Wednesday, 9 August 2017

Faulty Goods – What are my rights as a Consumer ?


Let’s say you have purchased an item, eg, a camera from your local camera retailer. You’ve done your research, know exactly what camera to buy, have looked at the demonstration model, obtained what you think is a fair price and are happy to proceed with the purchase.

You pay for the camera as new. The Seller gives you a new pre-packaged camera. You excitedly take it home looking forward to using it on your upcoming holiday. After unpacking the camera, you notice that the shutter is damaged.

What are your rights in this situation ?

The Australian Consumer Law (ACL) a national, state and territory law which commenced on 1 January 2011. The ACL is contained in a schedule to the Competition and Consumer Act 2010 (CCA).

The ACL includes certain consumer guarantees (or a base set of rights) for the goods and services that consumers purchase. The ACL only applies to goods and services purchased on or after 1 January 2011. Goods and services acquired prior to this date are covered under the precursor of the CCA, the Trade Practices Act 1974.

The ACL also applies to:
  • any type of goods or services costing up to $40,000; and 
  • goods or services costing more than $40,000, which are normally used for personal, domestic or household purposes.
In the above example we will assume you purchased the camera in January 2016 for a cost of $1,500 in which case the ACL applies.

Under the ACL there are essentially 9 guarantees that apply to goods:
  • that goods are of acceptable quality when sold to a consumer; 
  • that goods will be reasonably fit for any purpose the consumer or supplier specified; 
  • that the description of goods (eg., in a catalogue) is accurate;
  • that goods will match any sample or demonstration model and any description provided; 
  • that the goods will satisfy any extra promises made about them (called express warranties); 
  • a supplier guarantees they have the right to sell the goods (clear title);
  • a supplier guarantees that no one will try to repossess or take back goods; 
  • a supplier guarantees that goods are free of any hidden securities or charges; 
  • manufacturers or importers guarantee they will take reasonable steps to provide spare parts and repair facilities for a reasonable time after purchase.
Given the shutter is damaged in our camera example, you as the buyer would argue:
  • the goods are not of an acceptable quality (because it has a defect);
  • the goods are not reasonably fit for their purpose because you need the shutter to operate the camera correctly.
Minor and Major Faults

The ACL also breaks down failures in goods or services into two categories, major and minor.

A major failure with a good occurs if a reasonable consumer would not have bought the goods if they had known about the problem.

When the problem is minor, the seller can choose between providing a repair or offering the consumer a replacement or a refund.

When there is a major failure, the consumer can:
  • reject the goods and choose a refund or a replacement, or 
  • ask for compensation for any drop in value of the goods. 
In the camera example, a failure of the shutter is quite critical to the camera’s operation so it is arguably a major failure.

Remedies Available for major Failure

As a consumer you have a right to a remedy if goods or services do not meet a consumer guarantee.

Because the camera is not fit for its purpose you would arguably have a right against the seller (retailer). Your remedy would include to:
  • reject the camera and get a refund;
  • reject the camera and get an identical replacement, or one of similar value if reasonably available, or;
  • keep the camera and get compensation for the drop in value caused by the problem. 
For a major failure the choice of the above remedies is the consumers, not the seller’s choice.

Notify the Seller
Once you know there is a defect in a good you must advise the seller if you intend to reject the goods, and explain why. You must:
  • return the rejected goods to the seller, or 
  • ask the seller to collect the rejected goods, if the goods cannot be returned without significant cost to you. 
A “significant cost” to a consumer might arise when the good is too large, too heavy or too difficult to remove, in which case the Seller would be responsible for paying the shipping costs or collecting the good.

Refund
If you elect to receive a refund, once the goods are returned to the seller, the seller must repay any money paid by the consumer for the returned goods.

You will usually also need to provide a receipt or other ‘proof of purchase’.

You do not have to return products in the original packaging in order to get a refund.

Replacement

If you elect to receive a replacement item, once the goods are returned to the seller, the seller must provide goods of the same type and similar value. If such a replacement is not reasonably available, you can choose a repair or a refund.

It is also important to note that the consumer guarantees apply to the replacement good as if it were a new.

What are the Next Steps ?

Step 1

Contact the seller as soon as possible once you know there is a problem and explain the situation.

Perhaps an initial phone call to the seller is sufficient to get the process started.

Make sure your have your proof of purchase (receipt).

Determine whether it is a minor or major problem to determine if a repair, replacement, or refund applies.

Step 2

If you are having initial difficulty dealing with the seller, write a formal complaint letter to the seller setting out the problem and what you want. This will also serve as a record of your contact with the seller.

Step 3

If you are still having difficulty resolving a problem, the next point of contact maybe with your local state & territory consumer protection agency.

In Queensland it is the Office of Fair Trading: http://www.qld.gov.au/law/fair-trading/

Nationally it is the Australian Competition and Consumer Commission (ACCC):
http://www.accc.gov.au

The ACCC have a generic online Consumer Complaint Form.  See the link: https://www.accc.gov.au/contact-us/contact-the-accc/consumer-complaint-form

The ACCC can be contacted for further information on phone: 1300 302 502

Step 4 Depending on the situation you may need to commence legal action. Subject to the value of the goods in dispute, you could take your complaint to the small claims court or tribunal in your state or territory.

In Queensland it is the Queensland Civil and Administrative Tribunal (QCAT): http://www.qcat.qld.gov.au

For disputes involving large sums of money, you may need to consider legal action in a different legal jurisdiction.

NOTE: It is important to note the consumer guarantees under the ACL apply regardless of any “manufacturer’s warranty” (or warranty against defects) provided by the manufacturer. In this article we have only dealt with the ACL in summary.

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Disclaimer

The material provided in this document is for general information only and is not to be relied upon as advice. No responsibility is accepted for any loss, damage or injury, financial or otherwise, suffered by any person or organisation acting or relying on this information or anything omitted from it.


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