Updated: Mar 24
The Australian Consumer Law is one of the most important laws for online businesses to understand. In this article, you’ll hear from an eCommerce lawyer about how consumer law applies to your online business and some helpful tips to make sure you comply with the law.
Author: Farrah Motley, Legal Principal of Prosper Law.
Before we get started - protect your revenue
Before we dive into the ins and outs of the Australian Consumer Law, I want to make one thing clear. The law is designed to protect consumers' rights. But this doesn’t mean that you should agree to every claim that is made against your business.
For this reason, it’s important to investigate the root cause of the product defect. If you have a reasonable basis to determine that the product is not faulty or the claim is not well-founded, you can decline to provide a remedy to your customer.
Some businesses skip this part and instead take the position that they will refund, replace or repair all allegedly faulty products. You can do this too, but you don’t have to.
What is the Australian Consumer Law?
The Australian Consumer Law describes several consumer rights and obligations that businesses owe to their customers. The consumer law aims to protect consumers and ensure that customers can hold businesses accountable for faulty or defective goods or services.
The Australian Consumer Law is set out in Schedule 2 to the Competition and Consumer Act 2010 (Cth) (formerly the Trade Practices Act).
Businesses are not able to exclude or agree with their customers that the Australian Consumer Law does not apply.
If businesses mislead their customers about whether and how the consumer law applies to them or states that their business policies override the Australian Consumer Law, there may be additional legal consequences for the business.
For this reason, it is important to understand what the Australian Consumer Law requires of your business.
Furthermore, because the regulator of the Australian Consumer Law, the Australian Competition and Consumer Commission, has spent years educating the public about their rights, many of your customers are likely to be well informed about their rights.
Does the Australian Consumer Law apply to online businesses?
Yes. The Australian Consumer Law applies to online businesses as well as the typical bricks-and-mortar businesses.
The Australian Consumer Law applies to the sale of goods and services in Australia, if:
the goods and/or services are or are likely to be used for domestic, household, personal use; or
the goods and/or services are not used or likely to be used for domestic, household, or personal use however they are valued at under $100,000; or
the goods are commercial road vehicles or trailers used primarily to transport goods on public roads.
The consumer law applies to both business customers and individual customers, provided that one of the above rules applies.
What does your online business need to do to comply with the Australian Consumer Law?
Understand your legal obligations
It is important that online businesses understand what they are required to do (or not do) to comply with consumer law.
If you want tailored advice about how the Australian Consumer Law applies to your online business, it may be helpful to ask an eCommerce lawyer.
Alternatively, if you are happy to do your own research, the ACCC has a lot of helpful information about consumer law on their website.
Develop procedures and train your staff
Once you understand what the consumer law requires of your online business, you need to implement those requirements across your business. This could include developing procedures to carry out quality checks on new and existing products, dealing with customer complaints, and investigating product defect claims.
Even if your online business has not technically breached the consumer law, or is not sure whether your business has breached the law, your business must develop a policy for dealing with issues.
It is also highly important to educate and train your staff. If your staff provides incorrect advice to customers, this could also cause your business to be in breach of consumer law.
What happens if your business does not comply with the Australian Consumer Law?
There are several different remedies available to customers where businesses breach the consumer law. There is also a risk that the ACCC will separately pursue your online business.
Reputational risk and bad customer experience
If your customer has a complaint about goods and/or services you sold to them, it is important that you deal with issues in a fast, efficient and caring way. If you don’t provide your customer with a seamless experience during the complaints process, there may be a higher risk that the complaint will have a bad outcome for your online business.
If you are directed by the ACCC to issue a public notice that your business has breached the law, or individual customers have a bad experience with your business, this may damage your business’s reputation. It may have broader financial consequences for your business that are not easy to identify and calculate.
Customer legal proceedings and claims
Running an online business will always run the risk that a customer will start legal proceedings. It’s a necessary part of running a business. If you do receive a letter of demand or a customer starts a legal process, it is important to quickly hire an eCommerce lawyer.
If the consumer claim has gone this far, the risk of an unfavourable outcome to your business must be quickly assessed. This will determine how far your business should go to defend the claim or try and settle the dispute out of court.
Fines and enforceable undertakings
If your online business gets the attention of the ACCC, and they investigate and find that your business has breached the Australian Consumer Law, your business may face fines. Alternatively, your business may be required to provide an enforceable undertaking. This is a legally enforceable promise to the regulator that your online business will do or not do something.
How can Prosper Law help?
Prosper Law provides eCommerce legal advice to online businesses across Australia.
Contact the team at Prosper Law today to talk to an eCommerce lawyer and find out how we can help you – for a fixed fee.
Farrah Motley | Legal Principal
PROSPER LAW - A Commercial Law Firm for Businesses
M: 0422 721 121
A: Suite No. 99, Level 54, 111 Eagle Street, Brisbane, Queensland Australia 4000