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Retailers and the Australian Consumer Law

Consumer Law News | July 2015

The Australian Consumer Law (“the ACL”) has been in effect across Australia since 1 January 2011, replacing the consumer provisions contained in the former Trade Practices Act 1974. Navigating the legislation is a challenge as the ACL is located in Schedule 2 of the Competition and Consumer Act 2010 (Cth) and sets out the consumer guarantees which are outlined in sections 51 to 59 of the ACL in relation to the supply of goods and sections 60 to 64A of the ACL in relation to the supply of services.

The ACL provides that a consumer can require a supplier [the retailer] to repair, refund or replace goods or services within a reasonable time if a consumer guarantee is not complied with. Many retailers may still believe that they can pass off this responsibility to the manufacturer, but it is the retailer as the supplier that has the responsibility for the goods sold to a consumer. The retailer may have recourse against the wholesaler or manufacturer in certain circumstances.

It is important that businesses (especially retailers) are aware of their obligations under the ACL (particularly the consumer guarantees) and ensure that they adhere to these obligations by implementing risk minimisation processes aimed at avoiding breaches of the ACL. The ACL also provides for other obligations of anyone or any entity engaged in trading not to mislead or misrepresent their goods and services. This will apply to how goods and services are represented anywhere including advertising material, the website, or verbal representations by staff to potential consumers.

Case study: ACCC v Coles

Section 18 of the ACL requires that a person must not, in trade or commerce, engage in misleading or deceptive conduct or in conduct that is likely to deceive or mislead consumers. The ACL applies broadly with prohibitions in this area, relating to a “person” (like a sole trader) as well as a “corporation”.

In ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 634 the Federal Court ruled that Coles had engaged in misleading and deceptive conduct by labelling its pre-baked bread as “fresh” and therefore was in breach of the Australian Consumer Law. In this case, the Australian Competition and Consumer Commission (“ACCC”) took issue with Coles’ use of terms such as “freshly baked”, “baked today, sold today” and “freshly baked in store”. The Federal Court placed significant emphasis in this case on the role of context in the representations made by Coles when deciding on the question of whether conduct is likely to mislead or deceive. By using phrases such as “baked today, sold today” and “freshly baked”, the Court found that these representations made by Coles were misleading.

Businesses should ensure any representations or claims which they make about their products which are difficult for consumers to test or prove can be substantiated to avoid the risk of misleading or deceiving consumers. Retailers, manufacturers and suppliers should all acquaint themselves with the provisions of the ACL to ensure that they are aware of how their businesses are impacted. The consumer guarantee provisions in the ACL include prescribed notices for extended warranties. Training staff who have regular face to face contact with consumers is advised to avoid breaches of the consumer guarantees from occurring and can also protect the public perception of a retailer’s business. 

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