A consumer is any individual or a group of persons who are the last to enjoy the products or services. Virtually, the manufacturer produces his commodities to make a profit out of the consumer; however, some producers, and other related individuals in the channel of product distribution, may have malicious motives that may end up infringing the consumer rights (Rodwin, 1996). In most cases, individuals lack the capability to fight for their rights if a large company has violated them. Therefore, the International Consumer Protection and Enforcement Network (ICPEN) and the Organization for Economic Co-Operation and Development (OECD) are some of the international forums that assist in consumer protection (Corones, 2012).
In light of this, Australia is a country that is at the forefront in fighting against consumer exploitation and it has formulated different laws to help in protecting the consumer. As a result, the Australian government came up with the Australian consumer law (ACL) that seeks to protect consumer guarantees from any faulty product or service (Clayton, 2010). The ACL is applied to the whole nation, states, territories, and businesses that are within the Australian boundaries through the Council of Australian Governments (COAG) (Harris, 2013). Therefore, this paper delineates the ACL act, especially section 18, its implications, benefits, limitations, and the different impacts it has on Australian businesses.
In 1974, the Australian government formulated a law entitled the Trade Practices Act of 1974 (TPA) to oversee the quality of goods and services in the country. The aim of this act was to guide the manufacturers and the suppliers on the right procedures to follow while delivering their duties. Three decades later, the government sort to amend this law to accommodate various stakeholders and offer more services to the public. Consequently, the Competition and Consumer Act (CCA) was enacted in 2010 (Turner, 2003). The main amendment that occurred in this act was the introduction of section 18, which was drafted in the same form as section 52 of the TPA. In January 2011, the Australian Consumer Law commenced and it included various amendments that were drafted from the previous bills regarding consumer protection (Clayton, 2010).
The application of the ACL act in Australia
- Implementation of the law
The Australian Consumer Law establishes a single and national law concerning consumer protection and fair trading. The law implies that manufacturers and suppliers should oblige to the statutory implications concerning marketing and advertising, product safety, quality guarantees, and product liability. The ACL is under the Competition and Consumer Act of 2010 (Cth) (CCA) that came into effect on 1 January 2011 (Clayton, 2010). It states that any consumer transaction bounds the retailer and the purchaser into a contractual relationship. The act bounds each person and corporation that conduct business in Australia but it excludes the government. Section 18 is split into two parts and the first segment states that an individual should not participate in a trading activity that is likely to mislead and imply deceit. The second segment outlines the regulations and limitations that govern the first segment; that is, the prohibition is not limited to the supply of goods or services and creates a broad, economy-wide norm of conduct. This law is applicable in cases of breach of consumer contracts, consumer rights that are supposed to be observed when purchasing goods and services, lay-by agreements; product safety, and consumer redress options (Corones, 2012).
- Importance of the new law
The introduction of this law is very important to the residents of Australia because it provides overall consumer protection from exploitation. The main important role of ACL was to synchronize the consumer protection laws in different states and come up with a single governing law (Harris, 2013). As a result, consumers are able to understand and enforce it since it is currently harmonized in the whole country. Elsewhere, retailers may be tempted to exploit the consumers through hoarding of goods, unsafe products, exaggerated prices, and selling inferior goods (Rodwin, 1996). The law also helps the public to acquire product correct information and get an immediate redress of their grievances. In addition, businesspersons are encouraged to work in accordance with the moral and ethical aspects, accord respect to the consumer, create a harmonious link with the customers, and provide regular bulletins and periodicals to the customer. The law replaced the former commonwealth and state legislation to form a single national law governing the entire of Australia.
- Differences from the older law
Previously, the Competition and Consumer Act 2010 only prohibited corporations from engaging in misleading or deceptive conduct. Section 18 amendment changed the clause from referring to corporations into referring to persons (Cseres, 2005). Before the amendment, the prohibition only applied to companies; hence, individuals and unregistered companies could exploit the consumer by misleading or cheating them. This is because the law only constituted corporations; therefore, any entity that could prove that it is not a corporation could not be held liable (Sommer, 2005). The changes create an impact on the public because any person, whether sole proprietorship, broker, wholesaler among others, can be held accountable for any malicious consumer transactions. The new law also stipulates that the advertisers should hold testimonials to substantiate their commercials (Turner, 2003). This clause abolishes the probability of misleading advertisements and holds the organization accountable for such situations. In addition, an organization that operated in different states had hard times in complying with the consumer law. This is because there were different consumer protection laws in each state and Australian territory, but the newly amended ACL law provides uniform terms in the entire nation (Harris, 2013).
- Misleading and deceptive behaviors
The distribution of goods and services from the manufacturer to the consumer involves a number of stages and transactions (Corones, 2012). Mostly, the manufacturers have the fine details of the product and service he or she is offering; in this regard, has the obligation to convey that information to the consumer. However, they may fail to do so indulging in misleading behaviors. To start with, a manufacturer may create a false impression to the customer about the product. The false impressions may occur when the producer quotes exaggerated performance characteristics, quality, false history, availability of repair services, and false benefits to please the customer. Misleading behaviors also occur during advertising; for instance, giving false discounts, comparing products and services with other companies, bait advertising, and giving scanty information about the product (Rodwin, 1996). Similarly, a company can deceive the consumer that their product is in compliance with the environmental regulations; for example, products like toiletries, detergents, energy remittent products among others. In addition, the retailers intend to breach their contracts; for example, they had given a one-year warranty for a certain product but when a customer returns the product after about ten months, they fail to address the customer’s issues (Clayton, 2010). Manufacturers can mislead customers by omitting the name of the organization, brand, or trademarks of their products. The law also prohibits the behavior of manufacturers hoarding goods to allow price fluctuations to favor them. Lastly, the products might be of a lesser weight than the indicated, unsafe products, lack of ingredients that are quoted on the product’s cover among other misleading behaviors.
Although the law was formed for the public good, it still has some limitations. The law implies that the supplier has statutory obligations to products and services that he or she transacts with the customer; however, some goods and services do not have a contract that substantiates their relationship with the supplier and the consumer (Corones, 2012). In such a case, the supplier bears all the burden of such goods despite the absence of the contract. Additionally, the law stipulates that parties to a contract cannot place boundaries or limitations on this legal requirement. On the contrary, some misleading behaviors do not match the damages offered by the law; hence, an individual can pay an exaggerated fine in terms of the crime committed. ACL also implies that a complaint can claim for damages within six years after the day on which the cause of action accrued (Cseres, 2005). Another limitation is that the law provides that the buyer enjoy undisturbed possession in spite of the method of purchase. This provision disadvantages hire purchase sellers and leasers because they are denied the right to interfere with the product once it lands in the buyer’s hands even if the buyer breached the contract (Turner, 2003). When goods sell by description, a buyer might rush to make a decision and after the purchase, he recognizes that the product does not meet the expectations. According to the ACL, the seller has to bear the responsibility in such a situation despite the fact that he or she gave the right information to the consumer. On the other hand, the ACL law applies to all parties that engage in a transaction but there are exclusions (Clayton, 2010). For example, governmental transactions are not included in the ACL law.
- State and Commonwealth laws
The Australian Consumer Law is a national law that is practiced in the states and Australian territories and a law of the commonwealth. In simpler terms, the state and commonwealth laws are still in existence but in accordance with the national law. The government adopted the ACL in a different mechanism to ensure that the states have the opportunity to consider changes in line with the national law (Sommer, 2005).
- Remedies for breaching section 18 of the ACL
Breaching the Australian Consumer Law, an individual person is entitled to a maximum pecuniary penalty of $220,000 while corporations can depart with $1.1 million (Cseres, 2005). A complaint that has been misled or deceived is entitled to damages in terms of monetary compensation. The measure of damage and compensation is awarded regarding the provisions of the Australian contract or tort law. The law also provides unfair terms that regulate breach of a standard form consumer contract. Other remedies include disqualification orders, redress for non-parties, and public warning notices. However, section 18 of the Australian Consumer Law is very broad; hence, there are no stipulated specific civil penalties and criminal sanctions because each criminal act is handled separately (Clayton, 2010).
Benefits of the Australian Consumer Law
Since the formulation of the Australian consumer law, it has exhibited several benefits and advantages. Firstly, businesses can trade in more than one state or territory in compliance with only one law unlike previously where each state had its own law (Rodwin, 1996). Secondly, the law cultivates consumer confidence because the customer feels comfortable purchasing goods without fear. Thirdly, this law prevents the country from being regarded as a dumping state because the law regulates against counterfeit goods. This is because the law requires manufacturers and suppliers to sell quality goods that meet international standards.
Similarly, consumers enjoy the benefit of buying products through sample references. Usually, bulky products are marketed via a sample and the rest of the consignment is delivered later. In such a situation, there are high chances of the consumer receiving products that do not meet the quality standards because he made the contract after observing the sample (Clayton, 2010). However, the Australian Consumer Law requires good in bulk to match the sample quality. Consumers are also entitled to safe products, repairs, spare parts, and express warranties. The economy of Australia is also impacted positively by this law because quality goods are beneficial to the economy and attract foreign investors. Lastly, the law helps Australia to meet the International Consumer Protection and Enforcement Network (ICPEN) standards in terms of consumer protection.
In most cases, consumers are very much vulnerable to exploitation by manufacturers and suppliers. The main aim of the organizations is to maximize profits; hence, they are tempted to use dubious methods to obtain their objectives. Suppliers on the other hand are also vulnerable to exploitation from producers because they can buy inferior products from them. As a result, the whole burden passes to the consumer and it is at this point the government has to intervene. In light of this, the government of Australia formulated Australian Consumer Law to offer consumer protection (Turner, 2003). As discussed earlier, the law prohibits any person from engaging in a trading or commerce activity that involves cheating and misleading the consumer. It protects the consumer from breach of contract, receiving unsafe and inferior goods, misleading advertisements, express warranties, repair, and spare parts services among many misleading behaviors. The law does not only boosts the economy but also attracts foreign investors to the country. The ACL also harmonizes consumer rights laws in Australia and helps in removing the uncertainties by sellers on which law to adhere to. This harmony aids in removing the confusion and potential conflict between the states, the commonwealth, and the national government (Cseres, 2005).
In spite of the numerous amendments done to this law, it still serves the interests of the public and consumers at large. The legislation does not differ largely from the older fashions but it contains the most updated and significant fashion of these legislations (Sommer, 2005). The Australian Competition and consumer commission is an association secluded to arise any emerging issues concerning consumer protection. The commission is very vital because it keeps up with the emerging trends and sets out branches and avenues that are easy for consumers to raise any grievances (Rodwin, 1996). In conclusion, the Australian consumer law is advantageous and it serves the public interests; hence, it should be implemented in due diligence.
A guide to the unfair contract terms law. (2010). Commonwealth of Australia. Retrieved from: http://www.consumerlaw.gov.au/content/the_acl/downloads/unfair_contract_terms_guide.PDF
Clayton, U. (2010). The Australian Consumer Law: an essential guide for product manufacturers and suppliers. Retrieved from: http://www.claytonutz.com/docs/ACL_Dec_2010.pdf
Competition and Consumer Act – schedule 2. (2010). Commonwealth Consolidated Acts. Retrieved from: http://www.austlii.edu.au/au/legis/cth/consol_act/caca2010265/sch2.html
Corones, S. G. (2012). The Australian consumer law. Rozelle, N.S.W: Lawbook Co
Cseres, K. J. (2005). Competition law and consumer protection. The Hague: Kluwer Law Internat.
Harris, B. (2013). Economic cost provisions in fixed-rate home loan contracts and breaches of Australian consumer law. Journal of Politics and Law, 6(3), 95-102. Retrieved from http://search.proquest.com/docview/1466380741?accountid=1611
Rodwin, M. A. (1996). Consumer protection and managed care: issues, reform proposals, and trade-offs. Houston Law Review, 32, 1319.
Sommer, H. J. (2005). Trying to Make Sense Out of Nonsense: Representing Consumers under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Am. Bankr. LJ, 79, 191.s
Turner, C. (2003). Australian commercial law. Lawbook Company.