Product safety changes in Australia: the Australian Consumer Law
The Australian Consumer Law
The Australian Consumer Law (ACL) introduced a new nationally consistent system to regulate the safety of consumer goods and product related services.Instead of each state and territory and the Commonwealth all having their own system for regulating product safety, thereis now a single harmonised framework that is the same throughout Australia.This reduces red tape for businesses and enhances safety for Australians.
The Product Safety Provisions
The ACL’s product safety provisions set out how the Australian and state/territory Governments can regulate consumer goods and product related services to ensure they are safe.These can include:
imposing mandatory safety standards or information standards on goods or product related services;
banning goods or product related services, either on an interim or permanent basis; or
issuing a compulsory recall notice requiring suppliers to recall a good.
They also regulate what a supplier has to do, including:
responsibilities if a Minister bans a product or imposes a safety or information standard on a good or product related service;
when to recall a good and how to do this;
what to do if a Minister issues a compulsory recall notice;
when to report an incident associated with a good to the Minister; and
when a manufacturer may be liable for loss or damage caused by a good with a safety defect.
The ACL is contained in a schedule to the Trade Practices Act 1974, which has been renamed the Competition and Consumer Act 2010.Relevant provisions are also mirrored in state and territory fair trading legislation.
Mandatory safety standards or information standards
Under the ACL, only the Commonwealth Minister has the power to declare a permanent ban on a good or product related service. Commonwealth bans apply nationally. The Commonwealth Minister and the relevant state and territory Ministers have the power to declare an interim ban. Interim bans last for 60 days unless extended for up to another 60 days, and they only apply in that state or territory. A full list of bans currently in force is available on the bans page of this website.
Compulsory recall notice
Either a state/territory Minister or the Commonwealth Minister can issue a compulsory recall notice for consumer goods.This can require the supplier (or, if the supplier cannot be found, the ACCC or State/Territory regulator) to take certain action.
Under the new law, the ACCC can issue an infringement notice for breaches of consumer protection provisions, enabling it to deal more efficiently with matters warranting a quick regulatory response.
Infringement notices provide an opportunity for a person to pay a penalty and resolve a matter with the ACCC. If a person who is issued with an infringement notice does not pay an infringement notice penalty, the ACCC may commence proceedings in respect of the underlying alleged contravention of the ACL.
The ACCC can only issue one infringement notice for each alleged contravention of an infringement notice provision, including certain product safety and product information provisions.
An infringement notice must be issued within 12 months after the alleged contravention occurred.
In relation to product safety the ACCC has the power to issue an infringement notice where it has reasonable grounds to believe a person has breached various product safety provisions, including supplying goods that have been compulsorily recalled, declared to be unsafe, are subject to a ban order or that do not comply with a mandatory safety or information standard.
Public warning powers
Under the ACL, there are two ways to warn the public about certain matters. At times in consumer market regulation, a rapid warning to the community is the best way of protecting it.
Under the TPA, product safety warnings could be issued under s. 65B. For example, in 2008 the Minister for Competition Policy and Consumer Affairs issued a warning about the potential risks to small children from personal fitness treadmill machines.
Under the ACL the public warning power is widened, allowing the Commonwealth or a state/territory Minister to issue a warning that certain goods or product related services are under investigation (s 129).In addition, under s 223, the ACCC and state/territory Fair Trading Offices are able to issue public warning notices when, on reasonable grounds, they suspect a contravention of the unconscionable conduct or consumer protection provisions; where someone is likely to suffer detriment from the conduct; and where it is in the public interest.
Civil pecuniary penalties
The ACL provides the ACCC with the ability to institute a proceeding in a court for the recovery on behalf of the Commonwealth of a civil pecuniary penalty (CPP) for consumer protection matters.The Court may order a person, who has contravened certain product safety provisions, to pay a civil pecuniary penalty if it is satisfied that the person contravened or attempted to contravene a product safety related provision of the ACL.
A court may order a civil pecuniary penalty for contraventions of the following product safety provisions of the ACL:
Supplying goods that do not comply with safety standards (s. 106)
Supplying product related services that do not comply with safety standards (s. 107)
Supplying consumer goods covered by a ban (s. 118)
Supplying product related services covered by a ban (s. 119)
Notification by persons who supply consumer goods outside Australia if there is compulsory recall (s. 125)
Compliance with recall notices (s. 127)
Notification of voluntary recall of consumer goods (s. 128)
Suppliers to report consumer goods associated with death or serious injury (s. 131)
Suppliers to report product related services associated with death or serious injury (s. 132)
Supplying goods that do not comply with information standards (s. 136)
Supplying services that do not comply with information standards (s. 137)
Compliance with substantiation notice (s. 221)
The maximum CPP for false or misleading (not s. 52) and unconscionable conduct, pyramid selling and breaches of certain product safety provisions is $1.1m for corporations and $220,000 for individuals. Lesser CPP apply to other contraventions.
On application by the ACCC, a court will is able to disqualify a person from managing corporations for a period it considers appropriate as a consequence of contraventions of various consumer protection related provisions. Disqualification orders were initially introduced into the Trade Practices Act 1974 in relation to the competition provisions.They may be particularly useful when addressing problems that arise with ‘repeat offenders’ regarding breaches of consumer law.
In some circumstances, disqualification orders may be appropriate for directors who fail to take steps to ensure that products they sell or produce comply with mandatory product safety standards and other trade practices breaches.
Substantiation power to check claims
The ACL provides the ACCC with a new investigative power: the substantiation notice. The notices can be used in a variety of circumstances, including in relation to product safety claims—such as requiring suppliers to provide information and/or produce documents to confirm that products comply with standards where a claim of compliance to a particular standard has been made by the supplier.
Redress for non-party consumers
The ACCC’s ability to obtain redress for consumers under the Trade Practices Act has had significant limitations. The Federal Court of Australia’s decision in Cassidy v Medibank Private Ltd placed constraints on the ACCC’s ability to obtain compensation for consumers not named in proceedings.
Under the ACL, the ACCC is empowered to deal more efficiently with matters that affect multiple consumers, by allowing the ACCC to represent multiple consumers and seek orders for redress for those consumers not party to the action. The changes bring Australia into line with international legal developments.
Another important legal change is the introduction of a mandatory reporting requirement. Under the new legislation, suppliers are required by law to advise the ACCC when they become aware that a good or product related service they have supplied has caused, or may have caused death or serious injury or illness to any person.They are also required to report if another person (e.g. a customer) considers that the death, injury or illness was or may have been caused by using the good or product related service.
The ACCC has developed draft guidance material to assist suppliers meet their mandatory reporting requirements. The guidance material is available from the mandatory reporting page of this website.