The definition of ‘consumer’ under the Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010 (Cth)) (ACL) is set to be expanded, with the introduction of new reforms aimed at strengthening the protections available to consumers.
The Treasury Laws Amendment (Acquisition as Consumer – Financial Thresholds) Regulations 2020 (Cth) were approved on 9 July 2020 and will increase the monetary threshold in the definition of ‘consumer’ from $40,000 to $100,000. This means that from 1 July 2021, more ‘consumers’ will be able to rely on protections under the ACL including the consumer guarantee provisions when buying goods and services.
The change will also apply to the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) which contains consumer protection provisions for financial products and services.
How is a ‘consumer’ defined under the legislation?
The concept of a ‘consumer’ determines whether a person is entitled to protections and guarantees in respect of the goods and services they purchase. For example, guarantees that goods or services will be of acceptable quality, fit for purpose and be supplied by an agreed end date or within a reasonable time.
If a business fails to comply with a consumer guarantee, the consumer may be entitled to a remedy under the ACL. Remedies generally include repair, replacement, or refund.
Currently, under both section 3 of the ACL and section 12BC of the ASIC Act, a person is considered to have acquired goods or services as a ‘consumer’ if they meet one of the three criteria listed in the definition. One of the criteria is that the amount payable for the purchased goods or services is $40,000 or less (irrespective of whether the goods or services are purchased for personal or business purposes).
The recently announced change will increase the monetary threshold in the definition of ‘consumer’ in both the ACL and ASIC Act from $40,000 to $100,000, which means that more individuals and businesses will receive protection under the ACL and more suppliers will need to comply with ACL provisions such as the consumer guarantees.
What should businesses do to prepare for the change?
One of the main implications of the expanded definition is that businesses whose goods and services were not previously within scope of the ACL may now find their operations to be within scope.
We recommend that businesses prepare for this change by:
- considering whether this reform may impact on their supply of goods or services and bring their operations within the parameters of the ACL and ASIC Act;
- reviewing contractual terms and documents to determine whether any updates are required to comply with the ACL or the ASIC Act; and
- educating staff that a wider range of goods and services may be captured by the ACL under the new definition.
If you have any queries or would like further information about this article, please contact:
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Published: 29 July 2020