In everyday language, a consumer is simply someone who buys goods or services. However, under the law, the definition is not so simple. In fact, an individual must satisfy quite a few requirements in order to receive consumer protection. In this article, we will explain this definition as well as the recent legislative changes.
Legal consumer definition
The Competition and Consumer Act 2010 (Cth) promotes fair trading, competition and provides legislative protections. It also provides the definition of consumer, to which all these protections apply. Schedule 2 section 3 provides the definition of consumer, and it relies on whether the individual or business is acquiring goods or services where:
- the price does not exceed $100,000; or
- the goods or services were of a kind ordinarily acquired for personal, domestic or household use or consumption;
- or the goods consisted of a vehicle or trailer acquired for use principally in the transport of goods on public roads.
Without meeting one of these requirements, an individual or business purchasing goods or services is not a consumer. This means those individuals or business are unable to receive protection under the consumer guarantees. Consumer guarantees are legisltive protections provided to consumers, guaranteeing that goods be fit for purpose, be of acceptable quality and match their description etc.
For more information, you can read our guide ‘What are consumer guarantees’.
Legislative change
The legislative change that took place on 1 July 2021 increased the threshold from $40,000 to $100,000. This updates the threshold from its 1986 origins, bringing consumer law in line with the modern-day value of goods considering inflation. The provisions relating to personal, domestic, or household use, and vehicles for transport go unchanged.
The threshold increase benefits more consumers and businesses who make high-value purchases. For instance, individuals buying vehicles for purposes other than transporting goods will now have the Act’s protection.
However, the change also increases the obligation of suppliers who may not have previously been subject to the Act. Suppliers will need to review their goods and services to ensure that they are complying with their obligations and guarantees as per the Competition and Consumer Act 2010 (Cth).
For more information, you can read our ‘A guide to all the laws changing from 1 July 2021’
Conclusion
The legal definition of a consumer is much more narrow than simply purchasing goods or services. Individuals and businesses ought to be aware of this definition and the recent legislative changes, so that they may recieve protection. Fortunately, the recent changes update the Act to consider the modern-day value of goods and services, with the effect of increasing accessibility to these protections.
