Every year around this time leading Australian consumer advocacy group “CHOICE” announces the year’s winner of the “Shonky Awards”, to shine a light on non-compliant products or services to inform and warn consumers. Hopefully, it encourages businesses to do better. Attwood Marshall Lawyers Commercial Litigation Senior Associate, Jade Carlson discusses each winner and consumer rights under the Australian Consumer Law.
Australian Consumer Law (ACL) overview
If you run a business in Australia, you’ll be affected by the Australian Consumer Law. Whether you work with customers, businesses, provide services or sell goods, you must know how the consumer laws affects your business.
The ACL is a national law to protect consumers. The Australian Competition and Consumer Commission (ACCC) alongside the state and territory consumer protection agencies jointly administer the ACL.
The ACL applies to anyone conducting business in Australia and can include businesses that are overseas.
Complying with ACL
Some examples of how you, as a business owner, must comply with the ACL include:
- If the goods or service does not meet a consumer guarantee (for example where goods are not of acceptable quality), your customer has the right to ask for a refund, replacement, or repair where:
- the goods or service is under $100,000.
- the goods are over $100,000 and normally bought for personal or household use; or
- the goods are business vehicles or trailers mainly used to transport goods.
- If there is a problem with your product or service, your customer has the right to ask you for compensation for damages and loss if the supplier could have reasonably foreseen the problem.
You cannot have a store policy and/or signs in store which seek to override consumer guarantee rights (for example ‘no refunds’ or ‘no refunds on sale items’ which implies you are unable to get a refund under any circumstances). This is unlawful.
Consumer guarantees
As part of consumer law and fair-trading laws, the ACCC regulates consumer guarantees.
As a business owner, you must understand consumer rights to comply with your obligations.
Businesses must provide an automatic guarantee to consumers with any product or service they sell. The guarantee includes that products or services will work and do as advertised.
If you sell a product, you must guarantee that it:
- is of acceptable quality
- matches the provided description
- meets any express warranties
- is fit for purpose
If you supply a service, you must provide it:
- with due care and skill
- fit for specified purpose
- within a reasonable time (if no time is set).
Consumer product safety
The ACL governs product safety in Australia. This means that the products you supply must be safe and meet consumer guarantees.
You cannot sell banned or recalled products and you must ensure that your products or product related services comply with relevant mandatory safety and information standards before they are offered for sale.
If you become aware that a product you supplied may have caused a death, serious injury or illness, you are required to submit a mandatory injury report to the Commonwealth Minister within two days of becoming aware of the incident.
Unfair contract terms
The ACL protects small businesses and consumers from unfair terms in standard form contracts.
A standard form contract is a contract between two parties where one party prepares the contract giving the other party little or no opportunity to negotiate the terms.
People enter standard form contracts frequently, sometimes without being aware of what they are agreeing to. These instances include contracts for:
- internet services
- credit cards
- mobile phones
- utilities
As a business, you need to make sure your terms do not unfairly disadvantage the consumer or small business.
For example, when an individual signs up for a new phone plan, they agree to a standard form contract. They have no opportunity to negotiate the terms with the business.
Whether a term is ‘unfair’ must be considered in the context of the contract. However, under the ACL, to be unfair, a term must meet 3 conditions:
- The term would cause financial or other detriment to a consumer or small business if it were enforced.
- The term significantly imbalances the rights and obligations between the business and consumer or small business.
- The term is not reasonably necessary to protect the interests of the business.
For example, the following contract terms may be considered unfair:
- Where one party (but not the other) is able to vary the terms of the contract (for example price).
- Where one party (but not the other) is able to decide whether to renew or not renew the contract.
- Where one party (but not the other) is able to determine whether the contract has been breached.
If a court orders the contract term to be unfair the term will be void. Only a court can find a contract term unfair.
Unfair business practices
ACL ensures that businesses conduct fair sales practices. This allows consumers to trust the businesses they deal with.
Unfair sales practices include:
- referral selling
- pyramid schemes
- unfair contract terms
- unconscionable conduct
- unsolicited supplies
- accepting payment with no intention to supply.
Businesses found conducting these practices may face penalties.
The 2021 Shonky Award winners by CHOICE
Every year CHOICE, a consumer advocacy group, receive hundreds of nominations for “Shonky” products and services from CHOICE members and staff.
While some Shonky nominees may not be breaking laws or breaching regulations – though sometimes they are – CHOICE believe that consumers deserve better products and services.
So how do CHOICE decide which nominations make the cut?
First, a nomination has to meet one or more of the following criteria.
Criteria for being named a Shonky
- Fails a standard
- Poor performance on CHOICE tests
- Hidden charges
- Lack of transparency
- False claims or broken promises
- Consumers are worse off because of it
- Consumer confusion
- Poor value for money
- Consumer frustration, or just plain outrage
Here are the 2021 Shonky Award winners, according to CHOICE:
1. Kiddylicious Strawberry Fruit Wriggles
This packaged toddler snack earned its Shonky for being 68.8% sugar, yet misleading parents into thinking it’s a healthy option with images of strawberries on the packaging and “made with real fruit” claims.
2. Knock-off bladeless fans
CHOICE gave these bladeless fans a Shonky for the simple reason that “Almost every feature didn’t work… the performance was the worst we’ve ever seen”.
3. Breville FoodCycler
With a $499 price tag (plus up to $309 in yearly costs), the Breville FoodCycler will reduce food waste and your bank balance. You can purchase a standard compost bin instead for around $45.
4. Humm
Thanks to a loophole in the National Credit Code, this “buy now, pay later” service has been dubbed “shonky” by CHOICE because it sends customers into $30,000 of debt without properly assessing the borrower’s ability to repay the money.
5. The Airline Customer Advocate
The Airline Customer Advocate (ACA) was awarded a Shonky for being no more than a forwarding service at a time when people needed it the most. Alison Elliott, CHOICE Head of Policy and Government Relations, says the Airline Customer Advocate will forward your complaint to the airline – and that’s about it.
Attwood Marshall Lawyers – protecting consumers from financial loss as a result of lemons
If you are a business owner and have been accused of not upholding your end of the bargain and breaching ACL Law, we can help you understand the issue at hand and what avenues to take to resolve the dispute.
If you are a consumer who has suffered financial loss as a result of a business breaching ACL Law or not upholding their guarantee to deliver a quality product or service, we can help you resolve your dispute quickly and effectively and seek redress for any financial loss you have suffered.
Attwood Marshall Lawyers have a dedicated commercial litigation team who are experienced in assisting consumers and businesses in matters relating to Competition and Consumer Law. We have a fortunate track record of assisting our clients throughout Queensland and New South Wales to achieve successful resolutions without having to endure an expensive, lengthy, and uncertain court process.
Litigation in any form is a stressful and expensive exercise, especially when the parties are deeply entrenched in their own positions. We aim to bring the parties together by way of an informal settlement conference with intent to resolve issues regarding products or services quickly and effectively so that all parties can move on with their lives.
If you are involved in a competition or consumer related matter, please contact our Commercial Litigation Department Manager, Amanda Heather, on (07) 5506 8245, email aheather@attwoodmarshall.com.au or free call 1800 621 071 to find out where you stand.
Read more:
Commercial litigation and class actions have erupted in the COVID era
How to Make Complaints to the Australian Financial Complaints Authority (AFCA)
Banks and Insurance Companies – up to their old tricks?
