New Consumer Protection Legislation in Australia - Implications for B-2-C Companies

Early this year, Australia introduced a new set of consumer protection laws that should be of significant interest to any consumer-facing company with operations in Australia, especially given the government’s diligent efforts to inform consumers of their rights and how to exercise them.

The Australian Consumer Law (CPL), which is in fact a schedule to the Competition and Consumer Act 2010, is a large consolidation of what was previously a disparate set of 20 or so acts and regulations dealing with consumer protection.

In this post, I provide a non-exhaustive list of CPL issues that I have encountered recently in the context of advising a North American manufacturer of goods that are sold by resellers into the Australian market. Please note that I am not an Australian lawyer, so you will want to engage local counsel to provide advice on specific issues; the below comments are merely my observations.

  • Although the CPL has conveniently packaged various bits of consumer protection laws into one place, do not be fooled: it is not a mere consolidation. On the contrary, it incorporates new and expanded consumer protections such that compliance models developed under the old consumer protection regime will in many cases be insufficient. Failure to re-evaluate and adjust your compliance models could lead to scrutiny by the Australian Competition and Consumer Commission, increased consumer claims, and/or reputational harm.
  • If you manufacture goods that are sold in Australia, certain parts of the CPL apply to you, even if you are not actually present in Australia or selling goods directly to consumers. The following example scenario highlights how this can create problems when determining when to approve or deny a warranty claim from a consumer:
      Like many manufacturers, you offer consumers of your goods a limited warranty that is governed by certain terms and conditions. An Australian consumer calls you to initiate a claim under your limited warranty. Since this particular claim does not fall within the confines of your limited warranty, you deny the claim.
    Your risk exposure does not end there. The consumer may still have a statutory cause of action under the CPL to sue either you or the local seller for damages pursuant to one of the several “consumer guarantees” contained in the CPL. Interestingly, even if the consumer elects to sue the local seller, you are still not off the hook since the seller may in turn have rights under the CPL to seek indemnification from you.
  • Be aware that if you provide direct-to-consumer services in Australia (e.g., repair or warranty services), you will likely have additional responsibilities under the CPL.
  • Any “affected person” can make claims under the CPL, which could be any person who acquires the goods or otherwise derives title to goods from an original purchaser (think eBay, etc.).
  • It may be important to remind consumers of their rights under the CPL in your standard terms and conditions. Failure to do so could result in hefty fines. Also, certain regulations will come into force on January 1, 2012, that will, in some cases, force you to insert prescribed language into your standard terms and conditions without modification.​

Australia b-2-c compliance model consumer goods consumer protection legislation manufacturer purchaser repair services reseller risk exposure seller statutory cause of action terms & conditions warranty

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