In July 2021, the Treasury Laws Amendment (Acquisition as Consumer-Financial Thresholds) Regulations 2020 (Cth) (the Regulations) amended the Competition and Consumer Regulations 2010 (Cth), marking a significant change in Australia’s consumer protection regime by expanding the definition of a “consumer”.
Who is a Consumer?
Prior to the Regulations, the Australian Consumer Law (the ACL) defined a consumer as someone who purchased goods or services:
Pursuant to the Regulations, starting 1 July 2021, the consumer threshold increased to now include any person who purchases goods or services valued up to $100,000. This widens the definition of who is a consumer to a large range of transactions.
These three requirements are exclusive, and the Regulations only altered the first requirement. Further, the Regulations do not seek to alter the exclusion of a person or business who is acquiring goods for the purpose of resupply, to use up or transform in the process of production or manufacture, or in the course of repairing other goods or fixtures of land.
The Regulations amended the Australian Securities and Investment Commission Regulations 2001 (Cth) (the ASIC Regulations) in a similar way. Pursuant to the ASIC Regulations the prescribed amount for acquiring financial services as a consumer was also increased to $100,000. This means that a wide range of financial services will now be subject to the key protections of the ACL.
Implications of the Regulations
As the meaning of “consumer” is relevant to the operation of many important sections of the ACL, the implications of the Regulations are significant.
Importantly, the Regulations impose the Consumer Guarantees on a wider range of transactions. Consumer Guarantees guarantee that:
These guarantees are incredibly important in protecting the rights of the consumer in day to day transactions. The expansion of the number of transactions that these Consumer Guarantees apply to is therefore a very important amendment with large implications, particularly for Small Businesses and Suppliers.
Further, the implications of the ASIC Regulations are that a number of financial services, such as business loans and linked credit contracts, are now also regulated by the ACL.
The Regulations now give protection to many business-to-business transactions that it did not previously.
Small Businesses commonly operate in dealings in the $50,000-$100,000 range. As such, Small Businesses are benefitted by the new laws as they are now eligible to seek the remedies available under the ACL for any breaches of their rights as a consumer.
Suppliers of goods and services priced between $40,000 and $100,000 ought to be aware of the new obligations that the Regulations impose onto their transactions.
Suppliers need to be aware that the Consumer Guarantees now apply to their business dealings and they must ensure that their goods and services comply with the Consumer Guarantees.
Suppliers ought to ensure that specifics, for example the descriptions of goods and services in promotions or samples, must be assessed and amended to comply with the ACL. Further, any mandatory requirements must be met, for example ensuring that packaging for goods express warranties against defects.
Finally, Suppliers will benefit from ensuring that their employees understand the new rights and remedies that are available to their consumers. Compliance training programs could be beneficial for these purposes.
Suppliers that do not comply with the guarantees or warranties under the ACL will be exposed to significant liability under the extensive range of remedies available to consumers under the ACL.
Small Businesses that now fall within the definition of “consumer” should familiarise themselves with their new rights and obligations. They will benefit from understanding whether their transactions with Suppliers are in compliance with the ACL, and from knowing the remedies now available to them.
We recommend that Suppliers that now fall within the $40,000-$100,000 transaction range immediately assess their transaction and business practices to ensure that they are complying with the Consumer Guarantees and warranties under the ACL.
Suppliers that are unsure whether their practices comply with the new obligations and requirements should contact Gavin Parsons of Gavin Parsons and Associates on (02) 9262 4471 or at email@example.com.