Businesses which advertise delivery times on their websites are on notice to make sure that they can comply with those timeframes and deliver on time – or risk high penalties for making false or misleading representations to consumers in breach of the Australian Consumer Law[i].
On 4 March, 2024 the Australian Competition and Consumer Commission (‘ACCC’) commenced Federal Court proceedings against national fashion retailer, Mosaic Brands Limited (‘MBL’) – owner of Katies, Noni B and Rivers brands – alleging that, between 23 September 2021 and 31 March 2022, MBL breached the Australian Consumer Law:-
- by making false or misleading representations to consumers that it would deliver products purchased online within the advertised delivery timeframes – which although varied across its websites, were advertised as being “generally two to 17 business days from the purchase date”[ii]; and
- by wrongly accepting payment for goods during the same period, when it failed to deliver orders within the advertised timeframes, or within a reasonable timeframe, or not at all.[iii]
The Australian Consumer Law provides that “A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”[iv]
In this case, the ACCC took action after it received hundreds of complaints from consumers about MBL’s delivery delays which showed that “over 26 per cent of items ordered were dispatched from [MBL’s] at least 20 days, and in some cases more than 40 days, after the purchase date”[v].
The ACCC is also alleging that during the period between 23 September 2021 to 23 October 2022, MBL misrepresented consumer guarantee rights in terms and conditions published on a number of its brand websites, stating that consumers were only eligible for a refund for a faulty product if they sought the refund within six months of the purchase date.
This is not correct. The Australian Consumer Law provides consumers with rights and remedies against suppliers (including on-line retailers) and manufacturers of goods or services acquired by them that do not comply with consumer guarantees. The consumer guarantees provided under the Australian Consumer Law cannot be excluded, modified or restricted and are in addition to any manufacturer’s or supplier’s warranty – with high penalties applying for breach. Business cannot apply a time limit on a consumer’s rights to notify them or return a faulty product. Also, if a product has a major problem the consumer retains the right to choose a refund (in addition to having a replacement or repair). High penalties apply for breach. The Federal Court of Australia recently ordered Mazda Australia Pty Ltd to pay $11.5million in penalties for making misleading statements about consumer guarantee rights[vi], while Fitbit LLC was also recently ordered to pay penalties of $11million for misleading consumers about their consumer guarantee rights.[vii]
Some takeaways
Online shopping is now ubiquitous and delivery timeframes can often be the term that sways a customer to buy from you – especially if the product is required for a specific event and date.
In addition to risking high penalties for breach of the Australian Consumer Law, failure to comply with delivery timeframes or consumer guarantees can result in damage to brand reputation which can be considerable – taking time to regain.
Businesses can take steps to prevent breaches of the Australian Consumer Law and reduce risk of damage to business reputation, including:-
- Businesses should ensure that they can comply with delivery timeframes they advertise in store and online – including by ensuring the advertised stock is available;
- If delays are likely or foreseeable, businesses should inform customers upfront and promptly when delays may occur. Prompt and courteous communication with customers is key.
- Conduct ongoing staff training – including at management and salesperson levels.
- Expert legal advice should be considered to ensure that business terms and conditions (including website terms and conditions) comply with requirements of the Australian Consumer Law – including consumer guarantees.
Disclaimer: This article is not intended to be a substitute for obtaining legal advice.
© Stephens Lawyers & Consultants, 5 March 2024. Authored by Rochina Iannella, Lawyer, Stephens Lawyers & Consultants
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[i] Competition and Consumer Act 2010. Schedule 2 – Australian Consumer Law. Commenced on 1 January 2011.
[ii] ACCC Media Release, ‘Noni B, Rivers, Katies Owner Mosaic Brands in court for allegedly failing to meet advertised delivery timeframes’, 4 March, 2024 – Noni B, Rivers, Katies owner Mosaic Brands in court for allegedly failing to meet advertised delivery times | ACCC
[iii] Ibid.
[iv] Section 18(1) of the Australian Consumer Law (Op cit.)
[v] ACCC Media Release, ‘Noni B, Rivers, Katies Owner Mosaic Brands in court for allegedly failing to meet advertised delivery timeframes’, 4 March, 2024; Op cit.
[vi] ACCC Media Release, ‘Mazda to pay $11.5m for misleading consumers about consumer guarantee rights for serious vehicle faults’, 14 February, 2024 – Mazda to pay $11.5m for misleading consumers about consumer guarantee rights for serious vehicle faults | ACCC
[vii] ACCC Media Release, ‘Fitbit to pay $11m in penalties for misrepresentations about consumer guarantee rights’, 12 December, 2023 – Fitbit to pay $11m in penalties for misrepresentations about consumer guarantee rights | ACCC ; ALSO SEE Stephens Lawyers & Consultants, ‘Australian Consumer Guarantees and Warranties: Is Your Business Compliant?’, 24 January 2024: Australian Consumer Guarantees and Warranties: Is Your Business Compliant? – Update January 2024 – Stephens Lawyers & Consultants