What changes to the ACL could mean to you

Recent recommendations made by Justice Connect would bring much-needed clarity to the not-for-profit sector. Although the changes are only recommended at this stage, not-for-profits should keep an eye on their progress to prepare themselves for any future legal obligations.

What is the issue?

The Australian Consumer Law (‘ACL’) is the national law for fair trading and consumer protection.  It regulates what many businesses in Australia can and cannot do ‘in trade or commerce’. For instance, section 18 states that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

"...recommended changes to the Australian Consumer Law could bring much-needed clarity to the entire charities and not-for-profits sector."

The problem for not-for-profits is that, for many years, there has been uncertainty about whether the conduct or activities of not-for-profits is ‘in trade or commerce’. The ACL defines ‘trade or commerce’ as including any business or professional activity (whether or not carried on for profit) that occurs either within Australia, or between Australia and places outside of Australia. Clearly, some activities that not-for-profits engage in will meet this definition, whereas other activities will not. A not-for-profit childcare centre which charges parents for their services, for example, will almost certainly be engaging in a business or professional activity. On the other hand, a not-for-profit group that visits sick children in hospital and provides them with toys will not.

In between this is a significant grey area. What about the sale of tickets to a concert where the proceeds are to go to a charity? Or the situation where a not-for-profit subsidises the cost of housing for those who cannot afford to pay the full amount? Are these in ‘trade or commerce?’ It is difficult to tell.

What could happen?

Justice Connect in its submission to Consumer Affairs Australia and New Zealand suggests amending section 18 of the ACL to read that a person must not, in trade or commerce or in relation to fundraising activities, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. Justice Connect also suggests adding indicia against which activities undertaken by, or on behalf of, a not-for-profit organisation can be assessed to determine whether or not that activity is in ‘trade or commerce’. For instance, it should include commentary on areas such as the provision of subsidised goods or services, the activities of government funded charities and not-for-profits, the benefits provided to members of not-for-profits and the engaging of commercial third-party fundraisers.

Justice Connect is also behind the campaign to #fixfundraising which we wrote about in our October edition of Not-for-Profit Law Notes. If these legislative changes were to occur, along with much-needed fundraising reform, charities and not-for-profits would have much greater certainty about the steps they need to take to comply. Stay tuned for any updates on these proposed legislative changes. For now, if you require advice about whether your charity or not-for-profit is subject to the ACL and its many provisions, please contact Q%B7%AB%BD%99%A9A%9C%BC%E8%BAz%97 Q%C1%AB%BB%98%A6%8Fv%90%E8%C5%BD%EB%A4C or Q%C0%AB%BB%A4e%97%B7%BB%96%97%C0%E2%DD%8FAfor more information.