Consumer Laws

• Overall

  Consumer laws protect the rights of consumers and identify the responsibility of businesses

  They restrict how businesses sell products by preventing them from acting dishonestly

  Importance for businesses: businesses need to know the laws relevant to them, and keep up with any changes to the law, staff must be trained to sell their products accurately and understand what customers rights are if the product doesn’t meet expectations and it is the business's responsibility to understand all relevant consumer laws and apply them to marketing practices
• Deceptive and misleading advertising 1

  Creates a false impression of a product and what it can do, so customers are misled

  It’s the most serious element of consumer laws because of how influential advertising can be

  For example: the CCA 2010 makes deceptive advertising illegal, but some businesses till engage in this unfair practice

  For example: greenwashing → some stores lie about how environmentally friendly they are like when a product says that the product is 100% recycled when it isn’t
• Deceptive and misleading advertising 2

  Bait and switch is also used when a product many be advertised at a low price to lure customers to the store, where they are sold higher-priced products

  Dishonest advertising → ads could include misleading words or claims a product can do something it can’t (Claiming Red Bull gives you wings when it can’t, resulted in them having to pay a 13 million dollar settlement fee)
• Price discrimination

  is when businesses set different prices for the same product in different markets, unfairly proving favourable treatment for certain customers

  It is illegal if it reduces competition, or if there is no valid reason for it

  According to the Australian Consumer Law (2011) price discrimination is legal if: there are higher transport or production costs in different markets like selling in the city vs country or if the discrimination is in place as an act of good faith to meet a price offered by a competitor
• Implied conditions overall

  are the terms of a contract that are assumed to exist, even though they might not be verbally spoken or written down

  Australian Consumer Law (2011) replaced implied conditions with consumer guarantees (which are a set of rights and remedies for products that are defective
• Implied conditions - acceptable quality

  Acceptable quality - considers price, advertising, and normal expectations of the product

  The product needs to be fit for purpose → if a bucket has a hole in the bottom, it wouldn’t be fit for purpose of holding water

  The product needs to be well-made and free from defects → a dress shouldn’t be sold when it has a coffee stain on it

  The product is safe and durable → your phone shouldn’t be exploding, and the battery shouldn’t stop charging after only two weeks
• Warranties 1

  is a business’ promise to fix any defects in the goods or services they offer

  The Consumer Contract Act (CCA) mandates businesses to compensate customers for defective goods or services, provide warranties, and clearly state their terms and conditions. False or misleading statements about warranties are illegal. Businesses can use warranties as a marketing tool, gaining an advantage by offering longer warranties or better features.
• Warranties 2


  Defective products can be resolved through monetary refunds or exchange for a different product. Businesses are required to offer refunds when products fail to match description or fail to perform their function, but not for customer changes or damage.
• Why is government regulations important in marketing

  protect consumers

  protect businesses

  increase consumer trust and confidence in businesses. This results in people buying more products, which is good for the economy

  promote and stimulate competition and fair trade, which benefits consumers, businesses and the community in general

  encourage businesses to do the right thing

  promote competition and create a more equal playing field.