Do you advertise goods and services online? And do you offer pre-selected add-ons at extra cost? Beware of new changes to Australian Consumer Law (ACL).

Changes to the ACL were announced late last month and will affect business advertising goods and services for sale online and who offer pre-selected options that may be purchased by consumers for extra cost.  In these cases the consumer is required deselect these options if they don’t wish to include them in the purchase.

The issue
“Sometimes, where these options are preselected by the seller, the consumer will then need to deselect them if they don’t wish to include the options as part of their purchase,” explains Karina McDougall, Senior Associate at Australian Business Lawyers & Advisors

“Previously under the ACL, sellers were not required to include any optional charges in the headline price advertised to consumers. 

As a result the headline price for goods or a service may not be a true representation of the total price where the seller had included pre-selected, chargeable options. This was particularly an issue with online sales,” Karina adds.

For example, a florist offers a bouquet of flowers for sale on their website for $50 (which is the headline price). However a box of chocolates can be purchased for extra $15 and is included as a preselected option.

This means when the consumer selects the flowers, they are automatically asked to pay $65, rather than $50. The consumer can choose to purchase just the flowers, but only if they deselect the chocolates option first.    

“The new changes require businesses must now ensure the headline price includes all charges automatically applied by the seller, regardless of whether the consumer can choose to deselect these options during the course of the transaction,” says Karina.

“Looking at the florist example, this means they must advertise a headline price of $65 if the chocolates are included as a preselected option. The headline price would be $50 only if the flowers included no preselected options.”

What does your business need to do?
You must ensure any preselected options are included in the headline price, regardless of whether the consumer has the option to deselect these options. Businesses should also ensure any system changes required to meet this requirement are undertaken prior to 26 October 2019 (which is the date these changes take effect).    

“In light of the increased focus on consumer protections and regulatory powers, businesses should ensure all staff members participate in regular compliance training, both as a reminder of business obligations under the consumer laws and to keep up to date with any changes,” suggests Karina.

If this article raises any concerns for your business, get in touch with Karina McDougall from Australian Business Lawyers & Advisors on 1300 565 846.