Australian Consumer Law for Service Providers: What You Need to Know
I’ve noticed a common misconception that the Australian Consumer Law (the ACL) only applies to larger, product-based businesses - like Harvey Norman.
This couldn’t be further from the truth. The ACL applies to all businesses that sell products or services to consumers. Different rules will apply to different businesses, depending on what the business does. The ACL is there to provide consumer protection, but what many small business owners don’t realise is that it also protects the business - if it’s complied with properly (& this is a really great thing). Without the protection of being compliant with the ACL, a business can be exposed to a great deal of problems.
So let’s take a deeper dive into the ACL, and what you need to know about it as a service-based business.
Not a service provider? Check out Time To Return | Key Facts for e-Com Return Policies
What is the Australian Consumer Law?
The ACL is a piece of legislation that sets out the rules that apply to businesses who sell products or services to Australian consumers. These rules are in place to offer protection to consumers, and there are obligations on businesses when selling their products or services.
How the ACL protects businesses
As a business owner, if you:
Make those Ts & Cs available to your clients/customers before they buy;
Ensure your clients/customers agree to your Ts & Cs before they buy; and
Comply with your obligations under the ACL by telling your clients/customers all the things you need to tell them…
then, you will be protected under the ACL, and your Ts & Cs will be enforceable. That means if an issue arises—like misaligned expectations, refund requests, delays, and so on—then you will be able to rely on your processes and protections as outlined in your Ts & Cs.
If you don’t comply with the ACL…
If you don’t meet your obligations under the ACL (and if you don’t take care of each of the steps outlined above), if an issue arises, you won’t be able to rely on your Ts & Cs. For example, that means you won’t be able to enforce your no refund policy, or your change of mind policy, and so on. Without the protection of your Ts & Cs, any requests for refunds, invoice disputes, issues in relation to services provided or deliverables, will likely end up costing you both time and money.
Does the ACL apply to service based businesses?
Short answer: Yes. The ACL applies to all businesses, in all states and territories in Australia, and that includes service-based businesses.
Longer answer: Yes. Under the ACL, all businesses in Australia are required to meet a set of basic rights called consumer guarantees. Warranties are also required from both service and product based businesses.
Many service providers are unaware of the fact that they are required to provide warranties, and they don’t know how to deal with this and lawfully limit their exposure. That’s where a good business lawyer (like me!) comes in.
What do you need to know about the ACL as a service provider?
In short, all businesses (including service providers) need to tell consumers what their terms and conditions are - before the consumer decides to buy.
So if you’re a coach, creative or consultant, this means you need to provide your Ts & Cs to potential clients before they decide to engage you. They need to have the opportunity to review and consider your Ts & Cs (and obtain independent legal advice if they wish), and decide whether they wish to engage you or buy from you.
The key here is that the consumer has the opportunity to say no - to not accept yout Ts & Cs, and to not be penalised.
How service based businesses ensure they’re compliant with the ACL
The best way to make sure you’re ACL compliant is with tailored personalised advice from a business lawyer who specialises in (and who loves!) the ACL.
Read more: The Great Template Debate: Is It Safe To Use Legal Documents From The Internet?
When service providers are trying to streamline and automate their processes and systems, I often see them missing critical steps, and one of them is the required order of proceedings when onboarding new clients.
For example, to ensure compliance with the ACL, you can't ask for payment before Ts & Cs have been accepted.
We explain how all the obligations work for both product and service based businesses, and work with clients to develop documents that work, that are compliant with the ACL, that manage client expectations, and that protect businesses.
If you’ve had your Ts & Cs developed for you properly by a business lawyer (and if you’ve stayed away from templates), then the chances are your lawyer has explained to you what you need to do, when, and how, and you have developed your systems and processes accordingly. That’s when you know you’re using the ACL effectively.
Anything less than this and—well—you don’t know what you don’t know.
If you want certainty that your service based business is ACL compliant, then let’s talk.
And for an overview of how to stay legally compliant in your business, check out Australian Law 101 - Guide For Small Business.
