8 June 2021
Consumer law is susceptible to constant change and business owners should continuously and actively keep up to date with these amendments to ensure the fulfilment of their obligations and mostly importantly, to avoid any punitive penalties. This article raises some awareness concerning new disclosure requirements indorsed within the Fair-Trading Act 1987 (NSW) as of 1 January 2021.
Do these new consumer disclosure obligations apply to me?
The consumer disclosure obligations will apply to a business that engages in the following conduct:
It is important to keep in mind that the monetary threshold of $40,000 will be increased to $100,000 from 1 July 2021. This means that more business will be captured by the consumer law warranties, guarantees and contractual obligations.
What disclosures do you need to make to consumers prior to completing a sale?
If your business meets the relevant criteria outlined above, you should ensure that you are taking reasonable steps to disclose the following information to your customers:
Suppliers must make the required disclosures to consumers before supplying the goods and/or services. In practice, this should be done before the consumer signs the contract, makes a payment, or otherwise commits to the supply arrangement.
How can my business assess if the substance and effect of its terms may ‘substantially prejudice’ the interests of consumers?
Section 47A of the Fair Trading Act sheds light on various terms or conditions which may be substantially prejudice. These terms include those that:
These are just some examples that business should familarise themselves with, however, they do not represent an exhaustive list of terms and conditions which may entail the need for consumer disclosure.
Has your business taken ‘Reasonable steps’ to disclose its prejudicial terms?
Businesses need to ensure that they are taking reasonable steps to fulfill their consumer disclosures. Although the requirement to take reasonable steps will differ and depend on the circumstances of each case, Fair Trading has shed some light as to how your business should tackle these requirements.
In summary, your business should:
What Disclosures are Required for Commission and Referral Arrangements?
Businesses must take reasonable steps to make consumers aware of any commission or referral arrangement in which the business receives a financial incentive from a third party supplier. Reasonable steps in this instance does not oblige the business to reveal the nature or value of the incentive, but merely requires the business to advise the customer that a financial incentive exists. Such disclosure must be made prior to the intermediary acting under the arrangement in which they receive the incentive fee. The requirement to disclose includes transactions that occur online where one of the parties to the arrangement is from interstate.
What Penalties Apply If I Fail to Disclose?
The applicable penalties for non-compliance with these new consumer disclosure obligations are rather substantial, so it is crucial that you continue to engage in conduct which is compliant.
The penal penalties include:
There are presently new disclosure obligations introduced in New South Wales which entail heavy fines for non-compliance. As such, it is essential that you:
How we can help you
JHK Legal has extensive experience in reviewing contractual terms, and can advise companies, individuals and third-parties on their consumer law obligations. Please do not hesitate to contact us today to discuss your concerns.
Written by, Rania Kassir