no time set
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The guarantees are made by the person or business
that is providing the service.
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This means the service provider is responsible for
fixing a problem when the service does not meet a
consumer guarantee.

There are three consumer guarantees that
apply to services.
Service providers guarantee to provide
services:
 with due care and skill
 which are fit for any purpose; and
 within a reasonable time, when no time is set.

Service providers must carry out all services
using an acceptable level of care and skill.

Their work must be at least as good as what a
competent person with average skills and
experience would provide.
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They must also take reasonable steps to
avoid loss or damage when providing the
service.

Services and any resulting products will be
reasonably fit for any particular purpose
specified.
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This guarantee may not apply if it is
unreasonable to rely on the service provider's
skill or judgment, or if the provider tells you
the service or resulting product will not meet
your purpose.

A contract or agreement for the supply of
services usually states when the services will be
provided and the date they will be completed by.

If not, the supplier guarantees to supply the
service within a reasonable time.

What is 'reasonable' will depend on the nature of
the services and other relevant factors such as
weather and availability of parts or supply of
materials.

Consumers often buy related goods and
services together as a package, such as home
delivery of your newspaper.

Sometimes a problem develops with only one
part of the package—that is, the good or the
service.

If you return unsatisfactory goods due to a major problem,
you have the right to cancel any services that were
provided in connection with the rejected goods.

The supplier does not have to give a refund for any
services you received up to the time you rejected the
goods.

These contracts do not automatically end.

When you cancel a linked service contract, you are entitled
to a refund or can refuse to pay for any services that you
have not yet received.

If you cancel a contract for unsatisfactory
services, you must return any goods connected
with the service—even if there is no problem
with the goods.

If you have paid any money for the goods, the
seller must give you a refund.

It is your responsibility to return the goods,
unless that would involve a significant cost (in
which case the seller must collect the goods).

If a product fails to meet a consumer
guarantee, you may be entitled to
 a replacement
 Repair
 refund
 other remedy
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simply change your mind or decide you do
not like your purchase
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damage or use goods in an unreasonable or
unintended manner
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discover you can buy the goods more cheaply
elsewhere (unless the seller guarantees that
the goods cannot be purchased more cheaply
elsewhere)
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had a defect drawn to your attention before
buying (such as goods labelled as seconds
with their faults clearly marked)
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did not rely upon, or unreasonably relied
upon, the seller’s skill or judgment when
choosing a product.

You automatically get the consumer guarantees
from the person or business when you buy, lease
or hire their goods, or buy their services.

This is different to a warranty, which is a
voluntary promise offered by the person or
business who sold the goods or service to you, or
the manufacturer of the goods.

You have consumer guarantees regardless of
any warranty provided by the supplier or
manufacturer.

Express warranty
 These are extra promises a supplier or manufacturer
may make about such things as the quality, state,
condition, performance or characteristics of goods.
 An express warranty is not necessarily about the
product breaking, it is about it living up to promises.
 If the manufacturer or supplier provides an express
warranty, they guarantee the goods will satisfy that
warranty.

Suppliers or manufacturers may provide a
warranty that promises consumers that:
 goods or services will be free from defects for a
certain period of time
 defects will entitle the consumer to repair,
replacement, refund or other compensation.

This is called a 'warranty against defects', also
commonly called a 'manufacturer's warranty'.

Some suppliers or manufacturers offer
extended warranties to lengthen the
coverage of their basic manufacturer's
warranty.
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You may be offered the chance to buy an
extended warranty after, or at the time, you
buy the goods.

Extended warranties are optional.
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Some suppliers or manufacturers may also
tell you an extended warranty provides extra
protection, which you would not have unless
you buy it.
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This is not necessarily true. The consumer
guarantees provide rights that exist despite
anything the supplier or manufacturer may
say or do.

A supplier or manufacturer must not:
 pressure you to buy an extended warranty
 tell you that you must pay for any rights
equivalent to a consumer guarantee.
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