7 Legal Essentials for Business Online: Part 4 – Consumer Protection Online

First rule of online business: Do Not Piss Customers Off – They Will Tell the Whole World!

Ok, so some people agree with the idea that any publicity is good publicity and if you’re in that camp, do what you will! For those of you who are concerned about the viability of your business and would rather see no comments on social media rather than negative comments, listen up.

Consumer law (trade practices/ fair trading) was consolidated and made consistent around Australia in 2012 and is now overseen by the ACCC rather than your local consumer affairs or fair trading office. Those offices still exist and continue to manage a raft of local legislation as well as investigating consumer complaints. This consolidation saw an increase in what was covered by consumer laws.

Disputes are no longer limited to what you can buy for ‘domestic or household use’. If any person or business buys a product or service for $40,000 or less, even if that purchase was for ‘commercial use’, the transaction is governed by consumer laws.  Purchases for more than $40,000 made for domestic or household use are also covered. So even though your business might have been clear of compliance concerns in the past, it may not be any more and you need to know where your risks are in doing business.

You need to have an understanding of consumer guarantees for products and the different consumer guarantees for services, as well as restrictions on what you can and can’t do around cooling off periods, refunds and returns.

To all business owners: You Cannot Advertise a ‘No Refunds’ Policy. The fines you risk are up to $300,000 for a person and $1.1m for a business. Scary, huh?  You can say ‘No refunds if you simply change your mind’ but that won’t cover you if the packet is open and the item is faulty or returned within a cooling off period. Look at your business and the number of times you get asked for refunds and make sure you have procedures, the staff understand the rules and are trained on those procedures. If that sounds all too hard, give refunds!

Even before consumer law was consolidated, the relevant government departments had created long and involved questionnaires for unhappy customers to complete.  The forms did require persistence and that does put some people off, but with greater bandwidth and download speed they are now easier to complete.  There is no cost to your customer to fill in a consumer complaint and if it is accepted, your business is suddenly on the regulators radar and they will ask you to explain your position. I’ve worked with quite a few businesses that have received ‘please explain’ letters from the regulator and then helped them to identify or implement appropriate policies and procedures, respond to the regulator and avoid prosecution.

If you successfully respond and the regulator decides not to pursue the claim, most customers will then give up their complaint. They might go on to social media and whinge, but you are then in a position to respond politely and comment that ‘this complaint was heard by the regulator on … and they decision was …’. That way you are seen to be objective and fair and have ‘official’ support for your position; tends to take the wind out of online discussions.

If you need a hand responding to a letter from the regulator, or reviewing your current business procedures to ensure you’ve reduced your risk of massive fines, contact the author.


About author:

Jeanette Jifkins is the founder and Principal of Onyx Online Law, an Australian based law firm with the focus of supporting businesses with an online presence.