As of 1 July 2021, the monetary threshold for consumer purchases protected under the Australian Consumer Law (ACL) significantly increased. This change means more businesses are now subject to provisions of the ACL and could be subject to consumer claims.
What does the Australian Consumer Law do?
The ACL is a national law that protects consumers, allowing consistent expectations towards a business’s conduct when selling goods and services, no matter which state or territory they operate in.
The ACL includes key protections such as prohibiting misleading or deceptive conduct, unconscionable conduct and unfair terms in sale agreements. Goods must be of acceptable quality, fit for their purpose, have been accurately described and match any sample. Services must be provided with due care and skill, fit for their purpose and provided within a reasonable time.
The application of the ACL is broad – it can apply to anything from the purchase of a motor vehicle to entering a financial arrangement for a business loan. Importantly, suppliers cannot contract out of the protections that apply.
What’s changed?
Since 1986, a consumer was defined under the ACL as a person or business who acquired a good or service for $40,000 or less. Naturally, our economy changed a lot over the following 35 years, yet this threshold for protection remained static and the coverage provided by the law therefore diminished.
This year the law caught up with inflation, and as of 1 July 2021, the consumer threshold has increased to $100,000 – providing more individuals and businesses with access to the consumer protections offered by the ACL.
Why does this change matter?
By increasing the transaction threshold to include higher value purchases, more consumer and business purchases will be covered by the protections offered. Whilst this affects us all as consumers, on the other side many businesses may now find that their transactions, including business to business dealings, are subject to provisions of the ACL where they were previously exempt.
A breach of consumer guarantees may result in a range of remedies for consumers including repair, replacement or refund, and compensation for any loss suffered. Suppliers and manufacturers may have more claims brought against them from this change and should be aware of their obligations under the ACL. This extends to the terms and conditions of sale agreements with their customers, to ensure there are no terms which would be deemed to be “unfair” under the ACL.
Action for business owners
With these changes coming into effect, it is an opportune time for businesses to review their sales processes and the terms and conditions they have with their customers, to make sure they comply with the ACL requirements.
For more information on your business’s legal obligations, or to make or defend a claim under the ACL, contact our experienced team on 07 3223 6100 or email us at redchip@redchip.com.au.
