ACCC urges SMEs to get compliant with new consumer guarantee rules before January 1 deadline

The Australian Competition and Consumer Commission has urged small and medium business owners to ensure their staff are ready for the introduction of a set of 12 new consumer guarantees which come into effect from January 1.

The new consumer guarantees are part of the Federal Government’s controversial changes to Australia’s consumer law regime, which will see state and territory consumer laws replaced by a national regulatory framework.

The first tranche of the new consumer laws, which came into force in July, covered the use of unfair contracts, with a particular focus on so-called standard contracts.

The next tranche of laws, which will come into effect on January 1, 2011, focuses on consumer guarantees rights, warranties and measures to prevent pressure selling.

For SMEs and their customer-facing staff, the 12 consumer guarantees established under the new laws are essential to understand.

ACCC deputy chair Michael Schaper says the consumer guarantees essentially integrate the current “implied terms” under current state and territory laws, although they are some new consumer guarantees, such as a guarantee that goods must be of an “acceptable quality” and services must be provided within a “reasonable timeframe” where no timeframe is agreed between a supplier and consumer.

The consumer guarantees also clarify the circumstances under which a supplier or a customer is entitled to choose the most appropriate remedy for a breach of the guarantee, such as refund or replacement.

“If a good or service does not meet the consumer guarantees, then a consumer can take action to obtain a remedy from the seller, service provider or manufacturer/importer,” Schaper said in a statement.

“The appropriate remedy will depend on the circumstances and the seriousness of the problem, but could include a refund, replacement, repair or having an unsatisfactory service performed again.”

“Generally, if the failure to comply with the guarantee is not major and can be remedied within a reasonable time, the supplier can choose whether to repair or replace the good, resupply the services or provide a refund.”

The nine consumer guarantees relating to goods are:

• Suppliers and manufacturers guarantee that goods are of acceptable quality when sold to a consumer.
• A suppler guarantees that goods will be reasonably fit for any purpose the consumer or supplier specified.
• Suppliers and manufacturers guarantee that their description of goods (for example, in marketing materials) is accurate.
• A supplier guarantees that goods will match any sample or demonstration model and any description provided.
• Suppliers and manufacturers guarantee that the goods will satisfy any extra promises made about them in express warranties.
• A supplier guarantees they have the right to sell the goods with clear title unless they alerted the consumer before the sale that they had limited title.
• A supplier guarantees that no one will try to repossess or take back the goods, or prevent the consumer from using the goods, except in certain circumstances.
• A supplier guarantees that goods are free of any hidden securities or charges and will remain so, except in certain circumstances.
• Manufacturers or importers guarantee they will take reasonable steps to provide spare parts and repair facilities for a reasonable time after purchase.

Service providers must also guarantee to provide services:

• With due care and skill.
• Which are fit for specified purpose.
• Within a reasonable time frame (where no time is set).

Shaper says businesses must ensure they are across all these guarantees, and adjust processes and documentation accordingly.

“It is vital that businesses and their staff understand both the rights of consumers under the new guarantees, as well as their own rights. Where the guarantees have been met, there is no obligation for businesses to provide a remedy under the consumer guarantees provisions – for example, if a consumer changes their mind. However, businesses must still comply with any additional obligations imposed by any voluntary or extended warranties they offer.”

The ACCC has launched a series of educational videos about the new consumer guarantees.

For retailers, one particularly important to note is the use of signs that say “no refund” or “no refund on sale items” as under the new laws these signs are unlawful.

However, the Government’s guide to the consumer guarantees says a sign that reads “no refunds will be given if you have simply changed your mind” are acceptable.