The case for reforming the Australian consumer guarantees for Consumer Internet of Things devices

David Lindsay, Genevieve Wilkinson and Evana Wright

What are Consumer Internet of Things devices and what differentiates them from other consumer products? Is there a case for new consumer guarantees for digital products? What would enhancing enforcement for additional consumer guarantees look like?

This article comes from the experts behind the Competition & Consumer Law Journal which covers a range of topics such as recent cases, legislative changes and issues facing competition and consumer lawyers both within Australia and internationally.

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Consumer Internet of Things (‘CIoT’) devices such as smart locks, connected refrigerators and smart assistants are increasingly becoming popular. These devices differ fundamentally from traditional consumer products and as a result, exacerbate existing threats and pose new threats of consumer harms that challenge existing consumer protections.

This article analyses the implications of CIoT devices for the consumer guarantees under the Australian Consumer Law. It makes the case for reforms that take into account the distinctive features of the devices, including introducing a new sui generis category of ‘digital products’, which would be distinct from the existing categories of ‘goods’ and ‘services’, and new bespoke consumer guarantees. The proposed new guarantees would address problems relating to outdated software, device security and interoperability of CIoT devices and services.

The article has five substantive parts and a conclusion. Following the Introduction, Part II introduces CIoT devices and explains how they differ from traditional consumer products. In Part III, the article introduces the Consumer Guarantee Law (‘CGL’) and briefly reviews concerns about how the current guarantees apply to ‘smart’ products. Part IV of the article explains the distinction between ‘goods’ and ‘services’ under the ACL and examines the case for introducing a new category of consumer products, distinct from ‘goods’ and ‘services’, that would include CIoT devices. In Part V, the article evaluates the application of the most relevant of the current consumer guarantees to CIoT devices, and analyses the case for introducing new guarantees designed to address the distinctive features of such devices. Part VI of the article introduces the current agenda for reform of the CGL, which is focused on enhancing enforcement of the consumer guarantees and examines the extent to which enhanced enforcement can address uncertainties in the law. Finally, the article concludes by arguing for the introduction of a new category of ‘digital products’, which would include both digital content and CIoT devices, and for introducing bespoke consumer guarantees that are specifically designed to address the distinctive features of these products.

Read more about how legal practitioners should be dealing with commercial and customer issues in the Practical Guidance Consumer module, and read more about the Practical Guidance Competition module which is a how-to resource for all legal practitioners who handle competition law matters.