Consumer guarantees for eCommerce and what online retailers must do under the ACL

Every online retailer that sells to customers in Australia carries legal obligations it cannot switch off. They come from the consumer guarantees in the Australian Consumer Law (ACL), which sits as Schedule 2 of the Competition and Consumer Act 2010 (Cth) and applies in every state and territory. The guarantees are automatic: they attach to every sale, whether the customer buys through your website, your app, a marketplace listing or a checkout link, and they operate regardless of what your terms and conditions say.

This guide sets out who the guarantees cover, the specific promises you must meet when you sell goods and services online, what a customer can demand when something goes wrong, the penalties attached to getting it wrong, and a practical checklist you can work through this week.

Who the consumer guarantees apply to

The guarantees protect customers who acquire goods or services as a consumer as defined in s 3 of the ACL. Whether someone is a consumer does not depend on who they are; it depends on what they bought and why. A person acquires goods as a consumer if the amount paid was $100,000 or less, if the goods are of a kind ordinarily acquired for personal, domestic or household use or consumption regardless of price, or if the goods are a vehicle or trailer acquired for use principally in the transport of goods on public roads. The same $100,000 and household-use tests apply to services.

A customer is not a consumer, and the guarantees do not apply, when the purchase is made for re-supply, or to use the goods up or transform them in the course of production, manufacture, repair or treatment. That exclusion matters mainly to wholesalers and manufacturers; almost every retail sale to an end buyer is covered.

Two consequences follow for online sellers. First, business customers are often consumers too. A tradie buying a $78,000 ute under the vehicle limb, or a café buying a $36,000 espresso machine, holds the same guarantee rights as a household shopper. Second, goods above $100,000 can still attract the guarantees if they are of a kind ordinarily acquired for personal, domestic or household use, such as a dining table or a caravan bought for the family.

Geography does not let you off the hook. The ACCC's Buying online guidance confirms that an overseas business that supplies goods or services directly to consumers in Australia must follow the ACL, including the consumer guarantees, even if enforcing those rights across borders is harder in practice. And if you sell through a marketplace such as eBay or Amazon, the guarantees run against you as the seller rather than against the platform, so a marketplace's refund policy does not displace your obligations.

Use these tests to scope your exposure:

Goods or services at $100,000 or less: every sale is covered, to any buyer, unless the buyer is re-supplying or transforming the goods.
Pricier household goods: anything of a kind ordinarily acquired for personal, domestic or household use is covered, whatever the price.
Vehicles and trailers: acquired mainly for transporting goods on public roads, they are covered.
Outside the guarantees: purchases for re-supply, purchases for use in production or manufacturing, and sales by private individuals who are not carrying on a business.

The guarantees you must meet when selling goods

The guarantees for goods sit in Division 1 of Part 3-2 of the ACL (s 51 onwards). You comply by satisfying each promise that applies to your supply:

Acceptable quality (s 54): goods must be fit for all the purposes for which goods of that kind are commonly supplied, acceptable in appearance and finish, free from defects, safe and durable, judged by what a reasonable consumer fully acquainted with their state and condition would expect given the price and anything you said about them. This is the guarantee behind most online disputes, from a dress that falls apart after two wears to a phone that overheats.
Match the description (s 56): goods must match the description on your product page, in advertising and on social media. Sizes, materials, colours and specifications all count, and the description includes photos.
Fit for any disclosed purpose (s 55): if a customer tells you what they need the goods for and relies on your skill and judgment, the goods must be reasonably fit for that purpose. A customer who tells you a tent will be used in alpine conditions is entitled to a tent that copes.
Title and undisturbed possession (ss 51-52): you must have the right to sell the goods, and no one else can have a claim over them that disturbs the customer's use.
No undisclosed securities (s 53): goods must be free from any security interest, charge or other encumbrance you did not disclose before purchase.
Match the sample or demonstration model (s 57): where you sell by reference to a sample or demo model, the goods must match it.
Repairs and spare parts (s 58): you must take reasonable steps to ensure facilities for repairs and spare parts are reasonably available for a reasonable period after supply.
Express warranties (s 59): any additional promise you make about performance, quality or condition, in the contract, on the box or in marketing, must be honoured.

None of these guarantees is a favour you extend. They are legal promises that travel with the sale, and a customer does not need to have signed anything for them to bind you.

The guarantees you must meet when selling services

If your store sells services as well as goods, three further guarantees apply (ss 60-62 of the ACL). Services must be rendered with due care and skill, must be reasonably fit for any purpose the customer made known, or for the result the customer asked for, and must be supplied within a reasonable time if no time was agreed. A web design agency, a subscription styling service or the installation arm of an eCommerce business all carry these obligations, and a failure to meet them triggers the same remedies as a defective product.

What a customer can do when a guarantee is breached

The ACL does not leave enforcement to goodwill. If a guarantee fails, the customer's rights under s 259 depend on whether the failure is minor or major.

For a minor failure, the customer can require you to remedy the problem within a reasonable time. If you refuse, or fail to remedy it within a reasonable time, the customer can have the failure fixed elsewhere and recover the reasonable cost from you, or reject the goods.

A major failure, defined in s 260, includes goods a reasonable consumer fully acquainted with the failure would not have bought, goods that depart significantly from the description or sample, goods substantially unfit for their common purpose where the problem cannot easily and quickly be remedied, goods unfit for a disclosed purpose, or goods that are unsafe. Two or more failures can together amount to a major failure even if each alone would not.

For a major failure, the customer can reject the goods and receive a refund, or keep them and recover compensation for the reduction in value below the price paid. In either case the customer can also claim damages for reasonably foreseeable loss, such as the cost of hiring a substitute while the goods are unusable. The same structure applies to services.

The practical rule of thumb, consistent with the ACCC's guidance on repair, replace, refund and cancel, is this: for a major failure the customer chooses between a refund and a replacement, and for a minor failure you may choose the remedy, usually a repair, replacement or refund, provided the failure is actually remedied. A refund for a major failure is not a courtesy you grant; it is a right the customer holds.

What you cannot do, and the penalties for it

Three things are off limits, and each carries its own exposure:

Contracting out: under s 64 of the ACL, any term of a contract that purports to exclude, restrict or modify the guarantees, or any liability for failing to meet them, is void. A line in your terms saying no refunds, or that the consumer guarantees do not apply, is legally meaningless.
Notices that exclude guarantee rights: section 66(2) prohibits displaying a notice that excludes or restricts consumer guarantee rights, the classic example being a no refunds on sale items sign. The pecuniary penalty is up to $50,000 for a company and $10,000 for an individual.
Misrepresentations about guarantee rights: representing that a customer has no rights, or that your return window is the only remedy, can be a false or misleading representation about a consumer's guarantee rights under s 29(1)(m) of the ACL. The penalties for contravening Part 3-1 of the ACL are set by s 224 of the Competition and Consumer Act 2010 (Cth): for a company, the greater of $100 million, three times the benefit obtained from the conduct, or 30 per cent of adjusted turnover during the breach period, and for an individual, up to $2.5 million.

To be precise about the enforcement model: failing to honour a guarantee is not itself a pecuniary penalty provision, but the conduct around it usually is. A customer can enforce the guarantees directly against you in court and seek damages or compensation orders, and the ACCC accepts reports from consumers, uses them to inform its education and compliance work, and can investigate and take enforcement action, including court proceedings. The ACCC does not resolve individual complaints, which is why your own dispute-handling process matters.

A compliance checklist for online retailers

Work through this list before your next product launch, and again whenever you change your checkout or marketing:

Audit product pages and ads against what you actually ship: descriptions, sizes, colours and photos must be accurate, because the description guarantee (s 56) treats them as promises.
Rewrite your returns and refunds policy: state that the consumer guarantees apply, explain the remedies for major and minor failures, and delete any no refunds, all sales final or store credit only language.
Remove signs, banners and pop-ups: nothing in the storefront, at checkout or in order confirmation emails should suggest that guarantee rights are limited.
Train your support team: it should distinguish a major failure from a minor one and know which remedy the customer can choose for each.
Issue receipts and keep proof-of-transaction records: keep them so you can respond promptly when a customer asks you to remedy a failure.
Honour express warranties and marketing promises: that includes influencer posts and user-generated content you republish.
If you sell services, document the agreed scope and outcome: this lets fitness for purpose be assessed against something concrete.
Keep repair and spare-parts arrangements in place: maintain them for a reasonable period after supply (s 58) and say so on your website.

When a lawyer should be involved

Most of the ACL is self-executing: you comply by meeting the guarantees and by handling failures promptly. A lawyer earns their keep at the edges. Have one review your terms of use, returns policy and checkout disclosures before you launch or relaunch, particularly if you sell through marketplaces, sell overseas or offer services. Standard form consumer and small business contracts carry a separate obligation that your terms not contain unfair terms, a regime with its own penalties, so a full terms audit should cover both the guarantees and unfair contract terms together.

If a customer makes a claim, a dispute escalates to court, or the ACCC contacts you about a report, take advice early. A practitioner will assess whether the failure was major or minor, what remedies the customer can validly demand, whether anything you published exposed you to penalty risk, and how to respond to a regulator without making the position worse. The cost of advice at that stage is usually small relative to a penalty, a damages award or the reputational cost of an enforcement outcome.

Start with the page customers actually read

The obligation most often missed by online retailers is not a guarantee itself; it is the returns policy that tells customers the opposite of the law. If your site says all sales final, no refunds on sale items or store credit only after 14 days, that language is void under s 64, the notice itself exposes you to a penalty under s 66(2), and every customer who reads it has been handed a potentially misleading representation about their rights. The fastest way to reduce your exposure this week is to open your checkout, order confirmation and returns pages and strip out any sentence that limits a right the ACL makes automatic. If a page would not survive a customer quoting s 259 back at you, rewrite it now, before the ACCC's compliance team reads it first.