The Australian Consumer Law (ACL) applies to every business that sells products and services to consumers in Australia. Service providers must meet the consumer guarantees (services must be provided with due care and skill, be fit for purpose and be delivered within a reasonable time), can't mislead clients, and can't use unfair terms in standard client contracts. Your clients also need to see and accept your terms before they commit. Get this right and your terms will protect you; get it wrong and you may not be able to rely on them.
I've noticed a common misconception that the ACL only applies to larger, product-based businesses, like Harvey Norman.
This couldn't be further from the truth. The ACL applies to all businesses that sell products or services to consumers, including coaches, creatives and consultants. What many small business owners don't realise is that it also protects your business, if you comply with it properly.
So let's take a deeper dive into the ACL, and what you need to know about it as a service-based business.
What is the Australian Consumer Law?
The ACL is the national law that sets out the rules for businesses that sell products or services to Australian consumers. It applies in every state and territory, and it's enforced by the ACCC and state and territory consumer protection agencies.
You may be dealing with "consumers" more often than you think. Under the ACL, your client is a consumer if:
your services are of a kind ordinarily bought for personal, domestic or household use; or
the price is $100,000 or less, even if your client is a business.
That means most small business clients of coaches, creatives and consultants are protected by the ACL too.
The consumer guarantees for services
Every business that provides services to consumers must meet the consumer guarantees. Your services must be:
provided with due care and skill;
fit for any purpose your client tells you about, or that you say your services will achieve; and
delivered within a reasonable time, if no timeframe has been agreed.
These guarantees apply automatically. You can't contract out of them, and terms that say otherwise can be misleading. That includes blanket "no refunds" statements.
You don't have to offer refunds for change of mind. But if your services don't meet a consumer guarantee, your client may be entitled to a remedy, such as having the problem fixed, a refund or compensation. For services that aren't ordinarily bought for personal or household use, you may be able to limit your liability, for example to supplying the services again or paying the cost of doing so, if your terms are drafted properly.
Don't mislead your clients
You can't engage in misleading or deceptive conduct, or make false or misleading representations about your services. That covers your website, sales pages, social media, proposals and sales conversations.
Be careful with promises about results you can't control. Read more in Legal contract essentials for business coaches in Australia.
What your contracts can't include: unfair contract terms
Since 9 November 2023, it's been unlawful to include unfair terms in standard form consumer and small business contracts, or to rely on them. A contract is a small business contract if at least one party has fewer than 100 employees or annual turnover under $10 million.
A term may be unfair if it creates a significant imbalance in the parties' rights, isn't reasonably necessary to protect your business, and would cause detriment to your client. Common examples include:
one-sided termination clauses, such as only the business being able to end the agreement;
cancellation fees that apply no matter how much work has been done;
the right to change the services or increase prices without your client's agreement; and
penalties that go beyond your genuine loss.
The consequences are significant. Courts can impose penalties of up to the greater of $50 million, three times the benefit obtained, or 30% of turnover for companies, and up to $2.5 million for individuals. They can also void the unfair term, or even the whole contract.
I predicted when these changes came in that coaches would feel the pressure most, and that's proven true. Termination and cancellation clauses are where I see the most problems. Read more in Coaches, check your contracts: unfair contract terms explained and Interior designers, are your contracts still protecting you?
How the ACL protects your business
The ACL isn't just about obligations. When you comply with it, it works in your favour. If you:
have properly drafted terms and conditions tailored to your business;
make those terms available to your clients before they commit;
make sure your clients accept your terms before they pay; and
tell your clients everything you're required to tell them,
then your terms are far more likely to be enforceable. If something goes wrong, such as misaligned expectations, a refund request or a delay, you can rely on the processes and protections in your terms.
If you don't, you may not be able to rely on your terms at all, and refund requests, invoice disputes and disagreements about your services are likely to cost you time and money.
Get your sign-up process right
All service providers need to tell clients what their terms are before the client decides to commit to you/lock themselves in. Your client needs a genuine opportunity to read your terms, ask questions or get advice, and decide not to go ahead without being penalised.
When service providers streamline and automate their onboarding, I often see them miss this critical step. You can't ask for payment before your terms have been accepted. If you use a CRM like Dubsado or HoneyBook, check your workflow so your proposal and terms come first, then acceptance, then your invoice.
What's coming next
More change is on the way. New laws banning unfair trading practices start on 1 July 2027, so it's a good time to review your terms, your website and your sign-up process together.
How to make sure your business complies
The best way to make sure your service-based business complies with the ACL is tailored advice from a business lawyer who knows (and loves!) the ACL. Templates rarely get this right. Read more in Are template documents adequate for my business?
Review your terms at least once a year, or whenever your services, pricing or way of working changes. In business, prevention is better than cure.
This topic is also discussed in episode #142 of the Rise Up in Business podcast, You can't afford to get this wrong.
Want certainty that your service-based business complies with the ACL? Download the free Essential Legal Checklist, then book an introduction call.
This article provides general information only and does not constitute legal advice. Your obligations depend on your specific circumstances.
Frequently asked questions
Does the Australian Consumer Law apply to service-based businesses?
Yes. The ACL applies to every business that sells services to consumers in Australia, including coaches, creatives and consultants. Clients are consumers if the services are ordinarily bought for personal or household use, or cost $100,000 or less.
What are the consumer guarantees for services?
Services must be provided with due care and skill, be fit for any purpose the client made known or that you promised, and be delivered within a reasonable time if no timeframe was agreed.
Can a service business have a no refunds policy?
You don't have to offer change-of-mind refunds, but you can't exclude the consumer guarantees. A blanket "no refunds" statement can be misleading if your client is entitled to a remedy under the ACL.
What are the penalties for unfair contract terms?
Since 9 November 2023, companies face penalties of up to the greater of $50 million, three times the benefit obtained, or 30% of turnover. Individuals face penalties of up to $2.5 million.
