The Australian Government recently released its final report on how the Australian Consumer Law (ACL) applies to AI-enabled goods and services. Here’s a summary of the report’s findings and our take on the implications for manufacturers and retailers of consumer goods.
Key points
- The ACL is ready for AI: The ACL’s principles-based approach means it already covers many of the risks associated with AI-enabled products and services. The result is that ensuring compliance in an AI-enabled world won’t need to wait for new legislation – you will need to adapt the principles in the current law to AI-enabled goods and services.
- Goods vs services – know the difference: There’s some uncertainty about whether AI-enabled offerings are ‘goods’ or ‘services’, which matters because there are some differences in the consumer guarantees and remedies that apply. If you’re selling products that combine physical and digital elements (like smart devices), keep an eye out for potential changes to the definition of ‘goods’, and updated guidance from regulators.
- Remedies and liability: The ACL’s remedies – repair, replacement, refund, and compensation – apply, and remain appropriate to AI-enabled goods and services. If a product fails, consumers have clear rights, and you have clear obligations.
- Supply chain clarity: As is the case now, if you’re part of a complex supply chain, make sure contracts clearly define who is responsible for what and keep an eye out for amendments to the definition of ‘manufacturer’. This may be updated to include digital products and software-enabled goods that the manufacturer continues to exercise a degree of control over post-supply.
- International alignment: Australian consumer protections are broadly in line with those in the EU, UK, and Singapore. If you operate in those markets, you can be broadly confident that your Australian compliance efforts are on the right track.
Implications for manufacturers and retailers
- Review product information and disclosures: Make sure your product descriptions, advertising, and customer communications are clear, accurate, and transparent about what your AI-enabled products can and cannot do.
- Check contracts and supply chain agreements: Clarify roles and responsibilities, especially around updates and ongoing control of software-enabled goods. Consider indemnities and risk allocation for AI-related issues.
- Monitor regulatory updates: The government is working on further reforms and guidance. Subscribe to our updates and those from the ACCC and Treasury so you’re first to know about changes.
- Prepare for customer queries: As AI becomes a more common component of consumer goods and services, the number and complexity of questions from consumers around their protections will increase. Make sure your support teams are ready to explain how your products work, including AI components, and the rights consumers have.
Our Australian Consumer Law Team specialises in advising and training consumer product manufacturers and retailers on compliance with the legislation, including the impact of AI. Get in touch if you’d like to find out more about the implications of AI enabled products for your ACL compliance regime.
