Consumer Affairs Australia and New Zealand has released a Consultation Regulation Impact Statement (RIS) seeking comment on five proposals to clarify, simplify and modernise the consumer guarantee framework in the Australian Consumer Law (ACL).

The Consultation RIS follows the Final Report of the Australian Consumer Law Review (Review), released in March 2017, which included five proposals relating to the consumer guarantees regime. We have set out below an overview of the five draft proposals.

Submissions from interested stakeholders on the proposals can be received up until 23 April 2018.

1. Increasing threshold in the definition of a consumer from $40,000 to $100,000

The current threshold of $40,000 in the definition of consumer contained in section 3(1)(a) of the ACL has not changed since 1986.

The proposed increase is intended to broadly account for inflation on the cost of goods and services since 1986 and thus afford more small business and individual consumers protections under the ACL. Two options are being considered (in addition to maintaining the status quo):

  • increase the threshold to $100,000 (as recommended by the Review); or
  • increase the threshold to $100,000 and apply indexation.

In setting out the costs and benefits of the different options, it is noted that the second option may create additional complexity and uncertainty.

2. Clarifying consumer guarantee remedies for failures within a short period of time

There is currently uncertainty as to when there has been a 'major failure' with a purchased product which would entitle consumers to a refund or replacement. One area of particular uncertainty, is where there has been a failure within a short period of time after the purchase.

The options under consideration, beyond maintaining the status quo, for addressing this issue are:

  • specify a period of time (the Consultation RIS proposes 30 days) where the consumer is entitled to a refund or replacement without needing to prove major failure (as recommended by the Review); or
  • a modified version of the first option, but specify different time periods for high value goods (eg, motor vehicles and white goods), or limit the operation of the first option to exempt high value goods (such as through specifying a high value monetary threshold).
3. Clarifying consumer guarantee remedies for multiple failures

Another area of uncertainty regarding when there will be a major failure, is where there have been multiple failures in the same product.

The options under consideration, beyond maintaining the status quo, for addressing this issue are:

  • clarify that multiple non-failures can amount to a major failure (as recommended by the Review); or
  • specify the number of non-major failures that can amount to a major failure.

In setting out the costs and benefits of each of the options, it is noted that the second option may create definitional issues and the need for exemptions.

4. Enhanced disclosure for extended warranties

There is concern consumers have difficulties making informed decisions in determining whether an extended warranty is value for money.

The options beyond maintaining the status quo are:

  • a legislative amendment comprising of a cooling-off right (the later of 10 working days or until disclosure obligations are met) and/or oral and written disclosure; or
  • oral and written disclosure with an opt-in process where consumers would have to confirm purchase of an extended warranty before paying for it, within a specified time frame (such as 10 working days).

The Consultation RIS notes that one of the issues with the second option is that it imposes a burden on the consumer to remember to confirm an extended warranty and means the consumer may also not receive immediate coverage.

5. Access to consumer guarantees for goods sold at auction

Currently, goods sold at auction are exempted from the majority of consumer guarantees including guarantee as to acceptable quality (s 54), guarantee as to fitness of any disclosed purpose (s 55), and guarantee relating to the supply of goods by description (s 56) (see also ss 57-59).

The growth in the online auction marketplace has reduced the ability for consumers to inspect goods prior to sale at auction.

The options beyond maintaining the status quo under consideration are:

  • goods purchased through online auctions conducted entirely online will receive access to the same consumer guarantees as are available under the ACL for generic retail sales, unless the auctioneer makes the goods reasonably available for inspection;
  • goods purchased through online auctions (including traditional auctions where bidding is online), regardless of whether inspection is reasonably available, will receive access to the same consumer guarantees as are available under the ACL for generic retail sales, unless the consumer purchases from an auction in person; or
  • all goods purchased receive access to the same consumer guarantees as are available under the ACL for generic retail sales.

It is noted in the Consultation RIS that a reasonable opportunity for inspection could take the same approach as in traditional auctions where goods are available for inspection in a specified place at a specified time.


Next steps

The Consultation RIS is open for submissions from interested stakeholders on the proposals to 23 April 2018. The Consultation RIS includes a series of focus questions, including focus questions specifically directed at business, on which feedback is sought. These questions are intended to assist in better understanding the specific problems identified and assessing the costs and benefits of the different options.

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