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 Australian Consumer Law  new rules for retail sales

With the Australian Consumer Law coming into force on 1 January 2011, the focus now is on ensuring the provisions of the new law are well understood by businesses and consumers alike.

Many of the provisions of the Australian Consumer Law are the same as those previously in the Trade Practices Act and State Fair Trading Acts, however there are important new provisions.

Over coming issues of Better Trading we will be providing a focus on these new provisions.

In this issue we focus on some of the new rights and responsibilities under the Australian Consumer Law that relate to retail sales.

Lay-bys

Lay-bys are a common way for consumers to spread the cost of an item over weeks or pay packets.  It refers to a consumer paying for goods in instalments, with any deposit being the first instalment, and where the item is held by the business and not released to the consumer until the final instalment is paid.

Lay-bys have been unregulated in the past but the Australian Consumer Law introduces a number of requirements for lay-bys. All lay-by agreements must be in writing, specifying all terms and conditions in easy to understand language, including any termination charge.  A copy of the lay-by
agreement must be given to the consumer.


Cancelling lay-bys

Businesses can only cancel a lay-by if:

  • the consumer has breached a term of the agreement (such as missing a scheduled payment).
  • the supplier is no longer engaged in trade or commerce; or
  • the goods are no longer available due to circumstances outside the supplier’s control (not because the supplier decided to withdraw the goods from sale).

Lay-by termination charges

Businesses can charge a termination fee if a consumer cancels the lay-by.  Consumers must be refunded all their money, less any termination charge. 

If the termination fee was not stipulated in the written lay-by agreement, then the business must refund the consumer’s full payments up to the date of termination. The termination fee is to cover any reasonable costs’ relating to the agreement such as a discounted value to resell the item due to
seasonal changes or technology upgrades.   

Example: 1

A consumer lay-bys a new winter coat in July for $180 and then decides to cancel it at the end of August when it goes on sale for $90.  The consumer may be charged the difference in the sale price, as long as this is provided for in the lay-by agreement.

 

Lay-by agreements that are standard form contracts may be covered by the unfair contract terms provisions under the Australian Consumer Law.  More
information about unfair contract terms is available on our website.

 

Receipts

Consumers must be   given a ‘proof of transaction’ for goods or services valued at $75 or more (including GST), such as a receipt, itemised bill, card statement, tax invoice or lay-by agreement.

The ‘proof of transaction’ must contain the:

  • supplier of the goods or services;
  • supplier’s ABN, if they have one;
  • supplier’s ACN, if they have one but do not have an ABN;
    date of the supply;
  • goods or services supplied to the consumer; and
  • price of the goods or services.

A GST tax invoice will be sufficient proof of a transaction.

Where a transaction is valued at less than $75, consumers have the option of requiring a proof of transaction to be provided within 7 days of the transation.

Itemised Bills for Services

Where a consumer has purchased services from a business (for example repair work) the consumer can ask for an itemised bill to be provided.The itemised bill must contain: how the price was calculated; the number of labour hours and the hourly rate (if relevant); and a list of the materials used and the amount charged for them (if relevant). 

If a consumer wants an itemised bill, they must ask for it within 30 days of receiving the services or receiving an unitemised bill from the service provider, whichever happens last.

Once a request for an itemised bill has been made, the supplier has seven days to provide the itemised bill.

Unsolicited Goods and Services - No Obligation to Pay

Consumers only have to pay for goods or services they have requested.  If a business supplies goods or services without getting the consumer’s agreement, then the consumer does not have to pay for them.

What is more, it is an offence for a business to seek payment for goods and services that were not
requested by a consumer.

Where a business has provided a consumer withunsolicited goods the business is entitled to recover the goods within three months, but if the consumer advises the business in writing that they do not want the goods, then the recovery period is reduced to one month.

The consumer is not liable for any loss or damage resulting from a supply of unsolicited services, however, they may be liable if they wilfully damage the goods during the recovery period.

If the unsolicited goods have not been collected within the recovery period the consumer can keep the goods. 

The consumer can’t keep the goods if it is obvious they have been sent to the wrong person (for example they have been delivered to the wrong address).

Example: 2

During a routine car service, a motor vehicle repairer decides to replace two tyres on a consumer’s car without notifying them. An additional $500 was added to the consumer’s bill. The consumer does not have to pay this extra amount but the repairer is entitled to replace the new tyres with the former tyres.

 

Multiple and Component Pricing

If a business displays an item with more than one price on it then they must sell it for the lowest displayed price or withdraw the item from sale

Advertised mistakes

If price is incorrectly displayed in catalogues or advertisements, a retraction must be published in a
publication with similar reach and circulation.

Components

A business cannot advertise an item at part only of its cost (for example, less fixed fees and charges) unless the full total price is also prominently advertised.If the item does not have a known static delivery charge then that  delivery fee does not have to be included. 

 

Example: 3

A Western Australian consumer is buying clothes from an internet site of a Victorian company. 
If the delivery price was a standard $10 anywhere in the country, then that price must be included as part of the sale price.   If the delivery charges increase depending on weight of items or distance then those fees do not have to be included in the sale price. However any delivery fees must be shown clearly before the final purchase process so the consumer is aware of the full costs before deciding to purchase the item.

 

 

Page last updated on:   -  Thursday, 28 April 2011