Do you want to know the key principles of consumer protection and fair trading in Australia? If YES, here is everything you need to know. When you sell a product or service, you are expected to comply with fair trading regulations. When you buy a product or service, you have consumer rights and guarantees. Fair trading laws ensure that trading is fair for your business and your customers.
Ideally, the Australian federal and state laws protect you, your business and your customers from unfair trading practices. These laws, together with industry codes of practice, strive to help your business operate fairly and competitively, and make sure your customers are properly informed and protected.
Have it in mind that it is against the law for businesses to limit or prevent competition. It is imperative that businesses understand their rights and obligations at all times. The ACCC promotes competition and fair trade in markets to benefit consumers, businesses, and the community.
Their primary responsibility is to ensure that individuals and businesses comply with Australian competition, fair trading, and consumer protection laws – in particular the Competition and Consumer Act 2010.
What is the Competition and Consumer Act 2010?
This Competition and Consumer Act 2010 (the Act) is a national law that regulates fair trading in Australia and governs how all businesses in Australia are expected to deal with their customers, competitors and suppliers. The Act also promotes fair trading between competitors while also making sure that consumers are treated fairly.
While the Act is a national law, each state and territory also provides additional consumer protections within their own fair trading legislation. If you sell products or services, make sure you’re aware of your local state or territory legislation. Each state and territory has fair trading departments within their governments that can help you.
What are the Key Principles of Consumer Protection and Fair Trading in Australia?
A “key principle” is the fundamental source or basis of something. Even though the area of consumer rights and consumer laws is complex and huge, there are some common areas of consumer law that everyone must try and familiarise themselves with, as this will make it easier to know what your rights are in the event you fall victim to what you believe could be a breach of consumer rights.
Indeed, when it comes to consumer laws, you can always find plenty of information that may relate to your specific needs and queries from a number of authorities as well as through resources such as online. Nonetheless, understanding some of the basis can be imperative and will help to ensure you’re able to know some common cases of consumer rights breaches.
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This happens when traders engage in some form of misleading conduct, commonly in advertising, where they mislead the consumer with the information they provide. In Australia, this is more or less done unintentionally but could still lead the consumer to make a decision in regard to purchasing the goods or services based on misleading claims. For instance, some of the ways in which you could be misled by an organisation include:
- Claims that the product or service is cheaper than a rival product or service when this is not the case
- Guaranteeing results about a product or service when there is no proof available
- Making false statements about the quality or standard of goods and services
- Making misleading claims about the nature or suitability of products or services
Accordingly, there are a number of different, commonly used tactics and methods leveraged by some traders and companies, which are actually unfair. Note that making use of unfair practices is in breach of consumer laws and regulations. Some of the ones you may have heard about or even experienced include:
- Failing to ensure the consumer understood the terms of any contract, transaction or documentation
- Using harassment or undue force to make a consumer reach a particular decision or make a payment
- Failing to provide full details of the products or services the consumer is considering, which could ultimately affect its suitability (an example is payment protection insurance cover, which was sold in the UK to many people who were self-employed even though self-employed workers were not eligible to make a claim on it)
Product Guarantees, Refunds and Failure to Comply with Implied Warranties and Conditions
It is very important to note that the Trade Practices Act and state/territory consumer laws instigate warranties and conditions into consumer contracts, which means that irrespective of any written guarantee or warranty (or lack thereof) the goods or services should last for what is considered to be a reasonable amount of time.
The type of product or service and the amount paid will help to determine just how long a “reasonable” amount of time actually is. Howbeit, if you would like to read more about refunds and product guarantees in Australia, consult a lawyer or an accountant versed in the field.
Failing to Supply Goods of a Merchantable Quality
Note that when you buy any goods, they are expected to be fit for the purpose for which they’re usually bought. This simply entails that they must be of merchantable quality. However, there are exceptions to this rule, which you should bear in mind. The exception in cases such as:
- If the consumer was made aware of the defects in question prior to actually purchasing the goods
- If the consumer examined the goods before making the purchase
- There are also additional consumer rights regulations that relate to services, such as services having to be carried out with due care to achieve the desired result agreed upon prior to the commencement of work.
Indeed, there may be many instances where it is unclear as to whether any breach of consumer rights has taken place. In cases such as these, where there is uncertainty, it is worth checking with the relevant authority, such as the fair trading office in your state or territory.
Always note there are fair trading laws you need to be aware of and how Australian federal and state laws can protect you, your business and your customers from unfair trading practices. The fundamental basis of consumer protection lies within understanding this information and its purpose.
Frequently Asked Questions
How Does The Fair Trading Act Protect Consumers?
The Fair Trading Act protects consumers from misleading and deceptive trader behavior, and unfair trading practices. These behaviors can include anything from false claims about what a product is made from or where it comes from, unfair sales practices, and key details being hidden in fine print.
What Is The Purpose Of Fair Trading Act?
The purpose of Fair Tarding Act is to encourage competition and to protect consumers/customers from misleading and deceptive conduct and unfair trade practices.
What Goods Are Covered By Consumer Guarantee?
- Anything that costs $40,000 or less.
- Anything for personal or household use, regardless of price.
- Vehicles and trailers, regardless of price and provided they are used mainly to transport goods.
Can You Contract Out Of The Fair Trading Act?
As a trader, you cannot contract out of your obligations to consumers under the Fair Trading Act. However, there is an exception where you may be able to contract out of some of your obligations when dealing with other traders.
What Does The Consumer Protection Act Cover?
The Consumer Protection Act 1987 is in place to hold manufacturers accountable for producing unsafe goods. It allows consumers to claim compensation if the defective product has caused personal injury, damage to property or death.
What Does The Consumer Guarantees Act Not Cover?
The Consumer Guarantees Act does not cover: goods normally bought for commercial or business purposes (for example, a photocopier) goods bought through a private sale – for example, garage sales, the “For sale” columns of newspapers, and buying from an ordinary person selling on Trade Me.
Does The Fair Trading Act Apply To Businesses?
The Fair Trading Act applies equally to established brick-and-mortar businesses, internet traders and temporary operations like pop-up shops. The Fair Trading Act (FTA) says you must talk fairly about what you sell — in person, in print or online. This is to make sure traders don’t oversell or make false promises.
How Do You Comply With The Fair Trading Act?
- Accurately represent your product or service.
- Make sure you — and any staff — are familiar with what you sell, and what it can and can’t do.
- Meet product safety rules.
- Give required information, e.g.: if the price tag includes GST. any extra fees. country of origin label on new clothing and new footwear.
What Does A Manufacturer Guarantee Cover?
A Manufacturer’s Guarantee usually promises to repair or replace faulty goods if they go wrong within a fixed period, usually 12 months. These promises are in addition to and not instead of a buyer’s rights against the seller and this must be made clear in the guarantee.
What Happens If You Breach The Fair Trading Act?
You will be fined and the maximum penalty for breaches of the Fair Trading Act is $200,000 for an individual and $600,000 for a business (per offence).
What Is The Difference Between A Consumer Guarantee And A Warranty?
A warranty is a guarantee of the integrity of a product and of the maker’s responsibility for it. In a sense, guarantee is the more general term and warranty is the more specific (that is, written and legal) term.
How Are Goods And Services Related?
Services are the amenities, benefits or facilities provided by other persons. Goods are tangible items i.e. they can be seen or touched whereas services are intangible items.
What Rights Do Customers Have?
Right to Safety. Right to be Informed. Right to Choose. Right to be Heard.
Do Customers Have A Right To A Refund?
Yes, customers have a right to a refund if what they bargain for is not what they got or if things go wrong during or after the transaction.
Is It Legal To Advertise One Price And Charge Another?
No, it is not legal to advertise one price and charge your customers another price. It is tantamount to deceiving the general public.
Where Should A Consumer Go If Your Rights Are Violated?
You go to the consumer protection agency in your country to report the case.
Who Is Responsible For Fixing The Problem With Your Goods?
The owner of the business where you bought the goods from is responsible for that. Although, the owner of the store can escalate it to the manufacturer of the good if need be.
Can A Business Provide Unsolicited Goods Or Services?
Yes, and unsolicited goods or services are items that firms send to you, but you didn’t actually order. You’re well within your rights to keep them. You have no obligation to send them back to the company or to pay for them.
What Does Warranty Against Defects Mean?
A warranty against defects is a representation communicated to a consumer that if the goods or services (or part of them) are defective, the business will: repair or replace goods (or part of them) provide compensation to the consumer.
What Is The Golden Rule In Advertising?
The golden rule of advertising is nobody goes out of his or her way to look at advertising.
What Happens If The Consumer Rights Act Is Broken?
The consumer must choose between repair, replacement or the short term right to reject; and if repair or replacement is not possible, the consumer has a final right to reject the goods and claim a full refund or ask for a price reduction of up to 100%.
What Are My Rights If A Product Is Faulty?
If something’s gone wrong with an item you’ve bought, you may be entitled to a refund, repair or replacement. It doesn’t matter whether you bought the item new or secondhand – you’ll still have rights. You’ll have legal rights if the item you bought is: broken or damaged.
24. What Are Your Rights Under The Consumer Rights Act 2015?
Under the Consumer Rights Act you have a legal right to reject goods that are of unsatisfactory quality, unfit for purpose or not as described, and get a full refund – as long as you do this quickly. This right is limited to 30 days from the date you take ownership of your product.
What Are Your Rights If A Product Is Not Fit For Purpose?
The Consumer Rights Act gives you a clear early right to reject goods that are unsatisfactory quality, unfit for purpose or not as described, and get a full refund. Contact the retailer you bought the goods from and tell it about the problem and that you want to reject the item and get your money back.
What Are The 8 Basic Rights Of Consumers?
The eight consumer rights are: Right to basic needs, Right to safety, Right to information, Right to choose, Right to representation, Right to redress, Right to consumer education, and Right to healthy environment.
Do Shops Have To Give Refunds By Law?
It depends on the country or state but what you must know is that, if you simply change your mind, the retailer has no legal obligation to give you your money back. If your goods are faulty and you don’t have the receipt, you still have the right to a repair, refund or replacement as under the Consumer Rights Act.
How Long Does The Supplier Have To Provide The Refund Once You Have Cancelled Your Membership?
This takes on average between 3 and 5 working days but depending on your bank or credit cards processing timeframes, can take up to 30 calendar days to appear.
In What Circumstances Can You Insist On A Refund?
Under consumer law, if a product or service breaks, is not fit for purpose or does not do what the seller or advertisement said it would do, you can ask for a repair, replacement or refund. Repairs, replacements and refunds are known as remedies.
Can A Shop Refuse A Refund Without Receipt?
Under the Consumer Rights Act as long as you return an item within 30 days of purchase, you can do so without a receipt and still have the right to a full refund. If you don’t want to return or exchange the item then you can ask for it to be repaired.
How Do You Cancel The Agreement Under The Cooling Off Period?
The first step to cancel a contract is to write to your supplier within the cooling-off period to tell them you want to cancel. You can do this by sending a letter, an email or over the phone.
How Do You Report Unfair Business Practices?
To report fraud, scams, or bad business practices, consumers should go to ReportFraud.ftc.gov.
What Does The Consumer Protection Act Say About Refunds?
In terms of s16 of the CPA, if a consumer has bought goods as a result of direct marketing, then for a period of 5 days after receiving the goods, the consumer can: return the goods, cancel the entire contract without penalty, and receive a full refund.
Is It Illegal To Mislead Customers?
Yes, it is illegal for you to mislead consumers when advertising goods and services. You are likely to break the law if you give the audience a misleading overall impression.
Can You Sue For Misleading Information?
Yes, you can.
What Are The Different Types Of Exemption Clauses?
There are two types of clauses, these are a ‘limitation clause’; this is where a party is limited from liability. The other is an ‘exclusion clause’; this is where a party is excluded from liability.
What If The Supplier Cannot Fix The Goods?
If the supplier cannot fix the goods, they can escalate the compliant to the manufacturer of the goods.
What Are Consumer Protection Laws?
Consumer protection laws are a form of government regulation that exists at both the federal and state level. There are several government organizations that promote consumer protection such as the Federal Trade Commission which was created in 1914.
Can A Company Refuse To Give A Refund?
It depends on the country, but in the U.S., there’s no federal law that says merchants have to accept returns.
Can The Supplier Deduct Any Fees From Your Refund?
When you credit your customer, the interchange fee — the largest part of the processing fee — is refunded back to the provider. Some providers return the refunded interchange to the merchant and only charge a small fee to route the refund.
Can I Cancel A Contract After Signing?
There is a federal law (and similar laws in every state) allowing consumers to cancel contracts made with a door-to-door salesperson within three days of signing. The three-day period is called a “cooling off” period.
What Happens If A Business Doesn’t Respond To A BBB Complaint?
Usually, the consumer will be notified of the business response when the BBB receives it and will be asked to respond. If the business fails to respond, the consumer will be notified. Complaints are generally closed within approximately 30 calendar days from the date filed.
Can You Sue For Unfair Business Practices?
No, you can’t. This is because Unfair business practices are typically legal. Usually, they involve a business behavior by an owner or corporation that is unethical or immoral. Unfair business practices do not violate the law, but may violate a personal or company moral code.
In What Circumstances Is A Seller Allowed To Refuse A Refund?
A business can refuse to give you a free repair, replacement or refund if: you simply changed your mind, you misused the product or service in a way that contributed to the problem, you asked for a service to be done in a certain way against the advice of the business, or were unclear about what you wanted.
What Can You Do If A Shop Refuses To Refund Your Money?
- Try to Work it Out with the Merchant First.
- Request a Chargeback.
- Consider Mediation.
- Sue in Small Claims.
- Pursue Consumer Arbitration.
- FairShake Can Help Make Arbitrating a Breeze.
What Does The ACCC Do For Consumers?
The Australian Competition and Consumer Commission (ACCC) is an independent Commonwealth statutory authority whose role is to enforce the Competition and Consumer Act 2010 and a range of additional legislation, promoting competition, fair trading and regulating national infrastructure for the benefit of all Australians.
What Is The Difference Between Minor Failure And A Major Failure?
If a failure is minor, a consumer is entitled to a remedy selected by the supplier and/or the manufacturer. If a failure is major, a consumer has the right to select the remedy – and may be entitled to reject the good and elect either a refund or replacement.