If you supply or manufacture consumer products, you only have until 30 September to ensure they comply with the mandatory obligation under the Australian Consumer Law to provide information about warranties against defects, as the current transitional arrangements are about to expire.
Warranties against defects?
Under the ACL, warranties against defects are the optional promises or warranties a business (a supplier or manufacturer) makes to consumers about what it will do if something goes wrong with a good or service. Those promises are often referred to as voluntary warranties, and should not be confused with consumers' statutory rights to various guarantees in the ACL.
Warranties against defects requirements
From 1 January 2011, if a business provides goods or services to consumers with a warranty against defects it must adhere to the disclosure requirements of the ACL. In short, all documents evidencing a warranty against defects must be presented in a certain way, and must include specific information to ensure that consumers understand the warranty is in addition to their statutory rights and know how to make a claim.
Because of widespread business concern at the need to change product packaging to comply with these new laws, ACL regulators have recognised that practical difficulties may arise during the transitional period in the application of the new provisions.
Accordingly, for products in the supply chain manufactured and packaged prior to 1 November 2011, ACL regulators were unlikely to commence enforcement action against a business where:
- traders encounter serious practical difficulties in updating warranty documents; and
- reasonable steps have been taken to otherwise convey the information required.
However that transitional relaxation of enforcement of the new law is coming to an end on 30 September 2012.
What do you need to do now?
Ensure that any products carrying warranties you provide to consumers comply with the disclosure requirements of the ACL by 30 September 2012. This means not only that any new warranties must comply, but any old ones that might still be provided to the consumer after 30 September must too.
If you do not meet the requirements outlined in the ACL, businesses face penalties of up to $50,000, individuals face fines of up to $10,000. Any associated misleading representations may incur a maximum penalty of $1.1 million for corporations and $220,000 for individuals.
ACL regulators will consider non-compliance with these provisions on a case-by-case basis. If they instigate proceedings, any action taken will be proportionate to the consumer detriment associated with the non-compliance.
We are aware of and have been involved in various representations to Government that these requirements are overly onerous and impose excessive costs on the supply of consumer goods in Australia, which greatly outweigh the benefits of educating consumers. There may be better and less costly ways to inform consumers of their warranty and guarantee rights than requiring every product to carry the mandatory text.
However it remains to be seen if the Federal and State consumers affairs regulators will be prepared to consider longer-term changes to ameliorate the prescriptive requirements of these laws.