The new disclosure requirements

The Fair Trading Act 1987 (NSW) (Fair Trading Act) now requires businesses to take "reasonable steps" to ensure that consumers are aware of the "substance and effect of any term or condition relating to the supply of the goods or services that may substantially prejudice the interests of the consumer".

The types of terms or conditions that may require disclosure include terms that:

• exclude the liability of the supplier;

• provide that the consumer is liable for damage to goods;

• permit the supplier to provide data about the consumer, or data provided by the consumer, to a third party in a form that may enable the third party to identify the consumer; and

• require the consumer to pay an exit fee, a balloon payment (typically a large final payment at the end of the loan to clear the debt) or other similar payment.

The Fair Trading Act also requires disclosure where there is a financial incentive arrangement (eg. payment of a commission) with an intermediary, such as an agent or broker. The intermediary must disclose to the consumer the existence of the financial incentive. There is no requirement to disclose the specifics of the financial incentive.

When and how do you satisfy the disclosure requirements?

Disclosure must be made before a supplier commences the supply of goods or services eg. before the consumer signs the contract, makes payment or otherwise commits to the supply of goods or services.

Fair Trading NSW recommends that businesses:

• be clear and concise when making disclosures;

• be proactive and upfront (rather than placing the onus on consumers having to search for the relevant terms and conditions);

• consider whether automatic disclosures may be appropriate; and

• consider how to satisfy the obligation of taking "reasonable steps" to ensure the consumer is aware of any terms and conditions which may substantially prejudice the interests of the consumer (eg. making consumers tick a pop-up box confirming they have been notified of certain terms and conditions before they can proceed with their purchase).  

How can we help?

If you operate a business in NSW, it is time to review your consumer engagement contracts, be it an online form or formal written agreement.  Contact our Commercial team for assistance before you are approached by Fair Trading NSW.

The material in this article was correct at the time of publication and has been prepared for information purposes only. It should not be taken to be specific advice or be used in decision-making. All readers are advised to undertake their own research or to seek professional advice to keep abreast of any reforms and developments in the law. Brown Wright Stein Lawyers excludes all liability relating to relying on the information and ideas contained in this article.

contact