ACCC “concerned” retailers don’t understand new consumer guarantee obligation

The competition regulator says it’s concerned that retailers are confused about consumer guarantee obligations that took effect this year.

Under Australian Consumer Law, a replacement for state and territory laws phased in through 2011 and 2012, consumers are granted the right to a refund, repair or replacement for faulty products that don’t do what they advertise.

The laws stipulate that goods must be of an acceptable quality when sold, fit for the specified purpose and matching any description. They must also match any sample or demonstration model.

“The key messages for businesses are that these guarantees are set under law and exist irrespective of whether a voluntary, manufacturers or extended warranty is offered,” the Australian Competition and Consumer Commission says.

“Businesses must be aware of what remedy should be provided, in particular, who gets to choose the type of remedy – this will depend on how serious the problem with the good or service is.”

Peter Strong, executive director of the Council of Small Business of Australia, says it’s impossible to understand everything, so it’s not surprising that many didn’t understand the new laws.

“In most cases it’s not an issue, and most of us understand what to do because it’s a natural honest thing to do. Any problems are around confusion rather than trying to do the wrong thing,” he says.

The consumer guarantees apply to:

  • Goods and services that cost less than $40,000.
  • Goods or services that cost more than $40,000 but are normally acquired for domestic, household or personal use or consumption.
  • A vehicle or trailer primarily used to transport goods on public roads.

The comments follow last year’s Australian Consumer Survey that estimated that Australian businesses spent a total of $6.6 billion annually to deal with problems where they have a legal remedy for the consumer, excluding costs to replace or repair products.

The report also found that:

  • The most common problems are poor customer service, high or unexpected fees and delayed or undelivered goods or services.
  • A quarter of consumer problems raised with businesses remain unresolved.
  • 74% of consumer respondents who experienced a problem in the previous two years took some form of action to try to resolve the problem, mostly through contacting the business.
  • 52% of consumers were satisfied by the business’ response.
  • Problems are estimated to cost Australian consumers $14.2 billion annually based on time spent and direct costs.


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