Australian Consumer Law obligations, a compliance guide for small business

Almost everything your business says and sells is regulated by the Australian Consumer Law (the ACL), which is Schedule 2 of the Competition and Consumer Act 2010 (Cth). It reaches website copy, social media posts, price tags, invoices, refund promises and the fine print in your contracts. The ACCC and state and territory fair trading agencies enforce it, and the maximum penalties are now severe enough that compliance is a genuine business cost, not an afterthought.

This guide sets out the obligations that matter most to a small or medium Australian business: who the ACL protects, the core duties around advertising, pricing, guarantees and contracts, what happens if you breach them, and the practical steps to stay compliant.

Who the ACL applies to: the "consumer" test

The ACL protects people who buy goods or services "as a consumer". Under s 3 of the ACL, a buyer is a consumer if the price paid or payable is $100,000 or less (the amount prescribed by reg 77A of the Competition and Consumer Regulations 2010 (Cth)), or the goods or services are of a kind ordinarily acquired for personal, domestic or household use, or the goods are a vehicle or trailer acquired mainly to transport goods on public roads.

The first limb matters more than most businesses realise. A company that buys a $60,000 machine for its own operations is a "consumer" for ACL purposes, as long as it is not buying for re-supply or to use up or transform in production. So small businesses get consumer protection when they buy, and sellers owe the full consumer guarantees to business buyers below the threshold. Section 3 also creates a presumption that a person is a consumer, which means the supplier carries the burden of proving otherwise.

Two other features bring business-to-business sellers within scope:

• Misleading conduct: s 18 applies to conduct in trade or commerce generally, so business-to-business dealings are covered, not just sales to the public.
• Unfair contract terms: the regime was extended to cover "small business contracts" in November 2016, where at least one party employs fewer than 100 people or has turnover under $10 million. Since November 2023, proposing or relying on an unfair term in those contracts can itself attract penalties.

The duty not to mislead or deceive

Section 18 of the ACL provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. In practice this means:

• It covers everything a customer sees or hears: advertisements, product pages, packaging, social posts, emails, sales calls and what staff say in the shop.
• Intention is irrelevant. The test is objective: would the overall impression be likely to mislead a reasonable person in the target audience, looking at the conduct in context? A technically true sentence can still mislead if the headline creates the wrong impression, and a footnote buried in fine print will rarely cure a bold claim.
• A contravention of s 18 does not itself carry a pecuniary penalty, but the ACCC or a court can obtain injunctions, damages and other orders, including redress for affected customers, so the exposure is real.

False or misleading representations: the claims you must be able to prove

Section 29 of the ACL singles out specific representations that are unlawful when false or misleading. They include claims about price, quality, value, standard, grade, composition, style or model, whether goods are new, testimonials, sponsorship or approval, place of origin, the need for goods or services, and the existence or effect of any guarantee or warranty.

Unlike s 18, a contravention of s 29 attracts pecuniary penalties, so a false claim in an advertisement can cost far more than the sale it generates. The practical consequences for your business:

• Keep substantiation: Hold records that prove each factual claim: supplier specifications, test results, performance data and correspondence. If you cannot produce evidence quickly, the claim is a risk.
• Be careful with "was/now" promotions: The "was" price must have been genuine for a reasonable period before the discount. Keep pricing records that demonstrate this.
• Do not manipulate reviews: Posting fake reviews, cherry-picking only positive ones, or incentivising customers to leave only favourable reviews can be misleading.

Unconscionable conduct

Section 21 of the ACL prohibits conduct that is, in all the circumstances, unconscionable, in connection with the supply or acquisition of goods or services. It captures behaviour that is harsh or oppressive where there is a clear imbalance of bargaining power: hard-selling to vulnerable customers, applying unfair pressure, or taking advantage of a customer's lack of understanding. The section is not limited by the general law, and it can apply to a system of conduct or pattern of behaviour even where no single individual is identified as disadvantaged. It carries the maximum penalties.

Consumer guarantees: what customers can demand

Part 3-2 of the ACL implies a set of guarantees into every supply to a consumer, and they cannot be excluded, limited or modified by contract. For goods, the guarantees include acceptable quality (fit for purpose, acceptable appearance and finish, free from defects, safe and durable), matching any description and sample, fitness for a purpose made known to you, and the availability of repairs and spare parts. For services, the guarantees include due care and skill (s 60), fitness for a disclosed purpose, and supply within a reasonable time.

When a guarantee fails, the remedy depends on whether the failure is major or minor:

• Major failure (s 260): the goods would not have been acquired by a reasonable consumer fully acquainted with the problem, they depart significantly from the description, they are substantially unfit for purpose and cannot easily be remedied, or they are unsafe. The customer can reject the goods and choose a refund or replacement, and can terminate a contract for services.
• Minor failure: the supplier gets the chance to repair or replace the goods, or re-supply the service, within a reasonable time. Only if the supplier fails to remedy the problem can the customer reject the goods or terminate.

The guarantees also apply to second-hand goods, though price, age and condition feed into what "acceptable quality" means. Signs saying "no refunds" or "no refunds on sale items" are misleading because the right to a remedy for a major failure cannot be contracted out. If you offer a voluntary "warranty against defects", it must comply with s 102 and the prescribed requirements in reg 90 of the Competition and Consumer Regulations 2010, including the mandatory statement that the goods come with guarantees that cannot be excluded under the ACL.

Pricing: the single price rule

Under s 48 of the ACL, when you advertise a price for goods or services of a kind ordinarily bought for personal, domestic or household use, you must also display the single price as a single, prominent figure. The ACCC's guidance is that the total price must be the minimum total cost: the lowest amount a customer could pay, including taxes, duties and unavoidable or preselected extra fees. If an optional extra is preselected in your checkout, it must be included. A surcharge that applies every day of the week is part of the minimum total cost and must be in the displayed price.

Delivery charges are the main exception: you can show them separately, but if you know the minimum delivery charge at the time of advertising, you must disclose it. If you display a partial price alongside the total, the total must be at least as prominent.

"Drip pricing" (adding unavoidable fees late in the checkout) is a live enforcement target. In June 2025 the ACCC issued an infringement notice to Dendy Cinemas over online ticket fees that were not shown in the displayed price. If you charge booking fees, surcharges or service fees, include them in the total or disclose them clearly and prominently before purchase, and never advertise a price that no customer can actually pay.

Unsolicited sales and cooling-off

Door-to-door and telemarketing sales are "unsolicited consumer agreements" under Part 3-2 of the ACL and carry extra obligations: permitted negotiation hours, upfront disclosure of who you are and what you are selling, and a written agreement document. The customer has a cooling-off period of 10 business days (s 82), and during that period you must not supply the goods or services or accept payment. If you breach the negotiation or documentation rules, the cooling-off period can extend to three months, or six months in more serious cases.

Note that everyday online or in-store purchases have no general cooling-off right in Australia. The right is limited to unsolicited sales and a few special regimes, so if you advertise a "cooling-off period" for ordinary sales, make sure you honour what you promise.

Unfair contract terms

If you use standard form contracts, a term can be declared void if it is unfair. A term is unfair when it causes a significant imbalance in the parties' rights and obligations, is not reasonably necessary to protect the legitimate interests of the party advantaged by it, and would cause detriment to the other party if it were applied or relied on. Since November 2023, proposing an unfair term in a standard form consumer or small business contract is itself a contravention carrying pecuniary penalties, and applying or relying on an unfair term is a separate contravention.

The terms most commonly flagged in reviews are unilateral variation or termination rights, broad indemnities, automatic renewal and lock-in clauses, and any term that limits or excludes the consumer guarantees. If a term is declared unfair it is void, but the rest of the contract continues to operate if it can do so without it.

What happens if you breach the ACL

Courts can order pecuniary penalties for contraventions of the penalty provisions, which include false or misleading representations (s 29), unconscionable conduct (s 21) and the unfair contract term provisions. For a corporation the current maximum is the greater of $100 million, three times the value of the benefit obtained, or 30% of adjusted turnover during the breach period; for an individual the maximum is $2.5 million (s 224 of the ACL).

The ACCC also has cheaper, faster tools:

• Infringement notices: fixed penalties for alleged contraventions, currently up to $218,400 for a listed corporation, $21,840 for other corporations and $4,368 for an individual, being 600, 60 and 12 penalty units at the current unit value of $364.
• Enforceable undertakings and court orders: the ACCC can accept a court-enforceable undertaking or seek injunctions, damages, corrective advertising and non-party redress.
• Substantiation notices: the ACCC can require you to prove a claim within a set time, and failing to respond is itself a contravention.

State and territory fair trading agencies, such as NSW Fair Trading and Consumer Affairs Victoria, enforce the same law in their jurisdictions, so a breach can attract attention from more than one regulator.

A practical ACL compliance checklist

Work through this list before your next campaign, product launch or contract round:

• Audit your claims: Substantiate every factual claim about price, quality, speed, stock and performance, and keep the records.
• Check your price displays: Show a single total price, remove hidden unavoidable fees, and make "was/now" discounts genuine and documented.
• Align your refunds policy: Your returns page and staff scripts must reflect the guarantees, including refund or replacement for major failures, and never say "no refunds".
• Review your standard form contracts: Remove or rebalance unilateral variation, auto-renewal and exclusion clauses before they become a penalty risk.
• Fix your warranty documents: If you give a warranty against defects, use the prescribed wording and disclose the required information.
• Set up your cooling-off process: If you sell door-to-door or by telemarketing, make sure nothing is supplied or paid for during the 10 business day termination period.
• Train your team: Use approved scripts for claims, refunds and complaints, and escalate anything unusual early.
• Watch your reviews: Do not post or incentivise fake reviews, and do not edit genuine ones in a way that misleads.

When a lawyer should review your compliance

Most ACL problems are preventable, and a lawyer earns their keep at the review stage rather than the defence stage. A consumer law practitioner can audit your website and marketing claims against ss 18 and 29, redraft standard form terms to remove penalty-risk clauses, draft compliant refunds, returns and warranty against defects documents, and advise on pricing structures such as subscriptions, surcharges and deposits. If a substantiation notice, infringement notice or investigation does land, a lawyer should respond to it for you, because what you say to a regulator can shape everything that follows. Given the penalty maxima now run to nine figures, the cost of a review is trivial next to the cost of a regulator's attention.

The threshold that catches business-to-business sellers out

The obligation that most often surprises businesses is not advertising or refunds; it is that "consumer" includes business buyers. If you sell to other businesses on standard terms, a customer that spends $100,000 or less holds the same consumer guarantees, and your standard form contract is a "small business contract" if the buyer employs fewer than 100 people or has turnover under $10 million. That means your terms and your refund policy must comply even when no member of the public is involved. Start this week by checking your standard terms and price displays against the checklist above, and get a contract review before your next round of renewals. If you are not sure whether a claim or a clause complies, it is cheaper to check before it is published than to defend it after a regulator has seen it.