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All businesses in Australia should be aware of their fair trading obligations. The Competition and Consumer Act 2010 remains the cornerstone national law regulating fair trading, while individual States and Territories maintain supplementary legislation. For more insights into your legal responsibilities, check out our Legal Health Check guide.
If you’re based in NSW, compliance with the Fair Trading Act 1987 (NSW) is essential. For businesses in other States and Territories, the following legislation may apply:
- ACT Fair Trading Act 1992
- NT Consumer Affairs and Fair Trading Act 1990
- QLD Fair Trading Act 1989
- SA Fair Trading Act 1987
- Australian Consumer Law (Tasmania) Act 2010
- Australian Consumer Law and Fair Trading Act (VIC) 2012
- WA Fair Trading Act 2010
The Act is designed to protect consumers from unfair trading practices by imposing a range of requirements on businesses. One key obligation is the duty to provide clear disclosure-ensuring that consumers are informed of essential details before making a purchase. Practising transparency in your business processes not only meets legal standards but also builds trust with your customers.
In this article, we’ll cover what these disclosure obligations are and how you can ensure your business complies with them.
What Obligations Do I Have?
Businesses must be vigilant in understanding their obligations-not only regarding consumer protection but also in relation to privacy and fair trading. Regular reviews of your policy documents, such as your Privacy Policy, are a good way to stay on track with current legal requirements.
Under the Fair Trading Act, you are required to ‘take reasonable steps’ to disclose two important pieces of information to consumers:
- You must disclose the effect of any terms that could substantially prejudice the interests of consumers.
- If your business has an arrangement with a third party supplier for a financial incentive, this relationship must be communicated to the consumer.
These obligations generally apply to conduct that:
- Relates to goods or services supplied in NSW
- Affects a person residing in NSW
- Results in loss or damage within NSW
- Involves what is legally defined as a ‘consumer’
Who Is Considered A ‘Consumer’?
The Australian Consumer Law (ACL) previously defined a ‘consumer’ as someone who purchases goods or services for:
- Less than $40,000, or
- More than $40,000 but purchased for personal, domestic or household use
As of 2025, recent updates have increased this threshold to $100,000. This means that purchasers now enjoy enhanced protections under fair trading laws. Consequently, it’s vital that your business stays updated with these changes and adjusts its disclosures accordingly.
This positive change minimises the risk of businesses embedding unfair terms within lengthy documents that consumers might not fully read or understand.
Now that we’ve covered the basics of consumer protection, let’s take a closer look at the specific disclosure obligations that are required.
Terms or Conditions That May Substantially Prejudice
As mentioned, businesses must disclose any terms or conditions that could substantially prejudice the interests of consumers, as defined in the ACL. Section 47A of the Fair Trading Act outlines what constitutes such a term.
If the term:
- Excludes the supplier’s liability, or
- Places the burden of liability on the consumer for any damage or losses, or
- Allows the supplier to share identifiable consumer data with third parties, or
- Requires the consumer to pay an exit fee, balloon payment, or an equivalent charge,
Then such a term may substantially prejudice the consumer’s interests and must be clearly disclosed under the Act.
Businesses also need to take reasonable steps to ensure that this kind of information is effectively communicated. So, what do ‘reasonable steps’ look like in practice?
What Are ‘Reasonable Steps’?
Generally, when disclosing information to consumers, it must be presented in an easily accessible and understandable manner. The intent is that consumers should not have to actively search for this key information-it should be provided upfront.
Using plain English and clear formatting is essential. For example, include a concise summary of the disclosure at the point of payment and reiterate it in confirmation emails. You might also consider incorporating a tick box for consumers to confirm that they understand the disclosed terms. For further guidance, see our Website Terms and Conditions service.
It’s also good business practice to obtain confirmation from consumers that they understand what is being disclosed. An ‘I understand’ tick box during the checkout process not only reinforces the transparency of your terms but also demonstrates your commitment to fair trading.
| Example 1 Sam runs a streaming service (similar to Netflix) that includes a term for the automatic renewal of subscriptions after a 12‑month period. This term could substantially prejudice the customer’s interests, so it must be clearly disclosed. The best practice is to present this information prominently on the website and in relevant emails, such as monthly newsletters. Sam can also disclose it during the signup process, followed by a confirmation that the customer understands its implications. |
| Example 2 Betty owns a popular restaurant in Sydney and has updated her booking terms following easing COVID‑19 restrictions to handle high booking volumes. Her terms state that no refunds will be provided for cancellations and that no changes are permitted once a booking is made. Since these terms could substantially prejudice customers’ interests, Betty must disclose them clearly. She can display this information on her website, share it via Instagram, and include it in confirmation emails sent to customers. |
Commission And Referral Arrangements
Section 47B of the Act requires intermediary businesses to take reasonable steps to ensure that customers are aware of any commission or referral arrangements with third parties.
If your business has an arrangement with a supplier in exchange for a fee, this relationship must be disclosed to consumers prior to the supply of goods or services.
What Is An Intermediary?
Intermediary businesses act as a medium between suppliers and consumers, typically earning a commission for facilitating these connections. Examples include brokers and online marketplaces. To learn more about structuring commission-based relationships effectively, check out our Commission Agreement guidelines.
If this arrangement applies to your business, ensure that you clearly disclose the existence of this financial incentive to your customers. You don’t need to reveal every detail of the arrangement, but you must indicate that it exists.
This includes situations where you recommend that customers purchase from a particular supplier. Remember, non‐compliance can result in substantial penalties. In 2025, corporations may face fines up to approximately $110,000, while individuals can be fined up to $22,000. Regular reviews-such as those provided through our Legal Health Check-can help ensure your websites and documents are free from undisclosed unfair terms.
Next Steps
If any of your terms of sale include:
- Terms that substantially prejudice the interests of consumers, or
- An arrangement with a third party supplier for a commission or fee
You must disclose these details to consumers in accordance with the Fair Trading Act. If you’re unsure whether your business meets these disclosure obligations, our team of experienced lawyers at Sprintlaw can help. Alternatively, consider getting a comprehensive Legal Health Check to ensure you’re fully compliant.
It’s always important to stay current with all your obligations as a business owner. For any queries or further assistance, feel free to reach out to us at team@sprintlaw.com.au or call us on 1800 730 617 for an obligation‑free chat.
Remember, staying compliant isn’t just about avoiding fines-it’s about fostering trust and transparency with your customers. Regularly reviewing and updating your contracts and sales terms can protect your business and enhance consumer confidence. For additional guidance, our Contract Review service and other legal resources available on our website can provide the support you need in this fast‑changing regulatory landscape.
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