If you run an online business in Australia (or sell to Australian customers from overseas) you must comply with the Australian Consumer Law (ACL).
The ACL protects consumer rights and sets rules for how businesses advertise, sell, and deliver goods or services. Breaches can lead to fines, legal action, and reputational damage.
This guide, prepared by our eCommerce lawyers, covers how the ACL applies, including who it applies to, your legal obligations, penalties for non-compliance and case studies with practical compliance tips for businesses.
Key Takeaways
The ACL applies to all businesses selling to Australian consumers – even if you’re based overseas
Consumer guarantees are non-negotiable and cannot be excluded by contract
Misleading advertising, reviews, or refund policies are illegal
The law covers digital products and services as well as physical goods
ACL enforcement continues to be a top priority for the ACCC
What is the Australian Consumer Law?
The ACL is found in Schedule 2 of the Competition and Consumer Act 2010 (Cth). It’s a uniform law that applies across all Australian states and territories, ensuring consistency in consumer protections.
The ACL applies whether you’re selling via:
Your own website
Online marketplaces (e.g. Amazon, Etsy)
Social media channels
Mobile apps or SaaS platforms
For a broader overview of your obligations in B2B transactions, check out our full guide on the Australian Consumer Law and how it applies to B2B arrangements.
Who Must Comply with the ACL?
You must comply with the ACL if your business:
Is based in Australia
Is overseas but targets or transacts with Australian consumers
Provides goods, digital products, or services to people in Australia
Even if your contract says it is governed by foreign law, Australian consumers still retain their rights under the ACL.
What Transactions Are Covered?
The ACL automatically applies to transactions where:
Goods or services are for personal, household, or domestic use
The total cost is under $100,000, regardless of use
Goods are vehicles or trailers used to transport goods for business purposes
Note: Businesses cannot contract out of or avoid these obligation by using disclaimers or refund exclusions that mislead customers about their rights.
Consumer Guarantees That Apply Automatically
The ACL imposes statutory guarantees that cannot be excluded or restricted. These include:
Guarantee Type | Description | Relevant ACL Section |
Acceptable Quality | Goods must be safe, durable, and free from defects | s54 |
Fit for Purpose | Goods/services must do what they are supposed to do | s55 (goods), s61 (services) |
Due Care and Skill | Services must be provided with acceptable care and skill | s60 |
Reasonable Time for Supply | Services must be supplied within a reasonable time | s62 |
Any attempt to exclude these guarantees is void under s64 of the ACL.
Misleading and Deceptive Conduct
The ACL prohibits businesses from engaging in misleading or deceptive conduct. This includes:
- False or exaggerated claims about products or services
- Inaccurate testimonials or endorsements
- Concealing important information from consumers
The Australian Competition and Consumer Commission (ACCC) regularly investigates online businesses for misleading advertising and unfair practices.
If you use competitor comparisons in your marketing, make sure you understand the rules around comparative advertising under Australian law.
Digital Products and International Transactions
The ACL applies to:
- Digital products (e.g. software, apps, streaming services)
- Subscription and “pay-as-you-go” digital services
Even if your terms state that “no refunds” apply or are governed by a foreign law, Australian consumer protections cannot be overridden (see ACL s67).
Real-World Case: ACCC v Valve Corporation
Valve Corporation, a US-based video game provider, claimed it had no obligation to offer refunds under US law. The Federal Court disagreed, ruling that Valve was doing business in Australia and subject to the ACL. Valve was fined and required to update its refund policy.
Key takeaway: If you sell to Australian customers – ACL rules apply.
Practical Compliance Tips for Online Businesses
1. Review Your Website Terms
Remove any clauses that attempt to exclude ACL rights
Be clear and specific about refund and return rights
Ensure your terms align with the latest 2025 enforcement trends
Your online store’s legal compliance starts with well-drafted website terms and conditions that are enforceable.
2. Train Staff and Develop Procedures
- Educate staff on consumer rights and complaint handling
- Implement quality control checks and a process for investigating product defects
3. Audit Your Marketing and Content
Verify all claims about benefits or performance to ensure they can be substantiated by you
Review social media posts and user testimonials to ensure accuracy
Learn how to legally manage your reputation with our guide on responding to negative online business reviews.
4. Respond Promptly to Complaints
- Create a step-by-step workflow for handling returns or defects
- Address customer complaints quickly and fairly
- Document all interactions to demonstrate compliance if challenged
5. Prepare for ACCC Investigations
- Cooperate with the ACCC or other regulators if contacted
- Understand the risks of fines and enforceable undertakings
- Ensure legal advice is readily available for your business
Enforcement and Penalties
Breaching the ACL can lead to serious financial and reputational consequences, including:
Fines (up to millions of dollars per contravention)
Court orders, including refunds or public correction notices
Brand damage and negative press
Enforceable undertakings – binding legal agreements to change your business practices
Real-World Case: Gonzalez v Agoda
Agoda (a global travel site) was found to be subject to the ACL despite being based overseas. The ruling reinforced that foreign companies are not immune from Australian law when selling to Australians.
While this decision strengthens the legal position of Australian consumers, it also highlights practical challenges and it often depends on the overseas business’s cooperation, presence in Australia, or willingness to comply voluntarily.
Frequently Asked Questions
What are consumer guarantees under the Australian Consumer Law?
Consumer guarantees are statutory rights that ensure goods are of acceptable quality, fit for purpose, and services are delivered with due care and skill. These guarantees cannot be excluded by contract.
Does the ACL apply to foreign online businesses selling to Australians?
Yes. If a foreign business is carrying on business in Australia or targets Australian consumers, the ACL applies regardless of your business location or any foreign law clause in the contract.
Can I refuse a refund if a customer claims a product is faulty?
You may investigate the claim to determine if it is genuine. If the product is not faulty or the claim is unfounded, you can decline a remedy. However, you must comply with your obligations under the ACL.
What happens if my business breaches the ACL?
Consequences can include fines, enforceable undertakings, compensation orders, and reputational damage. The ACCC may also require public notices of breaches.
Does the ACL cover digital products and software?
Yes. The ACL applies to digital products and services, including software-as-a-service (Saas), apps, and streaming platforms.
I am a small business, does the ACL apply to me?
Yes. The ACL applies to all businesses, regardless of size or turnover. If your business sells goods or services to Australian consumers, you’re subject to the ACL – whether you’re a sole trader, startup, or large corporation.
Small businesses can also have their own consumer rights when they purchase goods or services under $100,000 or for personal/domestic use.
Not sure when to seek legal advice? Find out what a small business lawyer can do for your business.
