If your business supplies goods or services to NSW, beware recent amendments to the Fair Trading Act 1987 (NSW)

Recent amendments to the Fair Trading Act 1987 (NSW) are now in force. The amendments relate to the supply of goods or services to consumers located in NSW, and require that:

• suppliers of goods (e.g. cars, crops, electricity or software) or services (e.g. insurance, professional services, gas or entertainment), before any such supply, take reasonable steps to ensure consumers are aware of the substance and effect of contractual terms or conditions that may substantially prejudice their interests; and
• intermediaries (e.g. travel agents, finance brokers or real estate agents), before acting under any arrangement that provides for payment of a commission or referral fee, take reasonable steps to ensure consumers who will be supplied with the goods or services to which the commission or referral fee relates are aware of the arrangement. It is not necessary to reveal the nature or value of the arrangement.

These new disclosure obligations are intended to increase transparency and competition, without imposing a significant burden on businesses. Importantly, they may apply to businesses outside of NSW, including online stores. Those based in SA ought to ensure they are aware of the obligations and are making any necessary disclosures, if the above criteria is satisfied.

Corporations found to have contravened the disclosure obligations may face a $110,000 penalty, whereas the penalty is $22,000 for individuals. In addition, NSW Fair Trading may issue penalty notices for each offence.

Who is a “consumer”?

The obligations only apply to supplies to “consumers”, as defined in the Australian Consumer Law (ACL). If the relevant customer or client does not satisfy the meaning of “consumer”, disclosure is not mandatory (unless required by some other law or regime).

Individuals or businesses will be a consumer if they:

• acquire goods or services for $100,000 or less;
• acquire goods or services for personal, domestic or household use or consumption, no matter the price; or
• acquire a car or trailer.

However, they will not be a consumer if they acquire goods for the purposes of resupply or transformation into another product for sale.

What does “substantially prejudice” mean?

Terms which could “substantially prejudice” the interests of a consumer and therefore might require disclosure include those that:

• exclude a supplier’s liability. For example, a recreation centre’s terms and conditions that state it is not liable for injuries arising from participating in the activities it provides;
• make the consumer liable for damage to goods that are delivered. For example, a contractual term to the effect that a courier is not responsible for any loss suffered and that the client bears the risk of goods transported;
• permit the supplier to provide identifiable consumer data to third parties. For example, terms which allow the divulgence of personal information to external service providers, like Google Analytics; or
• require the consumer to pay an exit fee, such as a cancellation fee for a gym membership.

What are “reasonable steps”?

NSW Fair Trading has published a guideline which sets out some tools to assist businesses take reasonable steps for the purposes of compliance. These include:

• using short, plain English summaries on the front page of contracts;
• providing information in short chunks at key times (i.e. on the information or payment pages);
• using comics, illustrations, icons or pop-up boxes to highlight and explain relevant information;
• making disclosure on quotations provided to the customer;
• directing customer attention to appropriate signage; or
• adding an automatic disclaimer in email footers.

This list is not exhaustive and exactly how disclosure is made will depend on a variety of factors, such as the nature of the business, the product or service and the customer.

If you think your business might be affected or if you would like to discuss the above, please contact us.

Author: Annabel Nettle

Position: Associate

Practice: Disputes

This article provides general commentary only. It is not legal advice. Before acting on the basis of any material contained in this article, seek professional advice.