#105 Does The Australian Consumer Law Apply To My Business?
One of my favourite topics to talk about is the Australian Consumer Law and it’s a topic that a lot of small business owners ask me about. What exactly is it and does it apply to me? So, today I’m demystifying the Australian Consumer Law because it’s very likely that you’re asking some similar questions.
In this episode, I discuss what the Consumer Law is and why it’s absolutely vital that you do everything necessary to comply with this law. Otherwise, should someone request a refund, cancellation, or worse - damages, you’ll be left wide open with no leg to stand on and unable to defend yourself.
I explain how to go about making sure that your business complies with the Australian Consumer Law, particularly by looking at your legal documents, systems and processes and ensuring that you issue your terms and conditions at the right time in the right way.
Regardless of what type of business you have, if you offer products or services to consumers within Australia, the Australian Consumer Law applies to you. I discuss some of the misconceptions surrounding this law and touch on what can happen if your business does not comply.
I also talk about how compliance is for the benefit of both the consumer and you as a business owner. Knowing that you have met your legal obligations under the Australian Consumer Law will leave you in a position of strength, should the worst case scenario happen. It does happen but my hope is that it won’t happen to you if you’ve been listening to this podcast and making sure your legal documents and processes are in order.
Full Transcript:
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[00:00:00] Tracey: Hello everyone and welcome back to the Rise Up in Business Podcast. Thank you for joining me for episode 105. Today I'm going to be talking about one of my favourite topics, and that is the Australian Consumer Law. I bang on about this so often on the day-to-day basis. In the resources over on the website, always on Instagram, and in this podcast I talk about it a lot.
[00:00:44] So if you've been listening to previous episodes, thank you for joining me again. This won't be a new concept for you. I'm asked a lot by small business owners, does the Australian consumer law apply to me? Some actually take a step back and say, what is it and does it apply to me? So I wanna demystify that in today's episode because chances are if other business owners ask me this, then you may well be asking or wondering the same thing.
[00:01:11] So first of all, what is the Australian consumer law? In short, it is a national set of rules that apply to businesses in Australia who sell services or products to Australian consumers. So for you are a small business and you're selling services, or you're selling goods, so you're a product-based business or a service-based business, then yeah, the Australian consumer law applies to you. Some people have a misunderstanding and think that the Australian consumer law only applies to larger businesses or companies who sell products.
[00:01:44] So for example, Harvey Norman, if I buy a toaster from Harvey Norman and it's faulty, I take it back and they have to give me a new one. That's the consumer law. That's all it is. Well, yes, that is the consumer law. And yes, it does apply to Harvey Norman, and yes, it does apply if you buy a [00:02:00] faulty toaster and you need to get a new one, absolutely.
[00:02:03] But it does a whole lot more than that, and it applies to a lot more businesses than just those larger corporations. Businesses like mine, absolutely it applies. Interior designers and stylists, coaches, consultants, e-commerce businesses, online coaching businesses that sell Masterminds. The consumer law applies to all of those businesses.
[00:02:25] So if you're listening to this podcast, chances are you're a business owner, small business owner, product base, service base. Yep. Consumer law applies to you, my friend. So what does it mean and what do you need to do is the next question. In answering that question, I'm gonna keep it simple and I'm gonna give you a high level answer on what it is you need to be doing to comply with the consumer law, because yes, you need to comply with your obligations under the consumer law because if you don't and something goes wrong, you are completely exposed.
[00:02:57] What do I mean by that? If you're a business owner, and let's just say you're a coach and you issue some terms on the bottom of an invoice or the back of an invoice, and it deals with your cancellation policy and your refund policy. if someone comes to you and says to you, I didn't like my coaching with you. I thought you were going to help me double my revenue in six months and you haven't. I'd like my money back, please. And also, if I had have gone with Coach ABC down the road, I reckon I would've hit a higher target.
[00:03:26] So really, I've got a lost opportunity here. You've cost me more than I paid you. You've actually cost me X dollars and this much time. So really you owe me this much, which is a lot more than what they actually paid you. Let's say that happens. It does happen. Let's say that happens to. And you say, no, sorry, doesn't work like that, and that person goes to Fair Trading, or that person goes to a tribunal or a court or lodges a claim or application against you.
[00:03:50] you've gotta defend yourself. How do you defend yourself? The first thing you need to look at when you're defending yourself are your terms and conditions. Now, if you're a coach or any business owner and you have just [00:04:00] included your refund cancellation policy, for example, on an invoice or the back of an invoice, you are not covered.
[00:04:06] That doesn't stand. It's not worth the paper it's written on because you haven't complied with the Australian consumer law. So you get it. You can see how important complying with the consumer law is. there's a whole host of things I could talk about here in relation to misrepresentation, promises, guarantees, marketing.
[00:04:24] All of those things need to be truthful, but you need to tell consumers what your terms and conditions are before they decide to engage with you. How do you do that? It's not on the. If someone comes to you and says, Tracy, I'm thinking about working with you. I know you're a great business coach. What's, what's the, what's the deal?
[00:04:45] How does it work? And you say, well, you get this many calls a month. We'll do this. We'll do this. We'll do this. Do you want in or not? This is how much it is. And they go, oh yeah. And they pay you. And then you go, all right, and you, you send out an invoice or you send out a receipt and it's got, you know, your cancellation or policy down the bottom.
[00:05:00] You are not complying with the consumer law. You are exposed and you do not have a leg to stand on in terms of consumer law if they come back and make a complaint against you or ask you for a refund. Same thing goes with selling courses or programs online. If you don't tell people and disclose to people in the a certain way before they press sign, sign up now, subscribe now.
[00:05:20] Pay now before they press the button. You are not protected. So if someone comes back later and says, I want a refund or worse, I want damages. You don't have a leg to stand on to protect yourself. That is why you need to comply with the consumer law and have your legal documents in. How great thinking. So what you need to be doing is making sure that your service terms and conditions or your course or program, terms and conditions, your retreat, terms and conditions, whatever it is you're selling by way of your product or service, make sure it is brought to the attention of consumers before they lock themselves in with you before they [00:06:00] decide to buy from you.
[00:06:01] And you do that by issuing your client service agreement or your business Ts and Cs or whatever you call it, to potential clients for them to consider before they lock in if they're signing up online. You've gotta make sure you've got those click wrap terms and conditions in place because that's your protection.
[00:06:18] If you're selling products, you've gotta make sure, again, you've got those click wrap terms and conditions in place because that is your protection, that is your legal compliance with the consumer law. You are giving consumers your terms and conditions for them to consider and they can still walk away.
[00:06:32] They can still say no, but you're giving it to them before they decide to engage with you. The next tier to that is what do you have to include in these things? and to cut through all the noise. That is the consumer law. You need to tell them what they're getting, what they're not getting, what the pricing structure is.
[00:06:50] What are you doing in relation to G S T? You need to tell them how they're getting it. You need to tell them if it's service base, if there's a cancellation policy, a refunds policy, a money back guarantee, you need to then tell them how can they terminate? How can they get out? What if they can't? You need to outline all of if it's a product, you need to give them warranties. What is it that you're promising? Because the consumer law does contain warranties. You've gotta give them something in proper working order as it's described. Fit for purpose was the old terminology. It's been replaced now, but everyone seems to be familiar with that.
[00:07:23] You need to tell them those things. What's your refund policy? What's your change of mind policy? You need to tell them all of those things before they decide to engage with you. Once you've told them that and you've given them the documents or you've set your click wrap terms up in the proper place on the website so that they've got a tick a box to agree to those terms and conditions before they press buy.
[00:07:44] Now, you have met your legal obligations, provided you've done it properly, because you're telling them all the things they need to know before they decide to engage. So if they tick that box or if they accept your proposal, which attaches your terms and conditions, and say, yes, thank you, [00:08:00] please proceed.
[00:08:00] Or they tick the box, guess what? The risk is now passed to the buyer or the consumer because you've met your obligations. And if someone comes back to you later and says, oh, but Tracy, I didn't read those terms and conditions, I don't agree to them. I don't wanna be bound and now I want my money. , you're really entitled to say no, sorry.
[00:08:18] At law you don't have to give them their money back cuz you did all the things properly. The business question is very separate. So if you're coming to me and you're saying, gosh, I really feel awful, this person wants out of this program, or This person really didn't like the product, you can make a business decision.
[00:08:33] Of course you can. It's your business. You can make a decision on a case by case basis as to whether you wanna refund that person, for example, a. But the point is you don't have to, if you've done everything you need to do to meet your obligations under the consumer law, so it protects both parties.
[00:08:50] There's a misconception around the consumer law in that it's designed only to protect consumers, but that's not true. It's designed to protect both business and consumers by making sure that all the communication, all the terms and conditions are transparent.
[00:09:05] That's what it's all about. If you do comply with the consumer law and you do find yourself in a challenging situation with a client, you are in a position of strength because you can then seek to negotiate or diffuse from a position of strength because you've complied.
[00:09:23] So you've got the consumer law on your side. So heaven forbid if you did end up in a situation where someone does commence proceedings against you, or there is a claim or an allegation made that's unfavorable to you, you can defend it. You can respond to it with confidence, knowing you've done all the things you need to do.
[00:09:41] It's not an ideal situation. We all wanna avoid it. Of course we do. I talk a lot about risk mitigation. I talk a lot about setting ourselves up for success with our clients in business. But one of the ways you do that is by ensuring that you've got solid legal documents in place that are tailored for you.
[00:09:57] And part of that is making [00:10:00] sure that you're meeting your consumer law obligations throughout this process, because that's what puts you in a position of strength and sets you up for long-term sustainable success in your. So the next obvious question, it's obvious to me because it gets asked a lot, but the next obvious question is, well, how do I make sure in my legal documents that I am complying with the consumer law?
[00:10:19] The answer to that's quite simple. You work with a lawyer who knows the consumer law inside out and who can do it for you, who can give you the advice? No template documents won't do this. Okay. I get this question a lot people either coming to me to ask the. . Oh, I've read about these lawyer drafted template documents.
[00:10:37] Can I use them? Or worse, I purchased some templates. Now I don't know if they're doing all the things they need to, or I found myself in a pickle when they didn't help me. Even worse. So save DIY for Bunnings, not for illegals. We don't wanna go there because you can't afford to get this wrong when you're working with somebody.
[00:11:00] If you're working with a. Make sure they're addressing you and explaining to you what your consumer law obligations are, and that they're weaving through the necessary provisions and clauses of your obligations into your legal documents. If they don't know about the consumer law or if they're not talking to you about it, or if they can't answer your questions much like dating, move on and find another one.
[00:11:21] Okay, that's not the right fit.
[00:11:23] What are the consequences if you don't comply with the consumer law? Are there penalties? I've been asked that recently and the consequences of what I've outlined in terms of your exposure and you're not protected. But yes, there are penalties. So if you find yourself in a serious position where somebody really is aggrieved or they really feel wronged and they have commenced a legal proceeding or they've made a complaint against, there can be penalties in certain circumstances.
[00:11:50] I like to think that that won't happen to any of you. I like to think that you've been listening to my podcast. You're so familiar with the importance of legal documents being [00:12:00] tailored to your business. You're so familiar with the importance of your processes and systems around issuing your legal documents because like I said at the beginning, if you don't issue your terms and conditions or your agreements to your clients in a certain.
[00:12:15] whether it's online or whether it's personalized via email, then you can be at risk of not having complied with the consumer law. So I like to think that because you've listened to me long enough, go on and on about this, that you won't be one of those people that gets themselves into serious trouble because you haven't complied with the consumer law and that you have to give that refund, or you have to give that a new product, or you have to take it back, or you are facing.
[00:12:39] A potential claim for damages because somebody has genuinely aggrieved. I like to think that that won't be you. So we're not gonna dive into penalties now because as you know, I'm all about prevention being better than q. I said, let's not even go there. low vibe, it's negative, it's scary. Let's not go there.
[00:12:54] Just know this. If you are a business selling services or products to consumers in Australia, yes, the consumer law applies to you. How do you ensure you're complying with the consumer law? Through your legal documents and making sure your systems and processes are set up to ensure your legal documents are complying, to make sure you're giving people your terms and conditions at the right time, in the right way, so that they can consider them before they decide to engage with you.
[00:13:23] That's it in a nutshell for me. I hope that wasn't information overload for you. As I've said earlier, there is so much I could talk about on this topic. I just wanted to cut through the noise of it and give you a short and sharp answer to the question, does the consumer law apply to my business? Chances are, if you're listening to this, the answer is hell yes, it does.
[00:13:41] if you would like to have a conversation, if you wanna reach out and have a chat about what you've got in place to see whether it's right, whether it's got all the things, or whether your systems and processes are working for you, feel free to reach out via the website and book in a time for a free chat.
[00:13:55] I am always happy to listen and I'm always happy to help and give you some honest and fully [00:14:00] frank and often blunt advice on what you need and where you're exposed. We'll put the link in the show notes. I would love to hear from you, but as always, thank you for joining me and I'll catch you next.
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