Under the Australian Consumer Law (ACL), businesses that supply goods and services to "consumers" automatically provide certain consumer guarantees that exist regardless of any warranty provided by the supplier or manufacturer.
From July 2021, the definition of a consumer is changing, meaning more businesses will need to be aware of and comply with the consumer guarantee regime.
Currently section 3 of the ACL, states that a person will have acquired goods or services as a consumer if:
- the goods or services did not exceed $40,000;
- the goods or services cost more than $40,000, but they are of a kind ordinarily acquired for personal, domestic of household use of consumption; or,
- the goods are a commercial road vehicle or trailer used primarily to transport goods on public roads.
Treasury Laws Amendment (Acquisition as Consumer – Financial Thresholds) Regulations 2020
The Treasury Laws Amendment (Acquisition as Consumer – Financial Thresholds) Regulations 2020 (The Regulations) will come into effect on 1 July 2021 changing the monetary threshold in the definition of Consumer.
The new regulations will increase the monetary threshold from $40,000 to $100,000 and in doing so will give effect to proposal 15 of the Australian Consumer Law Review which recommended changing the monetary threshold.
The Regulations also amend the prescribed amount in section 12BC of the Australian Securities Investment Commission Act (2001) which contain similar consumer protection provisions for financial products and services.
The ACL review found that consumer protections had "been eroded over time due to inflation in the cost of goods and services" which meant that certain business purchases that were once covered under the ACL were no longer covered. The increased threshold would again assure minimum standards of protection and will cover more business transactions.
What happens next?
This change in definition will mean that more businesses will need to understand the obligations associated with supplying goods and services to "consumers" on and from 1 July 2021. It is also important that businesses are aware that a business can be a consumer if the definition criteria is met.
Businesses have just under 12 months to prepare for this change and should take this time to consider how this might impact their business and related contracts. Consideration should be given to the value of the goods and services sold and a review of relevant agreements and potential staff training would be wise.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.