Consumer Rights and Responsibilities

Question 1

What is the purpose of the Australian Consumer Law?

Answer 1

They make sure that every transaction between buyers and sellers is fair to both parties. As it is illegal to do anything that might mislead or trick the consumer if they knew all the facts.

Question 2

What is the term called when a discount is provided to consumers when they refer other customers to a business?

Answer 2

Referral Selling

Question 3

What is the amount where a receipt is compulsory for all transactions?

Answer 3

> $75

Question 4

What are the days and times that door-to-door salespeople are allowed to sell goods and services?

Answer 4

Between 9am and 6pm on weekdays, and 9am to 5pm on Saturdays. Sundays, and public holidays are prohibited.

Question 5

How long does the cooling off period go for under the Australian Consumer Law?

Answer 5

10 days

Question 6

What is the purpose of the Competition and Consumer Act?

Answer 6

The Competition and Consumer Act encourages fair competition between businesses in all markets.

Question 7

What are the six banned anti-competitive practices?

Answer 7

Price Fixing, Misuse of market power, Predatory pricing, Exclusive dealing and Mergers and takeovers.

Question 8

What is the Price Fixing and how does it affect business practice?

Answer 8

Price Fixing is when two businesses in competition with each other agree to set identical prices for their products. It affects business practice because it prevents consumers receiving price benefits which the competition brings.

Question 9

What is Misuse of Market Power and how does it affect business practice?

Answer 9

It’s when larger businesses use their power unfairly to drive smaller competitors out of business. It means that consumers will have less competition in the long-run, enabling larger businesses to gain control of suppliers and prices.

Question 10

What is Predatory Pricing and how does it affect business practice?

Answer 10

It’s when a company drastically lowers their price to make it impossible for a competitor to remain in the market. This means less competition for consumers and generally higher prices.

Question 11

What is Exclusive Dealing and how does it affect business practice?

Answer 11

Exclusive dealing involves one business trading with another while imposing restrictions on that other business’ freedom to deal with its competitors. E.g McDonald sells Coca-Cola, but not Pepsi.

Question 12

What are mergers and takeovers and how does it affect business practice?

Answer 12

A merger or takeover is when two or more businesses become one business. The Act prohibits mergers and take-overs between businesses if they result in the competition being substantially reduced.

Question 13

What is it called when two or more businesses become one business?

Answer 13

A merger

Question 14

If there was a breach of the Competition and Consumer Act who would be the organisation who has the power to investigate this breach?

Answer 14

The Australian Competition and Consumer Commission.

Question 15

What are the benefits of competition with a market with a large number of sellers for consumers?

Answer 15

One of the best protections consumers can have is a market with a large number of sellers, all competing with each other to attract customers. Competition can help keep prices lower, and if one businesses gains a bad reputation, there are plenty of alternatives available. It also gives consumers more variety of goods and services.

Question 16

The Australian Consumer Law also outlines responsibilities for consumers in the marketplace. Identify and explain two responsibilities consumers have in the marketplace.

Answer 16

• As a consumer you have a responsibility to pay the required amount for the goods or services you purchase. This is most important if you buy it on credit.
• Consumers also have a responsibility to maintain items such as electrical cords, and safety features on motor vehicles.

Question 17

What are the six guaranteed rights under the Australian Consumer Law? (Know 2)

Answer 17

• The consumer will gain legal ownership to the goods; that is, the seller actually owns the goods being sold and can legally transfer ownership.
• Goods must match any sample, demonstration model, or description provide to the buyer.
• Goods must be of acceptable quality; they must be safe, long-lasting, free from defects, acceptable in appearance, and do all the things that the goods are normally used for.
• Products must be fit for a particular purpose. The product must work as the instructions, or advertisements imply.
• Repairs and spare parts must be available for a reasonable time after manufacture and sale.
• Any necessary servicing must be carried out with reasonable care and skill and must be completed within a reasonable time.

Question 18

What is the role of industry regulator to ensure product safety?

Answer 18

Specific industry regulators are organisations that have particular power in relation to certain types of products. They regulate whatever product are being manufactured and if they are safe for consumers when used for its intended use.

Question 19

What is the role of customs and quarantine to ensure product safety?

Answer 19

Customs and quarantine bodies are able to monitor goods coming in from overseas, and can identify any products that may be dangerous.

Question 20

What are the roles of local government authorities?

Answer 20

Local government health authorities carry out inspections on food premises such as resturants, cafes and school canteens to make sure cleanliness and hygiene regulations are followed.