Almost every day there is an article or media release about companies that have allegedly breached laws that protect consumers. Mostly they don’t intend to hurt their customers. (I hope not anyway!!)

Buying electrical and other goods online is becoming more common with new sellers popping up every day.  Here’s a warning that they are not exempt from the laws that protect the consumer. It doesn’t matter if they are an overseas supplier. The critical thing is that they are selling to Australians.

8 online sellers being pursued for non-compliant electrical goods

NSW Fair Trading officers have conducted covert investigations of companies selling electrical appliances online.

As a result of testing 1850 products, the NSW Fair Trading Commissioner says that they have found 8 online traders who have sold electrical goods that do not comply with Australian Safety Standards and says that the Office of Fair Trading will be taking action to enforce the law and/or educate the sellers.

Australia has a number of Safety Standards that sellers of goods must comply with when the goods are the type that a Standard applies to. This is a requirement under the Australian Consumer Law (ACL) and applies whether goods are sold online or through a “bricks and mortar” shop.

In the case of electrical goods this includes:

-meeting  safety requirements set out in laws and Australian Standards; and

-being  certified and carrying  the approved Australian markings to show that the goods comply.

Like the ACCC, the State Fair Trading Offices have powers under the ACL to take action to protect Australian consumers.

Companies that are found to breach the ACL can face pecuniary penalties of up to $1.1 million.  People who supply non- compliant goods can pay up to $220,000.

These sellers may also be required to:

– recall all non-compliant goods;

-give Court enforceable undertakings to the regulator;

– implement a compliance program;

– compensate consumers injured by the goods and other penalties.

Misrepresentations made to consumers and other businesses about online sales can be expensive

Selling goods that don’t comply with Safety Standards may just be the start of the problem for online sellers.  As Scoopon recently found out, making false and misleading representations can be costly.

Scoopon paid penalties of $1 million for misleading consumers about their rights to a refund and the price of some of the goods it was offering.  It also made misrepresentations to businesses it engaged with about the rate of use of purchased vouchers.

Confusion around warranties and guarantees

Another compliance trap that sellers (both online and in-store) struggle with  is warranties and guarantees.  Sellers often find it confusing to know when they have to give refunds, replace faulty good or repair them what time limits they can place on consumers complaining about faulty goods.

Under the ACL, consumers have a right to a remedy for faulty goods and goods that don’t match a description such as a sample or picture. This means that sellers cannot have a blanket “ no refunds, no returns” policy or limit the consumers’ rights to make a claim to a set time, such as 14 days. There is no time set under the ACL, it all depends on the particular circumstances. Whether the consumer can choose the remedy they want depends on how serious the fault is.

Extended warranties and manufacturers’ warranties are different, and in addition, to Consumer Guarantees. Several Harvey Norman franchisees learnt this lesson the hard way last year, paying penalties of around $30,000 each when the Federal Court found them guilty of making false and misleading representations.

What can online sellers do to avoid trouble or try to lessen the penalties?

1. Understand how the Australian Consumer Law applies to the goods they sell and their marketing.
2. Know what Standards apply to the goods they sell.
3. Know what the Standards require of them.
4. Test the goods (or have them tested by a relevant and appropriate testing agency).
5. Record keeping is important as is  being able to verify manufacturers’ claims.
6. Conduct a risk assessment of the business’s activities to identify areas under the ACL where breaches are possible.
7. Develop a Compliance Program to reduce the risk of breaches occurring.

Ascentia Sustainability helps companies develop and implement relevant and workable Compliance Programs. Contact us to find out how we can work with you.

Here is a link to the story on the Product Safety Australia website about the electrical goods failing to meet the Standards:

http://www.productsafety.gov.au/content/index.phtml/itemId/1006480