The Australian Competition and Consumer Commission (ACCC) has indicated that from October 2012, the “transitional arrangement” where the ACCC will take into account any practical difficulties for businesses in updating warranty documents to comply with Regulation 90 of the Australian Consumer Law (ACL), will no longer apply.

Regulation 90 of the ACL came into force on 1 January 2012. However, due to widespread difficulty faced by Australian businesses to comply with the Regulation in the prescribed time frame, the ACCC released a policy statement to the effect that until September 2012, it was unlikely to bring enforcement actions for stock packaged prior to November 2011, if:

  1. there are serious practical difficulties in updating warranty documents; and
  2. the supplier has taken all reasonable steps to convey the mandatory text and information required by Regulation 90.

That interim period is now over and as such, compliance with Regulation 90 is vital.

Regulation 90 requires any“warranty against defects”must include, amongst other things, certain detailed prescribed wording, specified under the Regulation.

A “warranty against defects” is defined in the ACL as a representation communicated to a consumer as to what the supplier will do (such as repairing or replacing the goods or re-supplying the services) in the event something goes wrong with the goods or the services supplied. It is however worth noting that a “warranty against defects” is different from an “express warranty” which focuses on a promise about what the goods are capable of doing or certain results of the services. A manufacturer’s warranty or an “extended warranty” are examples of a “warranty against defects”.

As well as the prescribed wording, Regulation 90 also requires any “warranty against defects” to:

  1. be on a document that is “transparent” (meaning in plain English);
  2. state certain details such as business contact details, term of the warranty and procedure for a consumer to claim on the warranty; and
  3. state that the benefits given to the consumer under the warranty are in addition to other rights the consumer holds under the ACL.

Importantly, any other wording in the documentation or on the packaging cannot derogate from or confuse the prescribed wording of the Regulation.

Non-compliance with the Regulation is an offence under the ACL. Penalties of up to $50,000 may apply to businesses and $10,000 for individuals. A maximum penalty of $1.1 million (for corporations) and $220,000 (for individuals) may apply for any related misleading representations.

What should you do?

Retailers and suppliers should assess their current packaging and any documentation for compliance with the requirements of Regulation 90. In particular, consider whether a “warranty against defects” is given and, where this is the case, take the necessary steps to ensure any documentation complies with the requirements of Regulation 90.