Most Australian businesses assume the Australian Consumer Law stops at the border: that it governs sales to customers in Australia and nothing more. In fact, s 5 of the Competition and Consumer Act 2010 (Cth) (the CCA), which contains the ACL as Schedule 2, extends the ACL to conduct that happens entirely outside Australia, and to traders who have never set foot here.
That matters to you twice over. First, if your business sells to Australians from overseas, through your own website, a marketplace, or a network of distributors, the ACL can govern what you promise and how you handle refunds, even when your team and your servers are offshore. Second, when your business buys goods or services from an overseas supplier, the same rules can be your protection. This article walks through the mechanism: why the ACL can reach conduct abroad, the four connections that trigger it, who counts as a consumer, and where the edges bite.
Why the ACL can reach conduct abroad
Australian courts start from the presumption that Commonwealth legislation applies only within Australia. The presumption reflects international comity: one nation does not lightly regulate conduct happening in another. But Parliament can override it, and in s 5 of the Competition and Consumer Act 2010 it did. The section extends the ACL, with a limited carve-out for the country-of-origin representation rules in Part 5-3, to the engaging in conduct outside Australia by four categories of person or company. That is the whole mechanism in one sentence: if the actor falls into one of the four categories, the ACL applies to their overseas conduct, and if not, it generally does not.
The case law shows the difference the connection makes. In Worldplay Services v ACCC [2005] FCAFC 70, the Full Federal Court held the then Trade Practices Act did not reach a global internet pyramid scheme run from overseas, because the scheme had no territorial connection to Australia. At the other end of the spectrum, in ACCC v Chen [2003] FCA 897 the Federal Court granted declarations that an overseas-based individual who operated an unauthorised imitation Sydney Opera House website contravened the Act, because the conduct reached Australians. The connection is everything, and s 5 is where it is defined.
There is a second point in the wording of the section. Section 5 extends the Act to conduct outside Australia, but it does not change the elements of the provisions themselves. The prohibition on misleading or deceptive conduct in s 18 of the ACL, for example, applies only to conduct in trade or commerce, so a purely private dealing falls outside it whether it happens in Sydney or Singapore. The extraterritorial extension widens the geographic reach of the law; it does not convert private conduct into trade.
The four connections that trigger the ACL
Section 5(1) of the CCA catches conduct outside Australia by bodies corporate incorporated or carrying on business in Australia, by Australian citizens, and by persons ordinarily resident in Australia. Each limb works slightly differently.
Companies incorporated in Australia
If your company is registered with ASIC, the ACL applies to its conduct no matter where that conduct happens or who it targets. An Australian company running its entire operation from the United Kingdom, selling mostly to United States customers, is still caught. What matters is the company's status at the time of the conduct: it must have been incorporated in Australia then. It does not help that the company has since deregistered, moved its management offshore, or stopped trading with Australia, because the test is applied to the conduct in question, not to the company's current circumstances.
Companies carrying on business in Australia
The second limb of s 5(1)(g) catches bodies corporate carrying on business within Australia, even when they are incorporated overseas. This is the limb that most often matters for foreign sellers, and it is where the source of much confusion lies.
Carrying on business is not defined in the CCA, so the courts apply general principles. In Gebo Investments (Labuan) Ltd v Signatory Investments Pty Ltd [2005] NSWSC 544, Barrett J summarised the test as conducting a commercial enterprise systematically and regularly with a view to profit, while noting that profit is not always essential and that not every usual element must be present. One-off transactions, and even a small number of isolated transactions, will generally not be enough.
A company can carry on business in Australia without an office here, without a local entity, and without a .au website. Courts weigh indicators such as the number of Australian customers, ongoing revenue from those customers, assets or servers located in Australia, staff working here, and contracts with Australian content or service providers. A steady stream of online sales to Australian buyers can be enough. No single factor is decisive, and each case turns on its own facts.
Australian citizens
Section 5(1)(h) extends the ACL to conduct outside Australia by Australian citizens. Citizenship is assessed at the time of the conduct, not before or after. Dual citizens are still Australian citizens for this purpose, and the fact that the person acted overseas makes no difference to the application of the law.
People ordinarily resident in Australia
Section 5(1)(i) catches persons ordinarily resident within Australia. The word ordinarily does real work: it points to habitual, normal residence in a settled way, not a short stay with the intention of returning home. A visitor in Australia temporarily is usually not caught, while an Australian who has moved overseas but retains ordinary residence here can still be. It is possible to be ordinarily resident in Australia and also have a permanent home elsewhere. Because the test is factual rather than formal, evidence matters more here than under the other limbs.
Who counts as a consumer
Reaching a foreign trader is only half the mechanism. Most of the ACL's protections, including the consumer guarantees and the refund and replacement rights that back them, apply only where the buyer is a consumer under s 3 of the ACL. The definition is broad, and it applies to overseas purchases as much as domestic ones. A person acquires goods as a consumer if:
- Price: the amount paid or payable was at or below the threshold, which was $40,000 and has been $100,000 since 1 July 2021 under the Treasury Laws Amendment (Acquisition as Consumer – Financial Thresholds) Regulations 2020.
- Kind of goods: the goods are of a kind ordinarily acquired for personal, domestic or household use or consumption, whatever the price.
- Vehicle: the goods are a vehicle or trailer acquired for use principally in the transport of goods on public roads.
Once a buyer is a consumer, the guarantees in Part 3-2 of the ACL attach to the supply. Goods must be of acceptable quality, match their description, be fit for the purpose the buyer made known, and come with clear title, and services must be provided with due care and skill. When a guarantee fails, the consumer can seek a remedy from the supplier, ranging from repair or replacement through to a refund, depending on how serious the failure is. The same threshold logic applies to services as to goods: a person acquires services as a consumer if the price is at or below the threshold, or if the services are of a kind ordinarily acquired for personal, domestic or household use.
Two consequences follow from the breadth of the definition. First, a business can be a consumer. A cafe buying a commercial coffee machine for $8,000, or a tradie buying a ute for the job, gets the same guarantees as a household buyer. Second, the definition has an important exclusion: you are not a consumer if you acquired the goods for re-supply, or to use them up or transform them in trade or commerce, such as components bought to manufacture other products or stock bought for resale. End users are consumers; intermediaries generally are not.
Where the edges bite
The mechanism produces some surprises in practice, and they are worth knowing before they cost you money:
- Timing: Each limb is assessed at the time of the conduct in question. It does not matter that the seller later deregistered or stopped trading with Australia; what counts is its position when the misleading statement was made or the goods were supplied.
- One-off sales: A single sale to an Australian customer rarely makes a foreign seller carry on business here. But a pattern of sales, even through an online marketplace, can, which is why the assumption that an overseas seller is untouchable is often wrong.
- Subsidiaries and the corporate veil: An overseas parent is not automatically liable for what its Australian subsidiary does. Australian law treats each company as a separate legal entity, and the courts are reluctant to pierce the corporate veil because doing so undermines limited liability. For the parent's overseas conduct to be linked to Australia, the subsidiary will generally need to be acting as the parent's agent, with the parent controlling or directing its actions. Mere influence, or even financial support, is not enough. If you are structuring a cross-border group, which entity actually deals with Australian customers is a key design point.
- Enforcement: Even where the ACL clearly applies, the practical question is whether you can enforce it. Suing an overseas trader means serving process abroad, working out which court has jurisdiction, and, if you win, enforcing the judgment in the trader's home country, which can be slow and expensive. The ACCC does pursue cross-border cases, but for an individual business the cost-benefit can be daunting.
When a lawyer helps
The overseas reach of the ACL raises questions that are easy to get wrong, and the cost of getting them wrong is usually far higher than the cost of asking. A lawyer can help in at least three situations:
- Before you sell into Australia: If your business is offshore, or you are an Australian business routing sales through an overseas entity, a lawyer can assess which s 5 limb you sit on and advise how the consumer guarantees, refund policies and unfair contract terms rules apply to your online terms and marketing. Getting the structure right early is far cheaper than responding to a regulator or a wave of refund claims.
- When you buy from overseas: If your business relies on imported goods or offshore software, a lawyer can review your purchase contracts so the consumer guarantees and misleading conduct protections work for you, and tell you honestly when they will not, so you know the risk before you order.
- When a dispute has started: If you are facing an ACCC investigation, or an overseas supplier has stopped honouring a guarantee, a lawyer can assess whether the conduct is caught, where you can sue, and whether a judgment would be enforceable. Sometimes the right answer is a negotiated outcome rather than litigation.
Start with your connection, not your location
The question that decides almost everything in this area is not where the trader sits but which of the four s 5 connections applies to it. For most Australian businesses the answer is straightforward: you are an Australian company, so the ACL follows you wherever you trade, and you should run your overseas sales with that in mind. The risk concentrates where the answer is unclear, such as an overseas parent with an Australian subsidiary, a foreign marketplace seller building an Australian customer base, or an individual with a foot in two countries. A consultation on a cross-border contract or a sales structure is a modest cost compared with defending an ACCC action, or chasing a guarantee claim against a trader who has already left the jurisdiction.