On 9 March 2018, the Government released its Consultation Regulation Impact Statement (CRIS) seeking feedback on four key proposals for changes to the consumer guarantees framework. The proposed changes are aimed at broadening the scope of the consumer guarantees regime and, if implemented, could have a significant impact on the scope of your business' obligations to consumers.

Expanding the definition of ‘consumer’

The CRIS highlights concerns that the current consumer guarantees framework may not protect small businesses because the definition of ‘consumer’ includes a monetary threshold of $40,000.

It proposes the following options for reform:

• increase the threshold to $100,000; or
• increase the threshold to $100,000 and apply indexation.

Clarifying the meaning of 'major failure’

The current consumer guarantees framework allows consumers to reject goods that have been subject to a 'major failure'. The CRIS seeks feedback as to whether the following types of failures should be considered major failures:

• failures that occur within a short time after purchase; or
• goods that are subject to multiple failures.

Goods sold at auction

In response to the growth of online auctions where consumers are not able to inspect goods prior to purchase, the CRIS proposes to expand the scope of the consumer guarantees to cover:

• all goods purchased at online auctions; or
• all goods purchased at auctions, whether online or offline.

Extended warranties

In order to address major concerns about businesses offering extended warranty products, the CRIS suggests imposing significant oral and written disclosure obligations on businesses, together with:

• a 10-day cooling off period for consumers; or
• a requirement that consumers opt-in to the extended warranty after a specified period.

How can we assist your business in the context of these proposals?

• Consider the options for reform and assess the consequences for your business.
• Work with you to prepare submissions on the CRIS due by 23 April 2018.
• Review your T&Cs for compliance with the Australian Consumer Law.
• Conduct consumer law training programs for customer facing staff.