Consumer protection is a group of laws and organizations designed to ensure the rights of consumers as well as fair trade, competition and accurate information in the marketplace. The laws are designed to prevent businesses that engage in fraud or specified unfair practices from gaining an advantage over competitors

1. BUSINESS LAW
Consumer Protection
On completion of this chapter, you should be able
to:
recognise the significance of the Australian Consumer
Law as a major source of consumer protection law
list and explain unfair practice
explain the rights against manufacturers and importers
under the Australian Consumer Law
explain the remedies available to a consumer and the
penalties that can be imposed under the Act against a
trader in breach of the Australian Consumer Law.

2. The Australian Consumer Law (‘ACL’) is principally
concerned with:
Protecting the interests of consumers of goods, services
and land against ‘unfair practices’.
Providing adequate remedies to protect the consumer in
the event of a breach of the ACL.
Main functions of the ACL
Protects the interests of consumers against:
Unfair practices of traders (things traders do to consumers)
Unconscionable conduct of traders
Misleading or deceptive conduct
Specific false representations
Unfair practices
Australian Consumer Law 2011 (ACL)
Main functions of the ACL
Provides safety and information standards
Establishes manufacturers’ liability
Establishes product liability

3. Who is a consumer?
A consumer is a person who:
acquires goods or services of less than
$40 000; or
acquires goods or services of a kind ordinarily acquired
for personal, domestic or household use (of any value);
or
acquires a commercial road vehicle or trailer principally
to transport goods (of any value);
Who is a consumer?
A person is not a consumer
if the goods (of any value) were acquired for
resupply; or
acquired for the purpose of using them up or
transforming them, in trade or commerce as an
ingredient in a manufactured product or to repair or treat
other goods or fixtures on land.

4. The unconscionability legislation provides
consumers with protection from unconscionable
(unfair) conduct:
Section 20 incorporates into the Act the common
law or equitable law principles from Commercial
Bank of Australia Ltd v Amadio (1983). Exploiting a
special disadvantage or disability is a key element.
ACL provides a range and variety of remedies.
The unconscionability legislation provides consumers
with protection from unconscionable (unfair) conduct:
Section 21 is a consumer provision and more specific. It
prohibits suppliers from engaging in unconscionable conduct
when supplying goods or services to consumers. It is aimed
at redressing the imbalance in bargaining power between
sellers and buyers.
Section 21 sets out a series of considerations for the
court to have regard to for the purpose of determining
if the conduct was unconscionable, including:
relative strengths of bargaining power;
is consumer able to understand documentation?;
were undue influence, pressure or unfair tactics used?;
the price for alternative, identical or equivalent goods or
services elsewhere.

5. Section 22 mirrors s 21 but deals only with commercial
transactions to protect the “business consumer” or “
small business supplier”. It has an almost identical
checklist, with some extra business-relevant tests
added, to that found in s 21, including:
the extent to which the conduct was consistent with
conduct towards other like customers;
the requirements of any applicable industry code;
the extent to which the defendant unreasonably failed to
disclose any relevant matter such as might affect the
small business supplier or business consumer, such as
unforseen risk;
was the small business supplier or business consumer
in a position to negotiate the terms of any contract?;
whether there is any contractual right for the stronger
party to unilaterally vary a contract condition.
Misleading & deceptive conduct prohibited
Three main elements must be established before a
contravention of Section 18:
Conduct by or person (includes corporations);
The activity of trade or commerce; and
Misleading or deceptive conduct, or conduct likely to
mislead or deceive.

6. Section 18 is not restricted in its usage to consumers and
can be equally enforced by competitors or suppliers against
other competitors or suppliers:
Eveready Australia Pty Ltd v Gillette
Australia Pty Ltd (2000)
What is ‘conduct’?
‘Conduct’ has a broad meaning and includes:
Statements of Opinion;
Puffs;
Broken promises and false predictions;
Statements that are literally true but which create a false
impression;
Pre-contractual statements; and
Silence.
What is ‘trade or commerce’?
The conduct complained of must have some
trading or commercial character about it:
Pacific Dunlop Ltd v Hogan (1989)

7. What is misleading or deceptive?
Whether conduct is misleading or deceptive
is determined by the court using an objective test of
whether a reasonable person would be misled or
deceived:
Taco Company of Australia Inc vTaco Bell Pty Ltd (1982):
At whom was the conduct directed?;
Would those persons have been likely to be led into error
by the conduct?
What is misleading or deceptive?.
It is enough if the conduct is likely to deceive
or mislead although mere confusion is not
enough:McWilliams Wines Pty Ltd v McDonald’s
System of Australia Pty Ltd (1980)
Even if a product is so similar to another that a consumer
would be likely to be misled, if the product is properly
labelled there will usually be no breach: Parkdale
Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982)
Representations as to future widens the scope of s 18 by
providing that future representations without reasonable
grounds for making the representations shall be misleading.
The onus of proof is on the person who made the
representation to show that they had reasonable grounds
for doing so.

8. False Representations - s 29-31, 37
These sections are narrowly defined.
A breach of s 29-type conduct can lead to fines of up to $1.1
million for companies and $220 000 for individuals under s
151.
Section 29 in 12 subsections, prohibits false or misleading
representations in relation to the supply or possible supply
of goods and services in defined ways and circumstances.
False Representations - s 29-31, 37
Section 30 prohibits false or misleading representations
made in relation to the sale or grant of interest in land;
Section 31 prohibits false or misleading representation
made in relation to offers of employment;
Section 37 prohibits false or misleading statements made
in relation to home-operated businesses.

9. Single Price to be Stated – s 48:
A corporation must disclose the total price payable for
consumer goods or services, which includes any necessary
taxes and charges.
Offering Gifts or Prizes – s 32:
A corporation is prohibited from offering gifts or prizes when
it doesn’t intend to provide them, or not providing them as
offered.
Proof of intention not to supply is essential for this section to
operate.
Misleading conduct as to the nature or
manufacturing process of goods – s33:
A person must not engage in conduct likely to mislead the
public about the nature, quantity, suitability, manufacturing
process or characteristics of a product
Misleading Conduct regardingServices – s 34:
A corporation shall not engage in conduct that is likely to
mislead the public as to the nature, characteristics,
suitability for their purpose or quality of any services.
Bait advertising – s 35:
corporation is prohibited from advertising of goods
or services at a special price where it does not
intend to offer those goods or services for a
reasonable period and in a reasonable amount.
Referral selling – s 49:
A corporation shall not induce a consumer to
acquire goods or services by representing that the
consumer will benefit after the contract is made by
providing names of prospective customers.

10. Accepting payment without intending to supply – s
36:Dawson v World Travel Headquarters Pty Ltd(1981)
Coercion or harassment – s 50:
A person must not use physical force, undue
harassment or coercion, in connection with:
the supply, possible supply or payment for goods
and services,
the sale of grant or possible sale or grant of, or payment for
and interest in land
Pyramid Selling – s 44-46:
A trading scheme in which a 'promoter' offers to sell
to a 'participant' both the right to sell a particular
product or service and
the right to introduce others into the scheme
in the same way.
Both the promoter and participants trying to recruit
others in the scheme are caught under this section.
Worldplay Services Pty Ltd v ACCC [2005]
Unsolicited Credit Cards – s 39:
A corporation is prohibited from sending unsolicited credit or
debit cards to a person unless they were requested.
Unsolicited goods and services – ss 40-41:
A corporation shall not assert a right to payment from a p
erson for unsolicited goods or services, unless the
corporation has reasonable cause to believe that there is
a right to payment (s 40).
A person who receives unsolicited goods
is only liable to pay for wilful destruction or damage
(s 41).

11. The ACL creates a national product safety system
under which the Commonwealth has sole
responsibility for making safety standards and
permanent safety bans which will apply nationally.
A corporation must not supply goods to consumers if the
goods do not comply with a prescribed standards [s 104].
If a corporation supplies goods that have been declared
unsafe or have been banned [s 106-107], they may be
prosecuted by the ACCC.
Require disclosure of information relating to performance,
composition, contents, methods of manufacture or processing,
design, construction, finish or packaging of goods and the form
and manner in which that information is to be disclosed on the
goods [ss 136-137].
A corporation that supplies goods that have not complied with
product information standards may be prosecuted.

12. Difficulty in bringing action against a manufacturer at
common law for defective products:
Proof of fault must be established
Doubtful whether pure economic loss can be recovered for
the purchase of a defective product.
Under ACL, plaintiff doesn’t have to prove
Fault.
S. 271. A dissatisfied consumer may take action against the
manufacturer of goods directly for failure comply with fitness
for purpose (s 55 (2)(b); correspondence with description (s
56); merchantable quality (s54); and express warranties (s
59).
A manufacturer must also ensure availability of repair facilities
and spare parts (s 58).
A manufacturer is liable to compensate a consumer, or a
person who acquires the goods from a consumer, for any
loss or damage they suffer as a result of a manufacturer’s
failure to comply with an express warranty made about the
goods (s59).

13. The consumer now has a choice of action where the
contract is for the supply of goods:
Sue the immediate supplier (the retailer) and seek indemnity
from the manufacturer; or
Sue the manufacturer directly.
Product liability under ACL imposes strict liability on
manufacturers and importers of goods with safety defects
that cause personal injury or property damage.
There is no need to prove negligence on the part of the
manufacturer [s 138] but it is necessary to prove a causal
connection between defect and loss.
There are a number of defences for manufacturers
provided in s 142.
Defences available to manufacturers s 142. the defect did
not exist when the goods were supplied; the defect is due to
compliance with a mandatory standard; state of scientific
knowledge;the defect is in a component and attributable to
the design, description or instruction with the component.

14. In determining the safety of the goods, the courts can
look at:
The manner in, and purposes, for which the goods have
been marketed;
Packaging;
The use of any mark;
Instructions or warnings;
What could reasonably be expected would be done to the
goods;
The time of supply.
Unsolicited Trade:
The ACL replaces state and territory laws regarding unsolicited
consumer agreements with a national law regulating
unsolicited sales practices [s 69], including door-to-door
selling, telephone sales and other forms of direct selling
which do not take place in a retail situation.41
Section 69 states an agreement as unsolicited if:
it is for the supply, in trade or commerce,
of goods or services to a consumer;
it is made in each other’s presence at a place other than
the supplier’s place of business, or by telephone;
the consumer did not invite the dealer to
come to that place or to make the telephone call for the
purpose of entering into negotiations to supply goods or
services; and
the total price under the agreement
exceeds $100.

15. The ACL creates a national enforcement scheme with a
wide variety of powers:
Undertakings [s 218]
Substantiation notices [s 219];
Public warning notices [s 223]
Injunctions [s 232]
Damages [s 236]
Compensation orders [s 237]
Orders for non-party consumers [s 239]
Non-punitive orders [s 246]
Offences [s 213]
Defences to criminal proceedings
Civil pecuniary penalty
At the time of writing, it is believed the state and territory
tribunals referred to below will continue to function as they
did prior to the commencement of the Australian
Consumer
The tribunals and courts attempt to achieve:
removal of emphasis on the rules of evidence;
much less formalised procedures;
speedier resolution of disputes; and
reduced costs for the consumer.

16. Thank You
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