Australian Consumer Law and your fair trading obligations as a business

If you sell goods or services to customers in Australia, the single most important set of legal obligations you carry comes from the fair trading and consumer protection framework built around the Australian Consumer Law (ACL). The ACL sits in Schedule 2 of the Competition and Consumer Act 2010 (Cth) and is applied in every state and territory through local fair trading legislation, so the same core rules bind a Brisbane retailer, a Melbourne software company and a Perth tradie alike.

The regulators who enforce these rules, the Australian Competition and Consumer Commission (ACCC) and the state and territory fair trading agencies, can impose penalties that run into the tens of millions of dollars, and customers can claim compensation against you directly. But compliance is not only about avoiding fines. Getting the basics right, honest advertising, honouring guarantees, fair contract terms and safe products, is what keeps customers coming back. This guide sets out who the ACL applies to, the specific duties you owe in your day to day operations, what happens if you breach them, and the practical steps to stay compliant as you grow.

Who the consumer protection laws apply to

The ACL's reach is broad, and you are likely in scope even if you have never thought about it:

• Anyone trading in goods or services: The prohibition on misleading or deceptive conduct in s 18 of the ACL applies to any person acting in trade or commerce. That includes business to business dealings, not just sales to consumers. A misstatement in a tender, a supplier pitch or a proposal document can breach it.
• Suppliers to consumers: The consumer guarantees and the unfair practices rules apply when goods or services are supplied to a consumer, broadly an individual acquiring goods or services for personal, domestic or household use.
• Businesses using standard form contracts: The unfair contract terms regime covers contracts with consumers and with small businesses. A contract is a small business contract where at least one party employs fewer than 100 people or has an annual turnover under $10 million, under s 23 of the ACL. That captures most Australian SMEs on either side of a deal.
• Online and outbound sellers: If you sell through a website, social media, or door to door or by phone, additional rules on pricing displays, delivery promises and cooling-off rights apply to you.

One common misunderstanding is that consumer law only matters for big retailers. In practice, the small business tests above were deliberately widened so that the protections, and the penalties, reach small operators as well. And on the privacy side, most businesses turning over less than $3 million are currently exempt from the Privacy Act 1988 (Cth), but that exemption is being removed on 10 December 2026, which we cover below.

The duty not to mislead

The core obligation is simple to state and easy to breach. Under s 18 of the ACL, you must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. This is not limited to written claims. It covers your website copy, product pages, advertisements, packaging, social media posts, emails, and what your sales staff say over the phone or across the counter.

Alongside the general prohibition, s 29 of the ACL makes it an offence to make false or misleading representations about goods or services, including representations about their standard, quality, value, whether goods are new, testimonials, sponsorship or approval, and price. A few rules of thumb keep you on the right side:

• Make sure every claim can be substantiated. If you say a product lasts ten years or a service will cut energy bills by 30 per cent, hold the evidence before you publish.
• Avoid vague superlatives like "best", "number one" or "guaranteed results" unless you can back them up.
• Keep a file of the testing reports, supplier certifications and data behind each claim. The ACCC can issue a substantiation notice requiring you to produce that evidence, and regulators expect you to be able to prove what you advertise.

Silence can also mislead. Leaving out a material fact, such as a recurring fee or a condition that changes what the customer is actually getting, can breach s 18 just as clearly as a false statement.

The consumer guarantees you must honour

When you supply goods to a consumer, the ACL implies a set of guarantees into the transaction that you cannot contract out of. The main ones are that goods are of acceptable quality, fit for the purpose they are commonly supplied for, match their description, match any sample or demonstration model, and come with any repairs or spare parts a reasonable consumer would expect, under ss 51 to 59 of the ACL. Acceptable quality is assessed by reference to what a reasonable consumer, aware of the condition and any hidden defects, would regard as acceptable given the nature and price of the goods.

For services, the guarantees are that they will be supplied with due care and skill, will be fit for the purpose you were told about, and will be supplied within a reasonable time where no timeframe is agreed.

When a guarantee fails, the remedy depends on whether the failure is minor or major, a distinction drawn in ss 260 and 268 of the ACL. For a major failure, for example goods a reasonable consumer would never have bought, or goods that are substantially unfit and cannot be easily remedied, the customer can reject the goods and choose a refund or replacement. For a minor failure, you can generally choose to repair or replace the goods or re-supply the service instead. Your terms and conditions cannot remove these rights. Section 64 of the ACL voids any term that purports to exclude, restrict or modify the guarantees, and display notices that tell customers they have no rights, such as a "no refunds on sale items" sign, are prohibited. A common practical error is treating an in-store credit policy as binding. If the goods fail a guarantee, the customer's statutory rights override your store policy.

Fair terms in standard form contracts

If you use a standard form contract, meaning a contract prepared by one party that the other accepts without genuine negotiation, the terms must be fair. Under s 23 of the ACL, an unfair term in a consumer or small business contract is void, and the contract continues to operate without it.

Since 9 November 2023, the regime is significantly tougher. Proposing, applying or relying on an unfair term in a standard form contract is now itself a contravention that attracts civil penalties, not merely a term that is struck out. The types of clauses that tend to be challenged are unilateral variation clauses, for example the right to change the price or terms without notice, terms that limit your liability in a way that is unbalanced, disproportionate penalty or late fee clauses, automatic renewal traps, and clauses that let you terminate for convenience while locking the customer in. Whether a term is unfair is assessed by whether it creates a significant imbalance in the parties' rights and obligations, is not reasonably necessary to protect your legitimate interests, and would cause detriment to the other party.

The small business reach matters here. Standard form contracts you use with other businesses are caught where the other party has fewer than 100 employees or under $10 million turnover, which covers the vast majority of Australian SMEs. Contracts entered into, renewed or extended after the commencement date are all within scope, so an old template renewed this year is covered even if it was drafted years ago.

Pricing, promotions and advertising

Price claims sit squarely within the misleading conduct rules. Representations about price must be accurate, and the ACCC closely scrutinises discount claims. A "was/now" comparison must reflect a genuine former price, "from" pricing must be honest about what is actually available at that price, and limited stock promotions must match reality. Advertising goods at a low price when you do not intend to supply them in reasonable quantities, known as bait advertising, is prohibited under the ACL's unfair practices provisions. Where a price is presented in components, separate rules require the total price to be stated clearly so the customer is not surprised at the checkout. Surcharges for payment methods must be no more than the cost of accepting that method.

Before launching any campaign, it is worth having someone check the claims, the fine print and the pricing mechanics. The cheapest fix is a review before publication, not a corrective advertising order afterwards.

Product safety and recall obligations

Goods supplied to consumers must comply with any mandatory safety standards that apply to them, such as those for children's products, and must carry required warnings or instructions. Under Part 3-3 of the ACL, the ACCC can impose interim and permanent bans on goods that present safety risks, and suppliers have obligations to report injuries associated with their products and to conduct recalls where a product is unsafe or does not comply with a safety standard.

For a business importing or distributing physical goods, the practical obligation is to know your supply chain. Obtain and keep certificates of compliance, test reports and supplier warranties, and make sure your supplier agreements allocate responsibility for defects and recalls. If a recall becomes necessary, the way you run it, how you notify affected customers and how you document it, will be scrutinised, so having a plan before an incident occurs is far easier than building one under pressure.

Selling door to door or by phone

If any part of your model involves unsolicited selling, meaning approaching customers who did not invite you, either in person away from your premises or by telephone, the ACL imposes a distinct set of rules in Division 2 of Part 3-2. An agreement negotiated that way is an unsolicited consumer agreement where the price is over $100 or cannot be ascertained at the time. You must not negotiate during prohibited hours, must disclose who you are and what you are selling, must give the customer a document setting out the agreement, and the customer has a cooling-off period of ten business days during which they can terminate the agreement by notice, under s 82 of the ACL.

Breaches of these requirements carry penalties of up to $50,000 for a company and $10,000 for an individual per contravention, so a door to door or telemarketing operation should build the compliance steps into its scripts, its agreement templates and its records before the first sale.

Privacy and your data practices

Fair trading is about how you treat customers, and privacy is part of that picture. Currently, businesses with an annual turnover of $3 million or less are generally exempt from the Privacy Act 1988 (Cth) under its small business exemption, unless an exception applies, for example if you are a health service provider, you trade in personal information, or you are covered by a specific law or contract. That means many small businesses do not yet have to comply with the Australian Privacy Principles.

That is about to change. Under the Privacy and Other Legislation Amendment Act 2024 (Cth), the small business exemption is removed from 10 December 2026, bringing an estimated 2.5 million additional businesses within the scope of the Privacy Act. From that date, affected businesses will need a privacy policy, must handle personal information in line with the Australian Privacy Principles, and must manage data breaches under the Notifiable Data Breaches scheme. If your turnover is under $3 million, the practical advice is to treat December 2026 as a deadline rather than a distant event, and to start documenting what personal information you hold and why.

What happens if you don't comply

The penalty framework is set out in s 224 of the ACL. For most contraventions, including misleading or deceptive conduct, false representations and unfair contract terms, the maximum penalty for a company is the greater of $100 million, three times the value of the benefit obtained from the conduct, or 30 per cent of the company's adjusted turnover during the breach period. For an individual, the maximum is $2.5 million per contravention. These are per act or omission figures, and regulators can pursue multiple contraventions, so the exposure for a systemic practice compounds quickly.

Beyond penalties, the ACCC and state agencies can seek court orders including injunctions to stop the conduct, corrective advertising to set the record straight, and compensation orders for affected customers. Consumers and businesses can also sue you directly for their losses. A substantiation notice can force you to prove your advertising claims, and the regulator's investigation itself, let alone a public court action, can damage a brand far more than the fine.

A practical compliance checklist

Building fair trading compliance into your operations does not require a compliance department. It requires habits:

• Audit your marketing claims: Review product pages, ads and social posts for claims you cannot substantiate, and keep the evidence behind each one.
• Review your standard form contracts: Look for unilateral variation, unbalanced liability limits, disproportionate penalties and automatic renewal clauses, and redraft them before your next renewal or extension.
• Get your refunds process right: Train staff on the difference between minor and major failures, and make sure your policy never tells customers they have no rights.
• Check your product files: Confirm mandatory safety standards apply to your goods, and keep supplier certifications and test reports.
• Price honestly: Verify was/now discounts, from pricing and component pricing before campaigns launch.
• Plan for privacy: If you are under $3 million turnover, map what personal information you hold before the exemption is removed in December 2026.
• Record and review: Keep a file of substantiation evidence, complaint logs and refund outcomes, and schedule an annual compliance review.

When professional help is worth it

Most day to day compliance can be handled internally, but a consumer law or commercial lawyer earns their fee at specific moments. Having standard form terms drafted or reviewed before you roll them out is the highest value work, because it is far cheaper than defending a regulator's penalty application against an unfair term. A lawyer can also help when you receive a substantiation notice or an ACCC enquiry, when a product recall is required, when you are negotiating major supply or distribution agreements, and when you are preparing for the Privacy Act changes. A practitioner will review your actual contracts and marketing materials against the current law, advise on the strength of any regulator's case against you, and help you design the corrective steps and documentation a regulator expects to see.

The contract terms that now carry penalties

Of all the obligations in this guide, the one most likely to catch an Australian SME by surprise is the unfair contract terms regime applied to standard form business contracts. Since November 2023, simply proposing an unfair term in a standard form contract with a small business is a contravention in its own right, with the same penalty exposure, up to $100 million for a company, as a misleading advertising campaign. Most small businesses have never had their customer terms, supplier terms or hire agreements reviewed by anyone. If you take one action this week, pull out your standard form contract, find the clauses that let you change prices or terms unilaterally, penalise the other party disproportionately, or renew automatically, and get them redrafted before the next contract is signed.