The Australian Consumer Law sets out the rights and obligations of both consumers and traders. Resolving a problem with a trader about goods or services that do not meet the consumer guarantees may take time and patience. Taking a trader to court over a dispute over goods or services may be a lengthy and expensive process, and the outcome is difficult to predict.

There are alternatives to the court process, including conciliation or mediation. It is important to get legal advice first to understand the options available.

Australia does not have an ombudsman service to resolve complaints regarding general consumer goods and services. More information about the roles of the Australian Competition and Consumer Commission and Consumer and Business Services is found below.

There are some specific services that assist to resolve complaints including:

*Note that each of these services are not a court and generally cannot compel a trader to comply with any decision. Before lodging a complaint, speak to the service to check if fees are payable and what you can expect.

Guarantee as to title, undisturbed possession and undisclosed securities

Sections 51 – 53 apply to all transactions, whether in trade or commerce (buying from a business) or a private sale. The guarantees provide that a supplier has the right to sell the goods, that the consumer will have undisturbed possession (free from someone trying to reclaim the goods) and free from any security not informed to them. The cause of action is against the seller, so in a private transaction the purchaser must sue the seller of the goods.

Guarantee as to Acceptable Quality

Section 54 of the ACL provides that goods supplied in trade or commerce must be of acceptable quality.

This means that all goods supplied to consumers must be:

These characteristics are subject to the ‘reasonable consumer’ test, which means that a reasonable consumer would regard goods as acceptable.

Other factors taken into account include price, nature of the goods and any representations made about the goods prior to sale. Goods with defects that are drawn to the attention of the consumer prior to purchase (such as “seconds”) are considered to be acceptable.

How long this guarantee lasts is a matter for each particular type of good. Further information about this is found under Remedies.

Guarantee as to Fitness for Purpose

Section 55 of the ACL provides that goods supplied in trade or commerce must be reasonably fit for the purpose made known by the consumer to the supplier. Not all consumers expressly state the purpose, so goods must be fit for their normal or common use.

Guarantee as to the Supply of Goods by Description or Sale by Sample

Section 56 of the ACL provides that goods supplied in trade or commerce must correspond with their description. Section 57 provides that goods sold by reference to a sample must match that sample and that consumer must be given a reasonable chance to compare the goods with the sample.

Guarantee as to Spare Parts

Section 58 of the ACL states that manufacturers must take reasonable steps to ensure that repairs and spare parts are available for a reasonable length of time, depending on the circumstances and nature of the goods.

The Australian Consumer Law (Competition and Consumer Act 2010 (Cth) Schedule 2 s 4) defines services to include any rights, benefits, privileges or facilities that are given by a trader under a contract for, or in relation to:

Section 60 provides that services must be provided with due care and skill.

Section 61 provides that services also must be reasonably fit for the purpose that a consumer makes known to the supplier. Section 62 provides that in the absence of agreement, the services will be provided within a reasonable time.

Section 59 states that a supplier or manufacturer of goods must comply with an express warranty. Express warranties arise under contract, and any warranty against defects must be accompanied by a statement complying with ACL Regulation 90. The statement must include contact information for the person giving the warranty, the length of time the warranty lasts, who is responsible for costs incurred in claiming the warranty and the benefits of the warranty that are additional to the rights and remedies of the consumer under the ACL.

The warranty must also include mandatory text:

'Our goods come with guarantees that cannot be excluded under the Australian Consumer Law. You are entitled to a replacement or refund for a major failure and compensation for any other reasonably foreseeable loss or damage. You are also entitled to have the goods repaired or replaced if the goods fail to be of acceptable quality and the failure does not amount to a major failure'.

Manufacturer or express warranties for services must have similar text regarding cancellation of the contract, compensation for consequential loss or rectification of services that have not been provided in accordance with the ACL.

Section 259 sets out the rights of a consumer to require a supplier to remedy a failure to meet a statutory guarantee in relation to the supply of goods. This means that where goods are faulty (perhaps due to a design or manufacturing problem) a consumer has the right to ask the store to fix the goods. If the fault is considered ‘major’, a consumer has the right to ask for a repair, replacement or refund.

If the failure to meet the guarantee is not ‘major’, the consumer can require the supplier to remedy the failure within a reasonable time. The most obvious example of remedying the failure is to require the supplier to have the goods repaired. What is reasonable depends on the nature of the goods. It may be reasonable to wait for 2 weeks to have clothing or shoes repaired. It may not be reasonable to wait a month to have a fridge or washing machine repaired.

A supplier can also choose to refund or replace the goods, rather than provide a repair.

If the goods are not repaired within a reasonable time, the consumer has a choice to either:

A consumer does not have a remedy against the supplier if the failure occurred because of something that happened after the goods left the supplier, such as accidental damage.

A consumer’s right to claim is not affected by whether the goods are still in their original packaging.

Major Failure to Meet the Guarantee

Section 260 sets out the criteria for a major failure to meet the guarantee. If the goods:

the failure is considered ‘major’.

Section 261 sets out the remedies a supplier can offer, including repairing or replacing the goods or a refund. A consumer has the right to request a particular remedy, but the supplier can choose the remedy.

Section 262 sets out the circumstances in which a consumer is not entitled to reject the goods. This includes:

Goods that are attached to real property or personal property that cannot be removed without damage cannot be ‘rejected’, but the consumer can ask for another remedy such as a repair.

The ‘rejection period’ is dependent on several factors. It may be the type of goods, the use to which they would be put and the amount of time it is reasonable for the goods to be used. Wear and tear is not considered to be a failure of the goods, unless it is caused by some inherent problem that causes wear and tear to happen faster than expected.

Consequences of Rejecting Goods

Section 263 sets out the final step to dealing with goods that fail to meet a consumer guarantee. Once the consumer notifies the supplier that the goods are rejected, the goods must be returned to the supplier. If the goods cannot be easily moved (such as a fridge or large TV) the supplier should collect them at the supplier’s expense.

The consumer has the choice to ask for a refund of the money paid for the goods or a replacement of the goods if section 260 applies (‘major’ failure).

Exceptions

Consumers generally are not entitled to a refund or replacement if there has been a change of mind. However, many retailers will allow a consumer to return goods that are unsuitable, provided that the goods have not been used or damaged in any way. There may also be a requirement that the goods are in the original packaging or retain any labels or tags.

Action against a Manufacturer

When a statutory guarantee for either goods or services has not been met, a consumer usually takes action against a retailer or supplier. If a supplier refuses to provide a remedy, cannot be contacted or is no longer trading, a consumer can also act against a manufacturer. Section 7 defines manufacturer as a business who makes or assembles goods, has their name on goods or imports the goods into Australia.

Section 271 sets out the rights of a consumer to act against a manufacturer where goods are not of acceptable quality, or do not match a description that is applied by the manufacturer.

Section 271 (6) states that a consumer who relies on an express warranty to require the manufacturer to replace or repair the goods cannot then claim damages for the failure to honour the statutory guarantee in relation to acceptable quality. However, a manufacturer cannot refuse a remedy if there has been a breach of the statutory guarantees, regardless of whether the goods are covered by an express warranty.

The guarantees regarding spare parts and repairs set out in section 58 of the ACL is a specific guarantee given by a manufacturer.

Services must be:

Due care and skill means the level of skill of a reasonably competent provider. They must also take care not to cause loss or damage whilst providing the service.

Services must also be fit for the purpose for which they are provided, as made known to the provider by the consumer. There is also an implied guarantee that the service will be suitable even if the purpose is not made

However, the guarantee does not apply if it can be shown that it is unreasonable for the consumer to rely on the skill or judgment of the supplier. It also does not apply if the provider tells the consumer that the service will not meet the required purpose.

If there is not an agreed time for the provision of the service, it must be provided within a reasonable time.

Under the Fair Trading Act 1987 (SA) liability for suppliers of recreational services can be modified, excluded or restricted, notwithstanding the provisions of the sections 60 and 61 of the Australian Consumer Law (see Fair Trading Act 1987 (SA) s 42). Recreational services includes services consisting of participation in sporting activities or similar leisure pursuits or any other activity that involves a significant degree of physical exertion or risk, undertaken for recreation, leisure or enjoyment.

Suppliers of such services can modify liability provided the term is: (i) in the prescribed form; (ii) brought to the attention of the consumer prior to the provision of the services and (iii) agreed to by the consumer in the prescribed manner.

Remedies against suppliers of services

Section 267 sets out the rights of the consumer to take action against a supplier of services if any of the statutory guarantees are not met.

If the failure is not major, the consumer must first give the supplier the opportunity to fix the problem. If the problem is not fixed within a reasonable time, the consumer is entitled to have the problem remedied elsewhere and claim the costs from the original supplier. The original supplier may also choose to refund the cost to the consumer.

If the failure to comply with the guarantee is major, or the failure cannot be remedied, the consumer may ask for a refund. The consumer may also recover damages for any loss, for example the cost of another provider remedying the failure. This may also include the cost of undoing the previous work, which can add to the cost.

If the contract is for the ongoing provision of services, and the failure is major, the consumer has the right to cancel the contract. Section 269 requires the supplier to refund any money paid under the contract for the services.

Consequential Loss

It is sometimes difficult to work out what extra losses may be attributable to the failure to meet a consumer guarantee. Suppliers of goods and services are liable for any consequential loss, which would put the consumer in the position they would have been but for the failure to meet the guarantee. For example, a washing machine is faulty and begins leaking causing damage to tiles and flooring. The supplier is not only responsible for the faulty washing machine but also repairing the damage to the tiles and flooring because the damage caused by water is foreseeable.

If the supplier refuses to repair faulty goods within a reasonable time or refuses to repair them, the consumer may also claim the cost of getting a repair from another supplier, as well as the cost of transporting the goods and any other loss associated with the repair.

Personal Injury

Faulty goods or services can cause personal injuries, such as burns resulting from a beauty treatment, or a part of a bicycle that fails causing the rider to crash.

There are strict time limits in South Australia for making a claim for personal injury. If you are injured, get legal advice quickly.

For further information about the legislation, including the statutory warranties relating to domestic building work in South Australia, please visit the Law Handbook chapter on HOUSING.

Building a home or doing renovations to an existing home is an investment in money and time. At times things can go wrong, and if not addressed can result in a dispute.

Address problems with the building work as they arise. A meeting onsite with the builder or other trades person often resolves the problem.

If you reach an agreement with the builder to fix something within an agreed time, make sure to confirm the agreement in writing. An email is often enough, or you could try to get confirmation by text message. Follow up with the builder if the time frame is not met.

If the problem is not resolved as agreed, or at all, write to the builder setting out your concerns. Give the builder a set time to respond and let the builder know what will happen if there is no reply. Listing the problems in writing avoids confusion and ensures that you cover everything.

Check the building work contract. Some standard form contracts have a dispute resolution clause using an industry association to help resolve the dispute. There is a fee for this and there is no compulsion to do so.

If there is still no response or the builder makes promises that are not kept, get legal advice. Consumer and Business Services has a consumer advice service and can assist consumers with dispute resolution.

Section 8A of the Fair Trading Act 1987 (SA) provides the mechanism for Consumer and Business Services to convene a conciliation conference. A written instrument records any agreement reached at the conference.

If the builder does not comply with the terms of the written instrument, a consumer can issue legal proceedings in the Magistrates Court. For more information about this process, see the Law Handbook chapter COURT-SUING OR BEING SUED.

Be very wary of terminating a building work contract without getting legal advice first. The builder can take legal action to recover any losses, usually the balance of the contract price. This may outweigh the cost of resolving any defects or unsatisfactory work.

If there are unresolved problems with building work and the builder has died, is bankrupt or cannot be contacted, remember that the builder must have taken out building indemnity insurance on your behalf. Check with the council to get a copy of the insurance certificate from the council. The insurance certificate is a prerequisite for the building work.

If you are having problems with the building indemnity insurance company, get legal advice. Building indemnity insurance is a statutory insurance scheme and not covered by the Australian Financial Complaints Authority.

For more information about building work contracts visit the CBS website (link opens new window).

Protections that previously existed for ‘door to door’ and telephone sales are now covered by the Australian Consumer Law as unsolicited sales, or “unsolicited consumer agreements”.

Under the Australian Consumer Law, an unsolicited consumer agreement has the following characteristics:

[Competition and Consumer Act 2010 (Cth) Schedule 2 s 69].

To be covered by the protections of the Australian Consumer Law it is essential that the supplier make the first approach to the consumer. This may be by phone, by letter (addressed to the consumer) or in person at the consumer’s home, work or any place where the trader normally does not do business. If the consumer contacts the trader first and invites the trader to her or his home, any contract entered is not an unsolicited consumer agreement.

It can be difficult in certain circumstances to determine whether the consumer is the one who has initiated contact but the provisions of the Australian Consumer Law ensure that where there is any dispute there is a presumption that the agreement is an unsolicited consumer agreement and the onus is on the supplier to prove otherwise [Competition and Consumer Act 2010 (Cth) Schedule 2 s 70].

Examples of unsolicited consumer agreements include when a supplier:

More complicated examples include where a consumer invites a supplier to provide a quote for the supply of goods and services. This contact in itself is not an unsolicited consumer agreement so that if a supplier attempts to enter into negotiations to sell a product or later attempts to contact a consumer to do so, the resulting agreement would be considered an unsolicited consumer agreement. If, however, a consumer approaches the supplier after they have provided a quote to accept it or negotiate different terms, this would not be classified as an unsolicited consumer agreement.

Party plan sales

Party plan sales are specifically excluded from the definition of an unsolicited consumer agreement. The circumstances that meet the criteria for a party plan event are set out in Part 6 of the regulations to the Competition and Consumer Act 2010 (Cth).

Consumers must attend an event on the understanding (express or implied) that the purpose of the event is to negotiate for the sale of goods or services to one or more people and three or more people must be invited (although not necessarily all must attend). Finally, the inviter (presumably this means the seller or the seller’s representative, although it is not clear) must be in the same premises as the consumers.

Permitted hours for negotiating an unsolicited consumer agreement

A supplier must not call on a consumer for the purpose of negotiating an unsolicited consumer agreement or for a related purpose [ Competition and Consumer Act 2010 (Cth) Schedule 2 s 73].

Disclosure of identity and purpose

Suppliers are required to clearly advise as soon as is practicable and before they begin negotiations, that their purpose is to seek agreement to a contract for the supply of goods and services. They must also provide details as to their identity i.e. a name and address [s 74].

Suppliers are obliged to leave premises immediately if asked to do so and prohibited from further contact for at least 30 days [s.75].

Penalties can be imposed for suppliers who breach these provisions.

Cooling off rights

Consumers have the right to terminate an unsolicited consumer agreement, either orally or in writing, within 10 business days of negotiating the agreement [s.82]. This is referred to as a ‘cooling off’ period. During the cooling off period the supplier must not supply any goods or services or accept payment from the consumer [s 86].

Where an unsolicited consumer agreement is terminated within the cooling off period the agreement is taken to have been rescinded by mutual consent and is void.

If goods have been provided the consumer must return any goods not consumed or arrange for the supplier to collect them within a reasonable time [s.85]. If the supplier fails to collect the goods within 30 days after having received notice of termination of the contract then the goods become the property of the consumer [ s 85(2)].

The consumer will be liable to pay compensation if they return goods in a less than reasonable state. However, they will not be responsible for any damage or depreciation that occurs in the course of normal use of the goods or as a result of circumstances beyond their control.

If services have been provided before the contract has been terminated the consumer can be required to provide payment for the services provided [s 85(6)].

Cooling off for other reasons

In certain circumstances the length of the cooling off period may be extended.

If the seller or their representative:

the cooling off period is extended to 3 months from the day after the signing of the contract [s 82(3)].

If the seller or their representative:

the cooling off period is extended to 6 months from the day after the signing of the contract [s 82(3)(d)].

*Since 2012 if the total contract price is less than $500 and the supply is for goods only, the purchaser may receive some or all of the goods.

Borrowing to purchase unsolicited goods or services

Consumers may purchase goods or services under an unsolicited consumer agreement by way of credit provided by a third party credit provider. The Australian Consumer Law makes no provision for the termination of credit contracts associated with the purchase of unsolicited goods or services where a consumer exercised the right to cool off, notwithstanding that the consumer agreement is void on cooling off and other related contracts are also automatically void [Competition and Consumer Act 2010 (Cth) Schedule 2 s 83].

Part 7 of the National Credit Code (NCC) provides for the termination of applicable credit contracts where a consumer terminates a contract, either by cooling-off or for some other reason. Note that Part 7 of the NCC does not only apply to unsolicted consumer agreements, but also applies to the termination of any type of consumer contract.

In order for the provisions to operate, certain conditions must be met:

A “linked credit provider” is a credit provider:

A tied continuing credit contract might be a credit card or overdraft facility, the provider of which is linked to the supplier [s 127(2)]. Using a normal credit card or overdraft to pay for the goods or services is unlikely to be caught by this provision.

A tied loan contract is a loan contract where the credit provider knows or ought reasonably to know that the consumer entered into the contract for the purpose of purchasing the goods or services supplied by the supplier and, at the time of the contract, the credit provider was a linked credit provider of the supplier [s 127(3)].

If the consumer exercises the right to cool off, thereby rendering the consumer agreement void, the consumer is also entitled to:

1. in the case of a tied loan contract – terminate the contract; or

2. in the case of a tied continuing loan contract – a refund of the amount of credit and interest charges paid in relation to that credit [NCC s 135].

The supplier is required to inform the credit provider that the sale contract has been rescinded and failure to do so attracts a criminal penalty [s 135(6)]. The requirement to inform is limited to credit provided in relation to unsolicited consumer agreements.

An entitlement to terminate a tied credit contract may be exercised only by notice in writing by the 'other party to the contract' [s 137]. The other party to the contract is usually the consumer.

There may be situations where the supplier may refuse, neglect, overlook or be unable to inform the credit provider (such as following the appointment of an external administrator or liquidator). Therefore the consumer should act prudently and comply with s 137 at the same time as terminating the sale contract to ensure that the credit provider does not take action in reliance on the tied credit contract.

In South Australia, the sale of secondhand cars by businesses is regulated by the Second-hand Vehicle Dealers Act 1995 (SA), and any references in this section are to this Act.

By contrast, buying a secondhand car from a private seller has few protections for a purchaser. More information about buying from a private seller is set out below.

Second-hand car dealers

No person may carry on a business of selling second hand motor vehicles unless they are licensed to do so [s 7]. The definition of what constitutes dealing in under the legislation has been expanded to catch “backyard” (unlicensed) traders. Under section 50 a person will be presumed to be a dealer if:

Before granting a licence the Commissioner of Consumer Affairs must be satisfied that all the people concerned with the business are fit and proper people to hold a licence [s 9]. The Commissioner must also be satisfied that the business has sufficient resources to meet the requirements of the Act. If an unlicensed person carries on the business of buying and selling second hand motor vehicles they commit an offence and can face a penalty up to $100 000 [s 7].

Display of information

Dealers must give certain information to any potential buyers and a notice, known as a Section 16 Notice, setting out the information must be attached to the vehicle. The information includes:

This information must also be displayed at any auction where second hand vehicles are sold [s 20].

Contract of sale

A contract for the sale of a second-hand vehicle by a dealer must be in writing within one document and be signed by the parties to the sale [s 17(1)]. It must also contain other information about the dealer and the vehicle, and whether the 2 day cooling-off period applies, set out in a Form 5 Particulars to be included in a contract [reg 12]. A purchaser must also be given a copy of the Section 16 Notice, and a Form 3 Notice to Purchaser, which confirms the details on the Section 16 Notice and describes the duty to repair.

Statutory duty to repair

Defects in a vehicle which make it unroadworthy or illegal to drive at the time of delivery to the purchaser must be repaired or made good by the dealer regardless of the price paid for, or the distance traveled by, the vehicle [s 23(7)].

In addition to the pre-condition that a car is roadworthy when delivered, dealers have a duty to repair defects in secondhand cars dependent on the price paid for the car, its age and distance travelled.

If the car was first registered more than 15 years before the sale or driven more than 200,000 kilometres, there is no duty by the dealer to repair (aside from ensuring that it is roadworthy).

The duty to repair by the dealer is also limited by time or distance driven [s 23(4)]:

In calculating the warranty period, the time that the vehicle is with the dealer for repairs does not count. The duty does not apply to the tyres or battery (unless those would make the car unroadworthy), or to reasonably apparent defects in upholstery or paintwork [ss 23(6),(7)]. A dealer does not have to repair any defects in an accessory not originally fitted by the vehicle's manufacturer, or not produced or approved by the manufacturer for fitting to vehicles of that kind if the dealer has stated in the Section 16 Notice given to the purchaser that the dealer does not accept a duty to repair a defect in that accessory [Second-hand Vehicle Dealers Regulations 2010 (SA) reg 21, sch 4].

The dealer is also not responsible for repairs to damage caused by an accident or deliberate act by someone, or normal wear and tear. Insurance may cover accidental damage.

Purchasers may also have rights under the Australian Consumer Law in relation to a secondhand vehicle. For more information the consumer guarantees relating to acceptable quality of goods see the Law Handbook page on Statutory Guarantees.

It is possible for a purchaser over 18 years of age to waive the dealer's duty to repair, although the purchaser cannot waive their rights in relation to applicable consumer guarantees under the Australian Consumer Law [s 33(2)]. The purchaser must be given a document known as a Waiver of rights under Part 4, that explains the consequences of giving up the right to insist that the dealer repairs defects to the car. The consumer's signature must be witnessed on this document by a Justice of the Peace, solicitor or proclaimed bank manager who is independent of the dealer [reg 23 and sch 6].

The witness has the duty to ensure that the purchaser understands the effect of the waiver before witnessing the signature [reg 23(2)(b) and sch 6]. It is an offence carrying a maximum fine of $20,000 for a dealer to, in any other way, attempt to modify or exclude the rights under this Act [s 33(3)]. This includes letting the purchaser believe that the vehicle is only for sale if the purchaser waives the warranty rights [s 33(5)].

Repairs to the car under the duty to repair must be done to acceptable industry standards. A consumer is also required to deliver the car to the dealer for the repairs to be done, to give the dealer a reasonable opportunity to fix the problem [s 24].

If the dealer cannot or will not repair the car in a reasonable time, a purchaser is entitled to get assistance from Consumer and Business Servicesfor a conciliation conference [s 24(2)]. If this does not resolve the problem it may be necessary to apply for a Magistrates Court order [s 24(5)].

If it is not possible or safe to deliver the car to the dealer, and the dealer is put on notice of the purchaser's intention to have the repairs done by another repairer, it may be possible to claim the cost of the repairs from the dealer on application to the Magistrates Court.

The duty by a secondhand dealer to repair does not apply to motor cycles or to vehicles purchased at auction or immediately after an auction [s 23(3)].

Cooling-off period

Purchasers also have the right to rescind (cool-off) a contract for a secondhand car bought from a dealer by delivering a written notice to the dealer within 2 business days of the signing of the contract [s 18B and reg 23(3)].

A dealer cannot require a purchaser to make any payment before the cooling period expires other than a deposit of not more than 10% of the contract price [s 18B(5)]. If the contract is cancelled by the purchaser within the cooling off period, the dealer must refund any deposit paid, less 2% of the contract price or $100, whichever is the lesser. The refund must be paid by the end of the next business day and the dealer faces a penalty of up to $5,000 (or $500 expiation fee) if they fail to comply [s 18B(7)].

During the cooling-off period, both physical possession and legal title for the vehicle remains with the dealer, who must allow the purchaser reasonable access to inspect the vehicle. The right to rescind the contract does not apply if the purchaser takes possession of the car. Other rights may exist under the Australian Consumer Law relating to the consumer guarantee as to acceptable quality or misleading and deceptive conduct and if there is a problem, it is wise to get legal advice regarding a remedy as soon as possible.

A purchaser over 18 years of age can waive their right to a cooling-off period but must sign a document, known as a Waiver of Cooling-off Rights, indicating that they are aware of the implications of doing this [s 33(2a), reg 23(3) and sch 6]. It is an offence for a dealer to influence or attempt to influence a purchaser to waiver their right to withdraw from the contract and a penalty of up to $20,000 applies [s 33(5a)]. In addition, they can be pursued for damages in the Magistrates Court by any individual who can show that they have suffered a loss or damage as a result of the offence [s 33(5b)].

Effect of cooling-off period on credit contract

A credit contract will not take effect until after the expiration of the cooling-off period or, in the event that the purchaser waives their right to withdraw, until a waiver has been signed [s 18B(9)(b)].

If a purchaser withdraws from a sales contract within the cooling-off period, any credit contract entered into in relation to the purchase will be void and any security taken by the credit provider will be discharged [s 18B(9)(a)].

Other considerations when buying from a dealer

Any security held by a lender over the car is automatically discharged if it is bought from a dealer in the normal course of the dealer's business. A purchaser is also entitled to undisturbed possession of the car, as well as clear title. These guarantees apply under the Australian Consumer Law.

Private sales

Buying a car privately offers few protections for the purchaser. However, there are a few steps that a purchaser can take before buying to avoid problems.

A private seller has no duty to repair a secondhand car. As a result it is essential to have the car checked over mechanically first. If any substantial claims are made by the seller regarding the car, such as its ability to tow a trailer, or year of manufacture or odometer reading, it is very wise to check the information for yourself. There is also no cooling-off period when buying secondhand.

If you rely on something the seller told you about the car and that information turned out not to be true, it could be a misrepresentation and may entitle you to ask for compensation. Get legal advice as soon as possible about your rights.

Money owing on the car

It is very important to ensure that there is no money owing on the car before you buy. You can obtain a search certificate from the Personal Properties Securities Register (PPSR) for a small fee ($2.00 as at March 2023). The PPSR is a national register and is available on-line at the PPSR Website. A certificate can be printed at the same time.

You will need to know the VIN of the vehicle to do the search as it is the only information that will identify the vehicle. Owner details are not required. The certificate also shows details regarding any reports regarding the stolen or written off history of the vehicle, assuming that information is reported. The search can be done by staff at PPSR if you cannot search on-line. If a certificate is obtained that shows there is no registered interest over the car, you will have until the end of the next day to complete the purchase to remain protected.

If you buy a car privately, you should always check the PPSR. If there is a registered security interest, you will lose the car if the lender repossesses it. Even if the seller says there is no security interest and no money owing, you should check for yourself on the PPSR. It may be very difficult to recover the purchase price from the seller once the lender repossesses the car, even though you have the right to ask for your money back,

The PPSR also records information about whether or not the car has been previously written off (economic write-off) or reported stolen. An economic write-off can be re-registered after strict testing, but a car that has suffered severe damage cannot, and must be taken off the road.

You can contact the PPSR by phone on 1300 007 777 (1300 00PPSR).

The Second-hand Dealers and Pawnbrokers Act 1996 (SA) regulates the activities of second hand dealers and pawnbrokers. While not requiring that second hand dealers be licensed, anyone setting up business must notify the police. A person will be prohibited from conducting business if convicted of an offence of dishonesty or a prescribed offence, or if the person is an undischarged bankrupt or subject to a composition or deed or scheme of arrangement [Second-hand Dealers and Pawnbrokers Act 1996 s 6]. Where a dealer is a company the same restrictions apply to any directors.

The Act contains many restrictions on dealers which if breached incur a fine of up to $2 500. For example dealers are required to keep detailed records of all transactions. Dealers must also retain goods for at least ten days after they are acquired although they may dispose of them after three days if full details of the purchaser are recorded [Second-hand Dealers and Pawnbrokers Act 1996 (SA) s 10]. Dealers must notify the police if they suspect that goods are stolen and may be disqualified from business if stolen goods are found on their property on three occasions within the previous 12 months [Second-hand Dealers and Pawnbrokers Act 1996 (SA) s 11].

A person who finds his or her stolen goods on a second-hand dealer's premises may apply to the Magistrates Court for the return of the goods.

The Act also contains new rights for people who pawn their goods. The minimum period a pawnbroker must retain any pawned goods will be one month. At the end of the redemption period the pawnbroker must sell the goods by auction. The person who pawned the goods can inspect the record of the sale and if the goods sold for more than is owing to the pawnbroker, the balance must be paid to the person who pawned them. Unjust transactions and unconscionable charges by pawnbrokers are subject to the Consumer Credit Code, see: Consumer credit.

Telemarketing is a term commonly applied to sales that are made by telephone or by marketing products on television.

Commonwealth legislation including the Australian Consumer Law (see Competition and Consumer Act 2010 (Cth) Schedule 2) and the Telecommunications Act 1991 (Cth) applies to sales made through electronic media such as the telephone or television. The use of services such as cable television may complicate consumer remedies even further.

Sales made through the use of electronic media are a relatively new, but rapidly expanding area. Issues of concern include:

Where disputes arise the Australian Direct Marketing Association has a code of conduct which determines acceptable behaviour of traders, but this code is only binding on the association's members. In addition, the Australian Competition and Consumer Commission has in place a Code of Practice on Distance Selling for telemarketing, mail orders and other forms of direct marketing where consumers buy goods or services without visiting the trader's premises. It covers:

Do not call register

This is a service provided by the Australian government to enable people to be excluded from telemarketer lists. Registration is free and can be done online, by phone or by post. Once your name has been registered telemarketers are legally prohibited to stop contacting you; however, it can take up to 30 days for telemarketing firms to receive the latest updates to the register so the effect of registration is not necessarily immediate.

There are exemptions for public interest organisations such as charities and political parties.

There is a complaints process if you believe there has been a breach of the register. For more information see the Do Not Call website.

A pyramid selling scheme is one in which goods or services are sold and the participants in the scheme receive payment or other benefit for introducing other people into the scheme as new participants. As each new participant is introduced to the scheme, the original participant moves further up the 'pyramid' and, depending upon the rules of the scheme, ultimately receives some payment or benefit, usually consisting of a contribution from each new participant. As there is usually a practical limit on the number of people willing to participate in the scheme, it is usually those who join the scheme at the start who receive some benefit whereas those joining at a later stage often have to make a payment but receive no benefit in return.

The Competition and Consumer Act 2010 (Cth) [Schedule 2 s 44] makes it an offence to participate in such a scheme, or to promote one. Under the Competition and Consumer Act 2010 (Cth) Schedule 2 the maximum fines are $220 000 for a person and $1 100 000 for a corporation.

What is a scam?

In simple terms, a scam is a trick to make you pay money to someone you may not know. Scams can be sophisticated and the amount of money lost to consumers has increased. They have the potential to cause great distress and financial loss to unwitting consumers.

There are many methods of perpetrating scams, including by email, phone or in person.

The promise of making quick money through investments is attractive to some people but may be a scam. Another common tactic is to use threats to personal safety or property, which often occurs when a scammer impersonates a public authority or trusted business. This type of threat is a common sign of a scam.

Agreeing to transfer money or goods for someone else can constitute money laundering under federal legislation. Money laundering is a criminal offence with significant maximum penalties.

Scams can originate from relationships formed online (dating and romance) which gains trust and then may result in a request for money for travel or medical procedures.

Phishing is a method of getting personal or sensitive information from a consumer. Scammers then use the information to get loans or access bank accounts.

Scammers may also try to trick consumers with the promise of a job or a home rental, or by donating to a bogus charity.

Gaining trust of the consumer is one way scammers may succeed. Another method is to create a sense of urgency or threat to personal property or life. The scammer may try to impersonate a trusted organisation such as a bank or government agency, and may call unexpectedly.

Financial abuse by family members or friends may also be a type of scam. For more information about financial abuse, please visit the Law Handbook sections on Elder Abuse and Family Violence.

Dealing with scams

Scams perpetrated by phone and email are difficult to stop because of the broad reach of the internet. The roll out of the National Broadband Network means that most phone services now use the internet, rather than a landline.

Scammers find ways to use either fake phone numbers or private numbers to hide their identity or make it difficult to trace the call. They can also take control of a person's phone number without their consent or knowledge, allowing them to use the two factor authentication process to access person accounts. Telecommunications companies have agreed to co-ordinate their efforts to disrupt scams and will use specific authentication methods to ensure that the origin of the calls are genuine. There are also industry codes and standards which require telecommunication companies to actively monitor for scam activity, share the information they collate and to disable phone numbers being used for scam calls.

Proprietary anti-viral software can filter emails and warn users about suspicious links to avoid phishing or malware. Be careful of unexpected emails from trusted institutions like banks or government agencies. From September 2022, website domain names ending ".au" (as opposed to ".com.au") are openly available to be registered, creating another opportunity for scammers to mimic genuine emails from trust organisations. Particular care should be taken to identify whether an email is from a ".com.au" or ".au" website, and to compare the email address with the genuine website address of the organisation.

Money paid to a scammer can be difficult to trace and recover. This is because many scams originate outside of Australia. Money paid into an overseas bank account is often withdrawn immediately and the account closed.

Unfortunately many people do not realise the scam until it is too late. Delay decreases the chance of recovery of any money.

Another way that scammers will prevent the tracing or recovery of money is to ask for payment using vouchers or crypto-currency. Visit the website of the business or government body to find out the correct way to make payment if necessary.

Any attempt to get money or personal details accompanied by a threat to life or property must be treated with suspicion. If the perpetrator claims to be a government authority or trusted institution or business, ask for a reference number then hang up and call the organisation back to verify the information. An unexpected call may also be a sign that it is a scammer.

For more information regarding data breaches, see Consumer Data - Breaches and Rights.

What else can you do?

Visit the Australian Government Scamwatch website for the latest information and resources. Pass the information on to vulnerable family members and friends to help spread the word. The South Australian Police also have a webpage on Scams and cybercrime.

It can be devastating to lose money to a scam. Get help from an organisation such as the Australian national identity and cyber support service ID Care who provides support in cases of identity theft and cyber-crime.

In circumstances where access to a mobile service has become blocked, contact should be made immediately with the service provider.

To aid in the understanding of how the Australian Consumer Law applies to specific industries, the ACCC has produced the following industry guides:

Whitegoods and Electrical

Personal Services

Motor Vehicles Sales and Repairs Note that this guide applies to the purchase of new motor vehicles. For further information about the purchase of secondhand vehicles under state legislation, see the Law Handbook page on Second Hand Motor Vehicles.

Rental Cars

Travel and Accommodation

The guides provide a useful summary of the Australian Consumer Law with examples.

The ACCC (in cooperation with other regulators) also addresses risks from safety hazards in consumer products by reviewing and updating mandatory standards and product recalls. Mandatory standards are in place for goods such as baby items, aquatic toys, basketball rings and backboards, beanbags, helmets, window fittings, bunk beds and button and coin batteries.

Ticket scalping is the practice of selling tickets to events at an inflated price. Part 4A of the Fair Trading Act 1987 (SA) regulates the re-sale of tickets in South Australia. There are also a number of other considerations when buying tickets from re-sellers and consumers should take care.

Part 4A prohibits the advertising or re-sale of a ticket to a sporting or entertainment event for a price that exceeds 110% of the original price of the ticket, as long as the ticket is subject to a re-sale restriction.

Section 37B defines ‘resale restriction’ as a term imposed by the original seller of the ticket limiting the resale of tickets. In addition, a term that restricts the resale of tickets for a price not exceeding 110% of the original price is void.

Promoters attempt to limit the resale of tickets (whether genuine or for profit) to prevent scalping which puts a buyer in a difficult position if they are unable to use the tickets. The legislation aims to allow the genuine resale of tickets by prohibiting this type of term.

In addition, section 37L prohibits the use of ticket buying ‘bots’ which are a type of software that allows the bulk purchase of tickets online.

There are a number of risks in buying from a private seller as opposed to the original promoter, including that the tickets may be forged or may not arrive in time for the event. It is important to check that the event is sold out first prior to buying tickets from unofficial sellers. There are re-selling websites that may give the impression that they are the official site for the event when that may not be the case.

Live Performance Australia has developed the Ticketing Code of Conduct to assist both businesses and consumers. The Code applies only to events run by members (not sporting events) and does not have the force of law, but members of LPA agree to comply with the code.

In addition to ticket sales, the code includes information regarding a consumer’s rights in relation to the consumer guarantees under the Australian Consumer Law as they apply to ticket sales and live performances. For example, cancellation or rescheduling of a concert entitles a consumer to a refund.

There are a number of circumstances where a consumer will not be entitled to a refund. For example, in the event that a cast member is unavailable, it is not unusual for a promoter to reserve the right to substitute a different cast member (understudy) to perform.

The code also includes a dispute resolution process to allow disputes between promoters and consumers to be resolved without resorting to legal action.

Gift cards sold to consumers after 1 November 2019 are required to have an expiry date of at least three years from the date of sale. The card must clearly show the expiry date or as a period of time from the date of purchase.

Cards sold before 1 November 2019 are not subject to the requirements.

A business is not permitted to charge any fees following the purchase of the card, for example to activate the card or to enquire about the balance left.

Cards that are not considered gift cards for this legislation include:

South Australian legislation relating to gift cards was repealed in September 2020 to avoid confusion with the Commonwealth legislation.

[see Competition and Consumer Act 2010 (Cth) Sch 2 s 99A, 99B and 99C and Competition and Consumer Regulations 2010 (Cth) r 89A, 89B and 89C].

The Lotteries Act 2019 (SA) and Lotteries Regulations 2021 (SA) commenced on 10 December 2021.

The lotteries provisions previously contained in the Lottery and Gaming Act 1936 (SA) have been reformed and inserted into the new Act.

The Act covers unlawful lotteries, licensed lotteries, licensing of suppliers of lottery products, and restriction on sale of lottery tickets by children.

The regulations cover permitted lotteries (fundraiser lotteries, non-fundraiser lotteries), licensed lotteries (fundraiser, trade promotion lotteries, suppliers of lottery products), minor bingo session rules, sweepstakes rules, card jackpot lottery rules, minor trade promotion rules, participation lottery rules, Calcutta sweepstakes rules, major lottery rules, major bingo session rules, instant lottery rules, major trade promotion lottery rules, and trade promotion (instant prize) lottery rules.

Trade promotions are used by some businesses to promote goods or services. The Lotteries Act sets out detailed requirements for trade promotions to protect consumers. For example, the business must obtain a licence to run the lottery if the prize is worth $5,000 or more.  Entry into the lottery must either be free or as part of the purchase of goods or services. There are limits on the type of goods that can be offered as prizes; for example, the goods cannot include firearms or tobacco products, or goods or services that are illegal to sell in South Australia.  

If a prize is more $1,000, the prize must be offered to be paid by transfer or cheque.

The management committee of the organisation or people involved in the conduct or promotion of the lottery are restricted from entering major lotteries, major bingo sessions, trade promotions and card jackpots. More detailed information about how organisations can raise funds, including lotteries can be found at the sa.gov.au webpage on Fundraising for Organisations (link opens new window).

Further information about the reforms can be found on the Consumer and Business Services website (link opens new window).