Travel and accommodation: an industry guide to the Australian Consumer Law
This guide was
developed by:
- Australian Capital Territory Office of Regulatory Services
- Australian Competition and Consumer Commission
- Australian Securities and Investments Commission
- Consumer Affairs and Fair Trading Tasmania
- Consumer Affairs Victoria
- New South Wales Fair Trading
- Northern Territory Consumer Affairs
- Queensland Office of Fair Trading
- South Australia Consumer and Business Services
- Western Australia Department of Commerce, Consumer Protection
Copyright Commonwealth of Australia 2013
ISBN 978-0-642-74919-2
This publication is available for your use
under a Creative Commons By Attribution 3.0 Australia licence, with the exception of the Australian Consumer Law logo, photographs, images, signatures and where otherwise stated. The full licence terms are available from the
Attribution 3.0 Unported licence page on
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Manager
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Langton Crescent
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Email: medialiaison@treasury.gov.au
Communications
The Treasury
Langton Crescent
Parkes ACT 2600
Email: medialiaison@treasury.gov.au
Introduction
The Australian
Consumer Law (ACL) is Australia's
national consumer law, replacing previous consumer protection laws in the
Commonwealth, states and territories. The ACL applies at the Commonwealth level
and in each state and territory.
This guide provides
information on the ACL for travel and accommodation businesses.
This guide is relevant
to you if your business:
- provides holiday accommodation
- provides travel; for example, airlines or coach services
- provides services related to travel, such as tours and recreational activities
- markets, sells or takes bookings for any of the above.
It covers key aspects
of the law such as refunds and cancellations, focusing on issues where:
- industry bodies have requested more detailed guidance for business
- consumers frequently report problems to national, state and territory consumer protection agencies.
- This guide supplements the ACL guides for business and legal practitioners, available from consumerlaw.gov.au:
- Consumer guarantees
- Sales practices
- A guide to unfair contract terms law
- Avoiding unfair business practices
- Compliance and enforcement: how regulators enforce the Australian Consumer Law
- Product safety.
In addition, guides to unfair contract
terms for specific industries can be found on the Australian Consumer Law website.
This guide gives general information and
examples – not legal advice or a definitive list of situations where the ACL
applies. You should not rely on this guide for complete information on all your
obligations under the ACL.
For more information, visit:
State and territory consumer protection agencies
Terminology
For the purposes of
this guide:
A supplier is anyone – including a trader, a
retailer or a service provider – who, in trade or commerce, sells, exchanges,
leases, hires or provides products or services to a consumer.
Trade or commerce means in the course of a supplier's or manufacturer's business or
professional activity, including a not-for-profit business or activity.
A consumer is a person who buys any of the
following:
- any type of products or services costing up
- to $40,000 (or any other amount set by the ACL in future) – for example, an airfare or hotel accommodation
- a vehicle or trailer used mainly to transport goods on public roads. The cost of the vehicle or trailer is irrelevant
- products or services costing more than $40,000, which are normally used for personal, domestic or household purposes – for example, a luxury cruise.
A person is not a consumer if
they buy products to:
- on-sell or resupply
- use, as part of a business, to:
o
manufacture or
produce something else (for example, as an ingredient)
o
repair or
otherwise use on other goods or fixtures.
Major failure and minor failure refer to
failures to comply with consumer guarantees. The ACL
does not use the term "minor"; it only makes reference to a failure that is "major" and "not major".
However, throughout this guide the term "minor
failure" is used for simplicity and will apply to circumstances where a
failure will not be major.
A representation is a statement or claim.
Consumer guarantees on services
Under the ACL, you
must meet the consumer guarantees of providing services:
- with due care and skill
You guarantee to use an acceptable level of
skill or technical knowledge when providing the services, and take all
necessary care to avoid loss or damage
- which are fit for any specified purpose
You guarantee that services will be
reasonably fit for any purpose specified by the consumer; and any products
resulting from the services are also fit for that purpose. You also guarantee
that services, and any resulting products, are of a standard expected to
achieve the desired results that the consumer made known to you
- within a reasonable time (when no time is set)
You guarantee to supply the service within
a reasonable time. What is "reasonable" will depend on the nature of the services.
The consumer guarantees apply to services
sold in trade or commerce, that
- were purchased on or after 1 January 2011
- cost up to $40,000 (or any other amount set by the ACL in future), regardless of purpose or use
- cost more than $40,000, and are normally acquired for personal, domestic or household purposes – for example, a luxury cruise or travel agent services.
Services not covered by consumer guarantees include:
- services bought before 1 January 2011. These are covered by statutory implied conditions and warranties under the Trade Practices Act 1974 and state and territory legislation in force before 1 January 2011
- services costing more than $40,000, which are usually for commercial use – for example, chartering a cargo vessel to transport livestock
- transportation or storage of goods for the consumer's business, trade, profession or occupation.
Consumer guarantees
cannot be excluded, even by agreement.
For more information
on consumer guarantees applying to services, refer to Consumer guarantees: a
guide for business and legal practitioners, available from the Australian Consumer Law website.
Major vs minor failures
When a service fails
to meet a consumer guarantee, your obligations depend on whether the failure is
major or minor.
A major failure with
services is when:
- a reasonable consumer would not have acquired the services if they had known the nature and extent of the problem. For example, a reasonable consumer would not pay to stay in a holiday rental if they knew it was infested with mice
- the services are substantially unfit for their normal purpose and cannot easily be made fit, within a reasonable time. For example, a consumer books a holiday at a health resort where the staff are not qualified to provide the health services
- the consumer told the supplier they wanted the service for a specific purpose but the services, and any resulting product, do not achieve that purpose and cannot easily or within a reasonable time be made to achieve it. For example, a consumer books a premium air ticket with additional leg room, telling the airline they need room to stretch out an injured leg; but their seat does not allow them to do this
- the consumer told the supplier they wanted a specific result but the services, and any resulting product, do not achieve that result and cannot easily or within a reasonable time be made to achieve it. For example, a consumer books a shuttle bus service to the airport, specifying they want to arrive in time for a particular fight, but the bus is running late and the consumer misses their fight
- the supply of the services has created an unsafe situation. For example, a family with children books a holiday house where the balcony rails are too low to prevent children falling over.
When there is a major
failure, the consumer can:
- cancel the services and get a refund for any unconsumed services (for example, the unused nights of a hotel stay), or
- keep the contract and get compensation for the difference in value between the service delivered and what they paid for.
The consumer gets to
choose, not the supplier.
The consumer may also seek compensation for
any consequential or associated loss or damage resulting from the supplier's
failure to meet the consumer guarantees. The loss or damage must have been
reasonably foreseeable and not caused by something outside human control, such
as a cyclone.
When the problem is minor, the consumer
cannot cancel the service and demand a refund immediately. They must give you,
the supplier, an opportunity to fix the
problem:
- free of charge, and
- within a reasonable time.
If you refuse or take
too long to fix the problem, the consumer can get
someone else to fix the problem and ask you to pay reasonable costs they
incurred in getting someone else to fix the problem, or cancel the service and get a refund.
Example:
A family books hotel accommodation,
specifying they need a cot for their baby. When they arrive at the hotel, there
is no cot in their room. The hotel can easily remedy this problem by providing
a cot, so it is not a major failure. This must be done within a reasonable
time, otherwise the consumer may terminate the contract and ask for a full refund.
A consumer may be entitled to compensation
from you if they suffered any loss or damage because of the failure, and it was
reasonably foreseeable that they would suffer loss or damage because of the
failure.
Allowances for recreational service providers
Under the Competition and Consumer Act 2010 and some
state and territory fair trading laws, suppliers of recreational services can
exclude, limit or modify liability when they do not meet the consumer
guarantees to provide services:
- with due care and skill
- fit for any particular purpose
- within a reasonable time (when no time is set).
Suppliers may only limit their liability
for death or personal injury, including illness (mental or physical) and disease, but not for property loss.
If you are a recreational service provider,
you should get legal advice to establish whether you can limit your liability.
Common issues
Online bookings
If you use an online
booking agent or website, they will have their own terms and conditions in
relation to deposits, booking fees and cancellations. Sometimes these terms and
conditions may conflict with yours, so it is important to provide consumers
with clear information about relevant terms and conditions of both the online
booking provider and the end provider (your business).
You should also be
aware that consumers may rely on representations made by an online booking
provider regarding certain aspects of your services; for example, room type,
quality rating or views.
To minimise the risk
of a dispute:
- ensure you have an agreement with the online booking provider that clearly sets out the relevant terms and conditions
- provide clear information on who the consumer should contact to change or cancel their booking
- ensure images of rooms have tags or titles indicating the room type
- clearly disclose if a quality "star" rating is self-rated.
Holiday deals and group buying
Group buying websites
– also referred to by some people as "daily deals" or "deal of
the day" – sell vouchers or coupons for products and services with
discounts. In some cases, the vouchers are offered on the condition that a
minimum number of buyers take up the deal.
Common issues
encountered by consumers include non-supply and incomplete supply of services,
and difficulty in booking services and redeeming vouchers.
If you offer these
deals you need to be aware of the potential demands and risks. You should
consider the potential demand created by advertising your services through
group buying websites and whether your business can deliver those services on
time and in a reasonable manner. For example, you may want to limit the deal
offered so it doesn't restrict your ability to serve both regular and new
customers.
You should also work
with the group buying website to:
- ensure that you can deliver services as advertised and that the terms and conditions of sale are fair and clearly expressed
- ensure any terms and conditions are clear; for example, if you only intend to offer the services on certain days of the week or for a limited time
- make sure any price representations are accurate.
Example:
A consumer purchased
an online group buying voucher for six nights' accommodation in a "beach
view" room at a resort, valid for use within 12 months of purchase.
A month later, he
tried to redeem the voucher. However, the resort informed him that the "beach
view" rooms advertised were not available for the selected dates, and he
would be offered different rooms at an extra cost of $100 per night.
Not wanting to incur
these extra costs, the consumer enquired about different dates within the
12-month booking period, but found the "beach view" rooms had been
booked out for the entire period.
Because the resort
could not offer the consumer the accommodation that had been advertised, it
could be argued that they had misled or deceived the consumer into making the
purchase and the resort was therefore liable to provide a full refund.
In addition, because
the resort had accepted payment for the advertised accommodation, it was
required, by law, to supply the accommodation within the voucher's 12-month
validity period or offer the consumer a full refund. The supplier could make up
for the lack of available "beach view" rooms by offering the consumer
an alternative arrangement (such as a "beach view" room in another
property of the same quality and standard), but the consumer does not have to
accept this.
Telemarketing sales
Many travel and
accommodation deals are also sold through telemarketing, which may make them an
"unsolicited consumer agreement" under the ACL.
There are specific
provisions in the law that apply to this type of selling.
Salespeople who make
unsolicited contact with consumers to sell products or services must comply
with:
- limits on the days and times when they can call or visit
- requirements for what they must tell the consumer; for example, their cooling-off rights
- requirements for the sales agreement, including that it must be in writing
- restrictions on when they can take payment and supply the products or services.
Even if you have
contracted another business to do telemarketing for you, your business is still
responsible for compliance with the law. The contractor is considered your
dealer or representative.
For more information
on unsolicited supplies, refer to Sales practices: a guide for businesses
and legal practitioners, available from the Australian Consumer Law website.
Representations and expectations of holiday accommodation
Consumers sometimes
complain when accommodation appears different from what was advertised by the
supplier.
Example:
Two friends travelling
together book a deluxe two-bedroom suite. The photos of this room type on the
hotel's website show separate sleeping areas, but when they arrive at the
hotel, they find their beds are right next to each other. When they raise the
issue with the hotel manager, they are told it will cost an extra $500 to
upgrade to a room that meets their requirements.
The best approach is to advertise what the
consumer will get accurately. If there are differences between what is
advertised and the accommodation that may ultimately be supplied – for example,
some rooms have substantially different layouts or views from those represented
– you should include a clear and legible warning at the time of booking
alerting the consumer to the possibility that they may receive something different.
You should also ensure any descriptions and
photos of your accommodation do not mislead consumers about its price, quality,
location or amenities. It might also be helpful to include tags or titles on
the photographs shown on your
website.
It is unlawful for a business to make false
or misleading representations about products or services when supplying,
offering to supply, or promoting those products or services.
For instance, a business must not make
false or misleading representations about:
- the standard, quality, value or grade of products or services
- a particular person agreeing to acquire products or services; for example, falsely claiming a celebrity as a client
- testimonials by any person relating to products or services
- the sponsorship, approval, performance characteristics, accessories, benefits and uses of products or services
- the price of products or services
- a buyer's need for the products or services
- any guarantee, warranty or condition on the products or services
- the requirement to pay for any guarantee, warranty or condition on the products or services.
Whether a
representation is considered false or misleading will depend on the
circumstances of each case. A representation that misleads one group of
consumers may not necessarily mislead another group. Whether a representation
about a service was misleading would depend on whether it would mislead a
reasonable person within this group.
Example:
A telemarketing
salesperson called a consumer, offering vouchers for fourteen nights' holiday
accommodation. The salesperson persuaded the consumer by comparing the cost of
the vouchers to the normal price of the accommodation.
The consumer agreed to
buy the vouchers. However, when he received them, he found they did not cover
the entire cost of accommodation – they only entitled him to a discount off the
price. They also contained additional conditions such as purchasing meals in
specified locations.
The consumer was
entitled to a refund, as the supplier had made representations to him about the
service that would have misled a reasonable person.
Component pricing
You must not promote
or state a price that is only part of the cost, unless also prominently
advertising the single (total) price.
The single price means
the minimum total cost that is able to be quantified (or calculated) at the
time of making the representation in order for a consumer to purchase the
service.
The single price is
calculated by adding up each of the price components that you are able to
quantify when you make the price representation; for example, any tax, duty,
fee, levy or charge imposed on you.
A prominent single
price is one that:
- stands out so it can easily be seen by a consumer
- is clear, eye-catching and very noticeable.
Example:
A travel business
advertises an overseas package holiday (fights and accommodation) for $1990. In
fine print at the bottom, it states this price excludes airport taxes. These
are known costs totalling $250, and should therefore be part of the total price.
The total price of
the holiday ($2240)
should have been displayed as prominently as the $1990 package price, because
the total price was quantifiable.
While what is "prominent"
may vary on a case-by-case basis, you should consider factors such as the size,
placement, colour and font of the price, as well as the background of the
advertisement. For example, if a single price is smaller or in a colour that is
harder to read than any component price, then this is likely to mean it is not
as prominent.
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