Key points

• The 'Review of AI and the Australian Consumer Law' discussion paper (ACL Discussion Paper) released this month by the Australian Department of the Treasury is intended to gather submissions from stakeholders to explore the application of the Australian Consumer Law (ACL) in relation to AI-enabled goods and services. Following similar action in a number of overseas jurisdictions, the application of existing product liability laws to AI products is being explored.
• In particular, the ACL Discussion Paper is seeking submissions regarding the following issues:
  • the extent to which the ACL is adapted to protect consumers of AI-enabled goods and services;
  • whether the application of the ACL to AI-enabled goods and services is uncertain; and
  • whether the remedies regime under the ACL is appropriate for breaches of the ACL resulting from AI-enabled goods and services.

Background

In June 2023, the Australian Department of Industry, Science and Resources published a 'Safe and responsible AI in Australia' Discussion Paper (AI Discussion Paper). The AI Discussion Paper sought stakeholder submissions on the steps that Australia could take to mitigate the potential risks of AI. In particular, the AI Discussion Paper noted that: “[t]he extent to which the product safety provisions of the [ACL] apply to consumer-facing uses of AI such as generative AI has not yet been considered by a court.”

The ACL, set out in Schedule 2 to the Competition and Consumer Act 2010 (Cth), provides consumers with various rights and guarantees regarding goods and services (including AI-enabled goods and services). In its interim response to the AI Discussion Paper in January 2024, the Australian Department of Industry, Science and Resources noted that there were submissions provided by stakeholders which identified the ACL as a framework which may require updating or clarification in an AI context.

Review of AI and the ACL

The ACL Discussion Paper seeks to further explore the ACL issues raised in the AI Discussion Paper – specifically, the application of the ACL in relation to AI-enabled goods and services.

The ACL Discussion Paper is set out in three sections to cover the key themes on which the Australian government is seeking submissions:

• Managing risks to realise benefits – this section considers the extent to which the ACL is adapted to protect consumers of AI-enabled goods and services and managing the risks of consumer harm arising from AI-enabled goods and services. In particular, the ACL Discussion Paper notes that the autonomous nature of AI may result in certain AI-enabled goods and services being less ‘controllable’ than traditional goods and services (and therefore increase the risks of consumer harm). The ACL Discussion Paper also notes that there is currently no specific safety standard for AI-enabled consumer goods (the Australian government can impose mandatory safety standards for consumer goods under the ACL).
• Addressing uncertainty – this section considers whether the application of the ACL to AI-enabled goods and services is uncertain. In particular, the paper notes that there has been uncertainty expressed over:
  • whether an AI-enabled ‘good’ or ‘service’ falls within the definitions of those terms under the ACL; and
  • how principles-based standards contained in the ACL apply to AI-enabled goods and services.
• Accessing remedies – this section considers whether the remedies regime under the ACL is appropriate for breaches of the ACL resulting from AI-enabled goods and services.

What’s next?

The release of the ACL Discussion Paper marks the commencement of a consultation process which ends on 12 November 2024. During this time, stakeholders can make submissions to Treasury, which will then consider these submissions when proposing further reforms to the ACL. 

It was noted in the ACL Discussion Paper that this review will likely also inform broader policy reform undertaken by the Australian government relating to AI, including the proposed mandatory guardrails for AI in high risk settings. It will therefore be important to continue to closely monitor developments in this area.