Definition of ‘consumer’ under the Australian Consumer Law to be expanded from 1 July 2021

Definition of ‘consumer’ under the Australian Consumer Law to be expanded from 1 July 2021

27 October 2020 Authored by: David Lee Lewes, Charles Sweeney   |   Topics: Competition and consumer law, Compliance and corporate governance, Family business, Franchising

Changes to the Australian Consumer Law (ACL) will soon allow more customers access to the ACL’s consumer guarantees when acquiring goods or services.

The changes

The definition of ‘consumer’ under the ACL currently captures any person who acquires goods or services for an amount not exceeding $40,000 (or where the goods were acquired for personal, domestic or household use). The monetary threshold under the definition of ‘consumer’ is fundamental to the operation of the ACL’s consumer protection provisions.

The recently passed Treasury Laws Amendment (Acquisition as Consumer – Financial Thresholds) Regulations 2020 has amended the definition of ‘consumer’ by increasing the monetary threshold to $100,000. The amendment will commence from 1 July 2021. Until then, the existing $40,000 threshold will continue to apply.

The original threshold of $40,000 was set in 1986. The increase in the threshold follows a review of the ACL by Consumer Affairs Australia and New Zealand, which found that the protection afforded to consumers under the existing threshold has been eroded due to inflation in the cost of goods and services over time.

Consumer guarantees

The ACL provides consumers with implied warranties for the goods and services that they acquire. The consumer guarantees override any less favourable terms and conditions provided by a business and generally cannot be contracted out of.

For businesses that provide goods, some of the consumer guarantees imply warranties that:

  • goods will match any description provided
  • goods will be of an acceptable quality
  • goods will be reasonably fit for purpose
  • facilities for the repair of the goods are reasonably available
  • any express warranties given in relation to the goods will be complied with.

For businesses that provide services, some of the consumer guarantees imply warranties that services will be:

  • rendered with due care and skill
  • reasonably fit for purpose
  • supplied within a reasonable time.

The increased monetary threshold for the definition of ‘consumer’ will expand the availability of the consumer guarantees to a broader range of customers.

What goods and services providers should do next

Businesses should review their terms and conditions, marketing material and internal policies to ensure that they are compliant with the changes to the definition of ‘consumer’ from 1 July 2021.

If you run a business that requires assistance with ACL compliance, we recommend that you speak with one of our professionals in Cooper Grace Ward’s corporate advisory team.

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