Legal Responsibilities for Buying and Selling Online

With the increasing growth of people buying and selling online, it becomes more important to understand the responsibilities of online transactions. If you own a business, staying compliant means protecting your reputation and avoiding legal issues in e-commerce. For your consumers, it’s about safeguarding their rights and interests when making online purchases.

Today, we’ll delve into the essential legal responsibilities and protections under Australian law, so whether you’re running an online store or shopping online, you’re prepared to ensure a smooth transition experience.

Australian Consumer Law and what it means for E-Commerce

The Australian Consumer Law (ACL) is the national law that sets the rules for how businesses should operate online and in-store, ensuring fair and transparent dealings between sellers and consumers.

The ACL sits within Schedule 2 of the Competition and Consumer Act 2010 (Cth) (CCA). It regulates the rights of consumers and obligations for businesses in Australia in relation to interacting with customers, suppliers, and competitors, ensuring that all parties have clarity and legal protection in every transaction. In addition to the ACL, the wider CCA and the Privacy Act 1988 (Cth), govern how businesses handle other critical aspects of running an online business.

Therefore, for online businesses, adhering to these regulations is key as more and more consumers are shifting to digital platforms.

Seller Responsibilities Under Australian Consumer Law

If you’re selling products online, you must comply with specific legal obligations set by the government to ensure your consumers are treated fairly. These responsibilities include:

Understand Consumer Rights in Australia

The main goal of the ACL is to allow consumers to buy with confidence online. A consumer is entitled to:

Product Guarantees:

products must be of acceptable quality, match descriptions, and fit their advertised purpose.

Damages Guarantees:

if a product fails to meet basic guarantees, consumers are entitled to a repair, replacement, or refund.

Clear Information:

consumers have the right to receive transparent details about the product, including specifications, prices, shipping details, and return policies.

Privacy Protection:

consumers’ personal information must be protected from unauthorised access or breaches, and businesses must inform consumers about how their data is collected and used.

Set Clear Terms and Conditions

Terms and conditions (T&Cs) set out the terms on which a consumer is allowed to use your website and interact with your business, including purchasing your goods or services. Your T&Cs form a binding contract between you, as the website and business owner, and your consumers.

It is, therefore, critical for an online retailer to have clear T&Cs to rely on if a consumer disputes the terms on which the goods or services were purchased.

Key Clauses in T&Cs include:

a clear definition of the product offered;
details of the website ownership and intellectual property, such as your trademarks;
any guarantees, warranties and disclaimer of liability;
the refund policy;
updates and changes to T&Cs. You may want to change the T&Cs at any time and without notice, and it is, therefore, important to highlight that in the agreement to avoid any surprises down the track;
privacy policy clause; and
transaction methods. You will have to accurately specify the online payment methods (i.e. credit card, PayPal, Paymate, etc.)

Manage Refunds and Warranties Legally

Below are four key aspects of the refund process to keep in mind when you’re buying and selling online:

businesses are not obligated to provide refunds for change-of-mind purchases;
refunds should be given in the original form of payment whenever possible;
consumers have the right to cancel a contract and request a refund for major failures; and
refunds are mandatory for faulty products or services that breach consumer guarantees.

To comply with the law, your refund policies should specify:

circumstances where refunds are provided;
how the refund process works and the processing time;
documentation required for refunds; and
who covers the shipping costs for returned items.

Avoid Misleading Advertising

There are some important legal risks associated with false advertising and non-compliance with ACL. It’s therefore important to be careful, stay compliant, and consider that misleading conduct can include:

fake testimonials or exaggerated claims;
failure to disclose key T&Cs; and
offering deals that businesses cannot fulfil (e.g., bait advertising).

If a business is found guilty of false advertising, it can face hefty penalties. For individuals, fines can reach up to $500,000, while corporations may face penalties starting from $10 million or a percentage of their turnover, depending on the nature of the violation.

If the court can determine the value of the benefits gained from the breach, the penalty may be up to three times that amount. However, if the court cannot establish this value, the penalty could be set at 30% of the company’s adjusted turnover during the period when the breach occurred.

Consumer Complaints and Legal Recourse

Disputes or issues may occasionally arise, but effectively managing consumer complaints is a valuable opportunity to build trust and strengthen your online business. If a customer encounters a problem with your product or service, the steps for resolution include:

Direct contact: a consumer should first try to resolve the issue by contacting your business directly.
Formal complaint: if the matter remains unresolved, a consumer might submit a formal written complaint to your business’s head office.
Seek external assistance: if the issue is still unresolved, a consumer can approach state or territory consumer protection agencies (e.g. NSW Fair Trading), relevant industry associations, or alternative dispute resolution services offered by e-commerce lawyers.
Legal action: for unresolved cases, a consumer may seek legal advice and take the matter to the relevant state or territory tribunal (e.g. NSW Civil Appeals Tribunal or NCAT), small claims courts or higher courts for larger disputes.

Role of E-Commerce Lawyers

If your business is expanding online or facing legal challenges, consulting with a professional lawyer who specialises in e-commerce law can help protect your business and keep you on the right track.

E-commerce lawyers can assist with:

ensuring compliance with the ACL;
drafting clear and enforceable terms and conditions;
protecting intellectual property (IP) rights and data privacy; and
managing disputes and legal risks effectively.

Compliance with E-Commerce Law is Key to Protecting your Business

To summarise, complying with Australian commercial law involves more than just understanding your responsibilities; it requires ongoing attention and updates to your practices. Some general tips to keep your business protected include:

set clear policies and documentation for your customers;
understand and follow consumer protection laws and privacy regulations;
protect your IP rights, including trademarks;
keep customer data secure and comply with Australian privacy standards;
regularly update your T&Cs to reflect any legal or business changes;
establish procedures for handling customer complaints efficiently; and
seek legal advice when expanding your business or facing new challenges.

If you’re starting or managing an online business and need assistance navigating your legal responsibilities, H+A Legal is here to help. Our experienced team of e-commerce lawyers offers a range of commercial services to ensure your business thrives.