Consumer Guarantees: not optional - guaranteed!

11 Feb 2018

  • Privacy and Compliance

Faulty product issues and misleading information about consumer rights are among the most common reasons for people to contact the ACCC – and contact they do!

Last year saw a 39 per cent increase in customer reports of issues around consumer guarantees, with half experiencing problems with finding a remedy for faulty automotive, whitegoods or electronics products.

With over 29,000 complaints received, it seems businesses are increasingly failing to comply with the Australian Consumer Law (ACL).

“It’s disappointing to see that more and more people are having issues enforcing their consumer guarantee rights,” Australian Competition and Consumer Commission Acting Chair Dr Michael Schaper said.

Businesses can face significant fines for not complying with or misleading customers about their rights and consumer guarantees under relevant consumer law.

What are consumer guarantees?

The ACL has been put in place to protect consumers (including B2C and B2B consumers). It provides them with a set of minimum rights and guarantees when they buy, lease or hire goods or services for $40, 000 or less.  Consumers also receive these rights and guarantees when they buy, lease or hire goods or services over $40,000 if they are the types or kinds of products or services usually acquired for personal use only (as opposed to commercial use).

These rights, called consumer guarantees, ensure that products and services:

  • Are of acceptable quality and fit for purpose;
  • Match the description they were sold under; and
  • Have spare parts available, where applicable.

In addition, it ensures that all express warranties offered are honoured.

According to the ACCC, the consumer guarantees have no set expiry date. It states that the guarantees apply for a reasonable amount of time given the cost, description and quality of the goods.

Read more about consumer guarantees here.

What this means for businesses

Businesses are welcome to offer voluntary or express warranties to customers in addition to the consumer guarantee rights of the ACL. But these warranties do not replace or remove the ACL rights.

“Many consumers often assume that the so-called warranties they are offered by a retailer are their only protection. This is not true, as consumer guarantee rights are separate to any warranty that comes with a product. The length of time these rights apply is also unrelated to the manufacturer’s warranty period,” Dr Schapper said.

Misleading a consumer about their rights or failing to comply with the ACL can have serious consequences for businesses, including incurring fines and additional costs.

Businesses can face up to $1.1 million and an individual $220,000 per instance for misleading or providing false information about consumer guarantees.

ACCC case study
Resource: ACCC’s Consumer guarantees – A guide for businesses and legal practitioners

How can businesses comply?

ADMA's handy flowchart is a great place to start for complying with consumer guarantees.

Become familiar with the ACL and consumer guarantees to know your obligations to your customers.

If a product sold is faulty, your customers have the right to choose a remedy depending on whether the failure is major or minor.

According to the ACCC, “If it’s a major fault, the consumer can choose to get a refund, replacement or repair. If it’s a minor fault, the business can choose which of these to offer you.”

What makes a fault ‘major’?

A product has a major fault if the product:
- Has a problem that, if known at the time of purchase, would have stopped the consumer from buying it;
- Is unsafe;
- Is different from the description; and/or
- Doesn’t do what it was advertised to do and can’t be easily fixed.

Retailers

Retailers also need to be aware that they must provide a remedy to faulty products, rather than sending customers to the manufacturer.

For a comprehensive guide on consumer guarantees read the ACCC’s Consumer guarantees – A guide for businesses and legal practitioners.

Need more info?