Are you accidentally breaking consumer law?

The Australian Consumer Law (ACL) came into effect in January 2012 to standardise the various state Fair Trading Acts into one uniform Australian ‘fair trading’ law. The ACL basically replaces all the previous Fair Trading Acts and what we were all used to: the de facto industry-standard, 12-month Return To Base (RTB) manufacturers’ warranties.

Instead, the ACL defines a Consumer Guarantee that applies to the retail sale of most goods and services, and any subsequent faults those products or services might have.

It’s worth noting that the ACL applies only to retail sales, not wholesale. So under the law, distributors and manufacturers have no direct responsibility to you, the reseller.

The ACL defines ‘major faults’ and ‘non-major faults’, and what rights the customer has under both of those conditions.

If the item purchased has a major fault, the customer is entitled to get either a replacement or a full refund by the reseller (not a repair), and possibly compensation for any reasonably foreseeable loss or damage that occurred as a consequence of that fault. For non-major faults, the customer is entitled to have any product fault repaired for a ‘reasonable’ period after the purchase. Now, the reseller may choose to offer a replacement or refund, but the customer is not obligated to accept that offer, nor is the reseller obligated to make such an offer.

I decided to have a look at some random reseller websites as a simple way to get an idea of the apparent level of ACL compliance among IT resellers. The result? Of the 30 or so reseller websites I looked at, not one was fully compliant with the ACL. 

Most did not have the sales and services texts that the ACL mandates must be displayed or given to customers by resellers, some during the sales process and some before any service. Alarmingly, most sites weren’t just non-compliant by omission, but actually had lots of text, disclaimers, and conditions that are highly ACL non-compliant. 

A common problem was Terms & Conditions that sought to avoid any responsibility for, say, ‘fitness for purpose’. But you cannot contract your way out of responsibility for major faults or non-major faults in any terms & conditions.

One catch with the law is that nowhere does the ACL set any defined or fixed period for this new statutory Consumer Guarantee period. Instead, it only outlines what factors should be taken into account, ultimately by the courts, when individually determining how long any particular Consumer Guarantee period for a product might be. These criteria are: the product type and mode; the price paid for the product; and the intended use of the product.

A simple but complete definition of the Consumer Guarantee period is, ‘How long a reasonable person would expect the purchased product to work (given the above factors) without any fault.’

Note, this period has nothing to do with product durability, as some people – including some folk from Fair Trading – like to claim. If that were the case, for example, I could take my 13-year-old car (in perfectly good nick, thanks for asking), and expect all repairs still to be done under warranty.

ACL ‘major faults’

• Unacceptable quality
• Not fit for the intended purpose (as described by customer at time of sale, or what would be a reasonable assumption of purpose)
• Not matching the supplied sample or the product description
• Some ‘clear title’ provisions
• You cannot ‘contract’ your way out of responsibility for these 
• (or non-major) faults in any Terms & Conditions.

Don Card is general manager of National Warranty Services. Disclaimer: This article does not constitute legal advice.