A growing number of people are choosing to start or expand a business online. This may seem like an easy option, but it’s important to know that your online responsibilities are the same as if you were operating a physical shop. We hear from many small business owners who have run into difficulty because they weren’t clear on their rights or responsibilities.
The ACCC promotes competition and fair trading to make markets work for everyone. We use a range of tools to encourage compliance with the Australian Consumer Law, including enforcement and business education.
Here is some guidance for any small business who may be starting up online or already has an online presence.
Any information that you post online about your products, services or business must be accurate and truthful, whether it’s on social media, your website or any other online platform. This information includes prices, images and descriptions of what you are offering, as well as shipping options and delivery times.
It is against the Australian Consumer Law for businesses to make false or misleading claims, or engage in conduct that is likely to mislead or deceive, when advertising online.
Even if you did not intend to break the law, there can be significant penalties for non-compliance.
The ACCC alleged that Amaysim Australia Ltd and Lycamobile Pty Ltd each separately misrepresented that their mobile phone plans were ‘unlimited’ in advertisements on social media designed to entice new customers, when in fact the plans had a maximum data allowance.
The ACCC issued an infringement notice to each company for alleged false or misleading representations about their mobile phone plans. Amaysim paid $126,000 and Lycamobile paid $12,600 in penalties.
Read more in the Amaysim and Lycamobile ACCC media release.
Online reviews are a great way for consumers to make informed purchasing decisions, but reviews should be independent and genuine. Reviews should only be written by those who have actually experienced the product or service, and reflect their genuinely held opinion.
Writing fake or misleading reviews is against the law. You should not ask others, including family and third parties, to write reviews about your business without prominently disclosing their personal connection or commercial relationship with your business in that review.
Some businesses offer incentives to customers to encourage them to provide reviews. However, these incentives must be equally applicable to both positive and negative reviews, and be prominently disclosed to users.
If your business receives a fake review, you should notify the review platform immediately and request that the review be removed. You can also respond to the review directly in a professional manner to correct the public record. Businesses and review platforms that do not remove reviews that they know to be fake risk breaching the Australian Consumer Law.
Service Seeking Pty Ltd is an online tasking platform, where customers can seek quotes for jobs such as gardening, building or cleaning services from businesses registered with the platform.
Service Seeking allowed the businesses on its platform to use a template to draft their own reviews and give themselves their own star ratings of jobs the businesses had done, and send these on to their customers. If the customer did not respond to the business’ review within three days, the review was automatically published on Service Seeking’s platform.
Following ACCC action, the Federal Court ordered Service Seeking to pay $600,000 in penalties for making false or misleading representations regarding reviews of businesses which were offering services on the platform.
Read more in the Service Seeking ACCC media release.
Under the Australian Consumer Law, consumers have automatic rights when purchasing products or services, and these don’t change for online purchases. These rights are called the consumer guarantees.
Consumers are guaranteed that a product or service they have purchased will work and do what they have asked for. The consumer guarantees include that products supplied must be of acceptable quality, meaning that the products are safe, lasting, free from defects, look acceptable and do all the things someone would normally expect them to do.
The consumer guarantees also include that services must be provided with due care and skill or technical knowledge and taking all necessary steps to avoid loss or damage, be fit for purpose, and be provided within a reasonable time when there is no agreed end date.
If your products or services fail to meet a consumer guarantee under the Australian Consumer Law, you will need to remedy the problem. Regardless of your own policies, you may need to provide a repair, replacement or refund and, in some cases, provide compensation.
If your online business has its own refund or return policy, you need to honour the terms and the policy should be made transparent to consumers before they make a purchase. But remember that your policies operate in addition to, not in place of, the consumer guarantees. There are penalties for making false or misleading representations to consumers about their consumer guarantee rights.
When starting or operating an online business, you may purchase goods or services from other businesses. For example, you may need someone to build a website for your business, or you may be offered search engine optimisation services.
It’s in your interests to make sure any other businesses you deal with are genuine and that you carefully review any contracts before signing. This may mean researching the business and asking them to back up any claims they make, checking standard form contracts for any unfair terms and getting independent legal advice.
Consumer rights can also protect you in your dealings with other businesses. In many instances, when you purchase products or services for your small business, you may be considered a consumer and entitled to certain remedies under the consumer guarantees if something goes wrong.
For more business tips and guidance, head to our information pages for businesses.