Key consumer law changes will affect your business

Business information | Print Article

[Winter 2014]

The Consumer Law Reform Bill passed into law on 17 December 2013 bringing about some of the most significant changes to consumer law in decades and more closely aligning our law to Australian consumer law.

The changes have been staggered, with most already being in force and one key amendment being effective from 17 March 2015. The amendments will affect all kinds of businesses, some more than others.

The key changes already in force are:

  • Parties in trade are now prohibited from making ‘unsubstantiated representations’ in connection with goods, services or interests in land. A representation will be considered to be ‘unsubstantiated’ if the person making the representation does not, when the representation is made, have reasonable grounds for the representation, irrespective of whether the representation is false or misleading. In short, before making a claim about their product, a business must have done the research to back it up. This could impact on businesses which wish to tout the environmentally friendly or health benefits of their products as they are not always easily proven.
  • Parties in trade are now able to contract out of sections 9 (misleading and deceptive conduct generally), 12A (unsubstantiated representations), 13 (false or misleading representations) and 14(1) (false representations and other misleading conduct in relation to land) of the Fair Trading Act when dealing with other parties in trade provided that it is ‘fair and reasonable’.
  • Businesses who provide an extended warranty agreement in return for the payment of additional consideration now need to provide consumers with a summary of their rights and remedies under the Consumer Guarantees Act and a summarised comparison between the relevant Consumer Guarantees Act guarantees and the protections provided by the extended warranty agreement.
  • Traders who organise finance for goods or services that a customer rejects as faulty under the Consumer Guarantees Act can now be held liable for the associated credit agreement.
  • The Consumer Guarantees Act now extends to auctions and competitive tenders where the seller is a ‘trader’ (including sales by traders through the likes of Trade Me).

There are also a range of other amendments that apply particularly to online traders, door-to-door sellers and businesses that allow customers to place goods on layby.

The key changes effective from 17 March 2015 are that it will be an offence under the Fair Trading Act to include, apply, enforce, or rely on an ‘unfair contract term’ in a standard form contract. This amendment will concern all businesses with standard form consumer contracts.

To make sure you comply with the law, businesses should review:

  • consumer contracts, warranty agreements and business- to-business transactions to assess whether they are appropriate, fair and reasonable and comply with the amendments;
  • existing policies and procedures to ensure compliance with new disclosure provisions so that documented research, or other evidence, is obtained for any representations made in respect of goods and services.

If you need more focused advice specific to your business please contact your lawyer.