The Australian Consumer Law (ACL) governs many business transactions and provides protections for consumers under the law. New changes to the ACL which came into effect on 1 July 2021 have broadened the definition of ‘consumer’, providing greater legal protection for business-to-business (B2B) transactions. This article explains the changes to the Australian Consumer Law and outlines how businesses can adapt to these modifications.
How has the Australian Consumer Law changed?
The ACL provides ‘consumers’ with a number of legal protections against suppliers of goods and services. These include consumer guarantees, such as goods being fit for their purpose and of acceptable quality. Under new changes to the ACL, the monetary threshold of goods and services to determine whether a person or business is a ‘consumer’ has increased from $40,000 to $100,000. This means that:
- Goods and services acquired for between $40,000 and $100,000 are now covered by consumer protection laws under the ACL, where they previously were not; and
- More businesses in B2B transactions are covered by consumer protection laws and subject to consumer guarantees.
Who is a ‘consumer’ under changes to the ACL?
From 1 July 2021, the definition of ‘consumer’ is now a person or business who acquires goods or services:
- for $100,000 or less (which is a significant increase from the previous threshold of $40,000); or
- which are ordinarily acquired for personal, domestic or household use or consumption; or
- consisting of a vehicle or trailer acquired principally for the transport of goods on public roads.
Consumers who fall within one of these definitions have available protections under the Australian Consumer Law, including consumer guarantees.
How do changes to the Australian Consumer Law affect suppliers?
The increase of monetary threshold to $100,000 means that many more B2B transactions are covered by the ACL and consumer guarantees. Suppliers should review their existing arrangements and determine which transactions are now covered by consumer guarantee provisions. Importantly, suppliers cannot contract out of the statutory guarantees and can face severe penalties for breaching the Australian Consumer Law.
What are consumer guarantees?
The ACL provides for a number of statutory guarantees for goods and services to protect consumers under the law.
These include that any goods supplied are:
- of acceptable quality;
- fit for their purpose;
- accurately described;
- match any sample or demonstration model; and
- satisfy any express warranty.
Suppliers must also guarantee that any services are:
- provided with due care and skill;
- fit for their purpose; and
- provided within the stated time or a reasonable time where it is not stated.
What should I do next?
Businesses should consider the impact of changes to the Australian Consumer Law on their transactions. To ensure compliance, businesses may wish to:
- Review existing arrangements and determine whether they are now covered by the ACL under the increased threshold;
- Review how their services and products are marketed or described and ensure this matches the service or product;
- Update their policies, terms and conditions, and contracts to manage liability risks; and
- Talk to a legal professional about business compliance with the Australian Consumer Law.
- The monetary threshold of goods and services to determine whether a person or business is a ‘consumer’ under the ACL has increased to $100,000.
- The new threshold may capture transactions that were previously excluded.
- Businesses should review their transactions and contracts to ensure compliance with the Australian Consumer Law and avoid significant penalties.