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Don’t get caught out this Christmas by retail legislation

As Australian retailers gear up for the Christmas shopping season, they must be diligent in ensuring their compliance with the Australian Consumer Law (ACL). The law, still in its infancy, has caught many companies off guard since its launch last year and anecdotally many businesses are still breaking the rules.

The ACL was partially introduced in January 2011, with a second wave of reforms coming into effect at the beginning of 2012. If the experience of Christmas 2011 is anything to go by, many businesses are still largely unaware of their obligations, and Christmas 2012 could follow suit.

The ACL deals in large part with refund and warranty policies for goods sold in Australia. Businesses not fully across the law may fall foul of the new rules simply out of habit. For instance, ‘no refund’ policies such as no refunds on sale items, or no refunds 14 days after purchase, could land a business in hot water with the ACCC.

In fact, the once trusty ‘no refunds’ sign can actually breach the rights afforded to Australian consumers. If you have one up in your store, you may want to reconsider it immediately.

The 2012 reforms deal substantively with extended warranty products offered on consumer goods. Certain industries, like home electronics vendors, offer an array of ‘opt in’ warranties for purchase as a standalone product in their own right.

Extended warranties are legitimate offerings so long as they comply with the ACL. Specifically, businesses offering these products need to be certain that they don’t misrepresent the scope of the warranty. If the warranty for sale only duplicates conditions already available to a consumer as part of the ACL, then the business risks facing prosecution by the ACCC.

With the new obligations come new, larger penalties for businesses caught out breaching the new law. Companies found not to be complying with the laws can face fines up to $1.1million – penalties which could represent ‘make or break’ moments for many businesses.

As it did with other legislation, for example, misleading conduct claims stemming from the Carbon Tax, the ACCC has given some latitude for companies caught out in the immediate aftermath of a change of law. However the ACCC has taken a tougher stance in recent times, perhaps holding the view that the ‘grace period’ on the ACL is behind us.

To that end, the ACCC has recently commenced proceedings against computer giant HP for breaches of the ACL and there is no reason to assume this proceeding will be the last of this kind. The tide of ACCC activity in this area is coming in, and businesses owe it to themselves to get across the ACL sooner rather than later.

There are some very basic steps that you can take to avoid being caught out:

–       Ensure your refunds policies, and refund statements (like signage) are consistent with the law. For instance, ‘no refunds on sale items’ and ‘exchange or credit note only for return of sale items’ are both unlawful.

–       Compare your warranty products to the law; if there are no additional protections in your products, you could be in breach; and

–       Consider how well trained your staff are – as representatives of your company, you could be liable for the representations they make to customers.

This is the sort of legal risk that can be easily minimised if you are proactive about ensuring compliance. Don’t let the complexity of the new laws, or a sense of “it won’t happen to me” prevent you from seeking expert advice and saving yourself from a great deal of heartache if the regulators come knocking on your door.

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Sally Scott

Sally Scott

Sally Scott is a Partner in Commercial Dispute Resolution at Hall & Wilcox Lawyers, Melbourne. She acts for prominent Australian, international and multinational corporations and institutions. Sally has considerable experience in competition and consumer law.

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