Sales practices
A guide for businesses and legal practitioners
This guide was developed by:
���� Australian
Capital Territory Office of Regulatory Services
���� Australian
Competition and Consumer Commission
���� Australian
Securities and Investments Commission
���� Consumer
Affairs and Fair Trading Tasmania
���� Consumer
Affairs Victoria
���� New
South Wales Fair Trading
���� Northern
Territory Consumer Affairs
���� Office
of Consumer and Business Affairs South Australia
���� Queensland
Office of Fair Trading
���� Western Australia Department of Commerce,
Consumer Protection
Copyright
� Commonwealth of Australia 2010
This work is
copyright. You may download, display, print and reproduce this material in
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ISBN
978-0-642-74656-6
Contents
�����
����� Introduction������������������������������������������������������������������������������������������� 4
1.�� Unsolicited supplies������������������������������������������������������������������������������ 6
���� What
are unsolicited supplies?������������������������������������������������������������ 6
���� Requesting
payment for unsolicited goods or services��������������������������� 6
���� Must
someone who receives unsolicited goods or services pay?������������ 7
���� Requesting
payment for unauthorised entries or advertisements������������� 7
���� Unsolicited
credit or debit cards���������������������������������������������������������� 8
���� Penalties������������������������������������������������������������������������������������������� 8
2.�� Unsolicited consumer agreements�������������������������������������������������������� 9
���� What
is an unsolicited consumer agreement?��������������������������������������� 9
���� Shopping
centre kiosks and stalls����������������������������������������������������� 10
���� Fundraising�������������������������������������������������������������������������������������� 10
���� Permitted
hours for contacting consumers������������������������������������������ 10
���� Suppliers�
obligations when calling on consumers������������������������������� 11
���� Requirements
for face-to-face and telemarketing approaches���������������� 11
���� When
unsolicited consumer agreement laws do not apply�������������������� 15
���� Supplier
responsibility for failing to comply � unsolicited agreements���� 15
���� Penalties����������������������������������������������������������������������������������������� 15
3.�� Pyramid schemes�������������������������������������������������������������������������������� 16
���� What
is a pyramid scheme?�������������������������������������������������������������� 16
���� Marketing
scheme or pyramid scheme?��������������������������������������������� 16
���� Penalties����������������������������������������������������������������������������������������� 17
4.�� Pricing������������������������������������������������������������������������������������������������� 18
���� Multiple
pricing��������������������������������������������������������������������������������� 18
���� Penalties
� displayed price��������������������������������������������������������������� 18
���� Component
pricing��������������������������������������������������������������������������� 19
���� Penalties
� component pricing����������������������������������������������������������� 19
5.�� Lay-by agreements������������������������������������������������������������������������������ 20
���� What
is a lay-by agreement?������������������������������������������������������������� 20
���� Requirements
for lay-by agreements�������������������������������������������������� 20
���� When
a consumer cancels a lay-by agreement����������������������������������� 20
���� Termination
of lay-by agreements by suppliers������������������������������������ 21
���� Penalties����������������������������������������������������������������������������������������� 21
6.�� Referral selling������������������������������������������������������������������������������������ 22
���� What
is referral selling?�������������������������������������������������������������������� 22
���� Penalties����������������������������������������������������������������������������������������� 22
7.�� Harassment and coercion�������������������������������������������������������������������� 23
���� What
is harassment and coercion?���������������������������������������������������� 23
���� Penalties����������������������������������������������������������������������������������������� 23
8.�� �Proof of transaction� and itemised bills���������������������������������������������� 24
���� What
is proof of transaction?������������������������������������������������������������� 24
���� Supplier
must provide proof of transaction������������������������������������������� 24
���� Itemised
bills for services������������������������������������������������������������������ 24
���� Penalties����������������������������������������������������������������������������������������� 24
9.�� Warranties, refunds, repairs � �consumer
guarantees������������������������� 25
����� Glossary and abbreviations����������������������������������������������������������������� 26
����� Contacts���������������������������������������������������������������������������������������������� 28
Introduction
This is one of six guides to the Australian Consumer
Law (ACL), developed by Australia�s consumer protection agencies to help
businesses understand their responsibilities under the law.
These
guides:
>��� explain
the law in simple language but are no
substitute for the legislation
>��� give
general information and examples � not legal advice or a definitive list of situations where the law applies.
About this guide
This guide will help businesses and legal practitioners understand the sales practices requirements of the ACL. It covers:
>��� unsolicited
supplies
>��� unsolicited
consumer agreements
>��� pyramid
schemes
>��� pricing
>��� lay-by
agreements
>��� referral
selling
>��� harassment
and coercion
>��� proof of
transaction and itemised bills.
About
the other guides
The other guides in this series cover:
>��� consumer guarantees
explains supplier, manufacturer and importer
responsibilities when there is a problem with goods and services; refunds,
replacements, repairs and other remedies
>��� product safety
covers safety standards, recalls, bans, safety warning
notices and mandatory reporting requirements
>��� unfair business practices
covers misleading or deceptive conduct, unconscionable
conduct, country of origin, false and misleading representations, information
standards
>��� unfair contract terms
outlines what an unfair term is and which contracts are affected by the law
>��� compliance and enforcement
outlines how consumer protection agencies will enforce the
law.
The Australian Treasury also publishes information about the
ACL � see The
Australian Consumer Law � a guide to provisions, available from the Australian Treasury website at treasury.gov.au
or the Australian Consumer Law website at consumerlaw.gov.au.
About
the Australian Consumer Law
The ACL aims to protect consumers and ensure fair
trading in Australia.
It is a national, state and territory law from 1
January 2011 and includes unfair contract terms legislation introduced on 1
July 2010.
Under the ACL, consumers have the same protections, and
businesses have the same obligations and responsibilities, across Australia.
Australian courts and tribunals (including those of the
states and territories) can enforce the ACL.
The
regulators of this law include:
>��� the
Australian Competition and Consumer Commission (ACCC)
>��� the
Australian Securities and Investments Commission (ASIC)
>��� each state
and territory consumer protection agency.
The ACL replaces previous Commonwealth, state and
territory consumer protection legislation. It is contained in a schedule to the Competition
and Consumer Act 2010 (CCA).
Aspects of the ACL are reflected in the Australian
Securities and Investments Commission Act 2001 (Cth) (ASIC
Act), to protect consumers of financial products and services.
01.
Unsolicited supplies
Summary
It is unlawful to:
>��� request
payment for unsolicited goods or services
>��� request
payment for unauthorised entries or advertisements
>��� send
unsolicited credit cards or debit cards.
A business or person must not issue an invoice that
states an amount to be paid for unsolicited goods or services, unless:
>��� they
reasonably believe they have a right to be paid, or
>��� the invoice contains the warning required by
law: This
is not a bill. You are not required to pay any money. This
warning must be the most prominent text in the document.
The maximum civil and criminal penalties for requesting
such payment or failing to include the warning notice on an invoice are:
>��� $1.1
million for a body corporate, and
>��� $220,000
for an individual.
ACL reference: sections 39-43, 161-163
What
are unsolicited supplies?
�Unsolicited supplies� are goods or services supplied
to someone who has not agreed to buy or receive them.
Unless a business or person reasonably believes that
they have the right to do so, it is unlawful to:
>��� request
payment for unsolicited goods or services
>��� request
payment for unauthorised entries or advertisements
It is also unlawful to send unsolicited credit cards or
debit cards.
For
example, it is:
>��� lawful to
send a free product sample to someone, when there is no expectation they will pay for the goods
>��� unlawful
to demand payment for books, magazines or
DVDs posted to someone who did not request the items
>��� unlawful to bill a business for an advertisement about its services, if that business did not authorise its publication.
Requesting
payment for unsolicited goods or services
A business or person does not have a right to be paid just because they have sent goods or
provided services
to someone.
A business or person must not issue an invoice that states an amount to be paid for unsolicited goods or services, unless:
>��� they
reasonably believe they have a right to be paid,
or
>��� the invoice contains the warning required by
the ACL Regulations: �This is not a bill. You are not required to
pay any money�.
This warning must be the most prominent text in the
document.
In a dispute, the business or person demanding payment
must prove they have a legitimate
right to it.
Must
someone who receives unsolicited
goods or
services pay?
Someone who receives unsolicited goods or services does
not have to pay for those goods or services. They also do not have to pay for
any loss or damage to the goods, or due to supply of the service.
However, they may have to pay compensation if they
wilfully and unlawfully damage unsolicited goods within three months of
receiving them. This three-month period is called the recovery
period. The supplier can recover the goods within this time.
The recovery period reduces to one month when the recipient gives written notice to the supplier.
This notice
must state:
>��� the
recipient�s name and address
>��� that the
goods are unsolicited and the recipient does
not want them, and
>��� where the
supplier should collect the items.
The recipient can keep unsolicited goods not collected
within the recovery period, without any obligation to pay. The supplier cannot
take action to recover the uncollected goods.
However,
the recipient cannot:
>��� keep goods they knew were not intended for
them � for instance, if the package was clearly addressed
to another person
>��� unreasonably
refuse to allow the supplier to collect the goods during the recovery period.
For
example:
>��� A consumer arranges for a mechanic to
replace the muffler on her car. When she returns, the mechanic says he also
replaced the tyres and brake pads, which cost an extra $1200. This work was
unsolicited; she does not have to pay for any work other than replacing the
muffler. This would not be the case if the mechanic asked her permission before
replacing the tyres and brake pads, and she agreed.
>��� A tradesperson is hired to replace rotting
timber beams supporting a pergola. The tradesperson notices the shed door is
also rotting, so replaces it and adds $250 to the bill. Replacing the shed door
was outside the scope of their agreement and unsolicited. The consumer does not
have to pay the extra $250.
>��� A consumer takes his laptop to a repairer to
have the hard drive replaced. When he returns, the repairer says he also
repaired the CD drive and added extra memory capacity. He added $150 to the
repair bill for this extra work, which was unsolicited. The consumer does not have to pay the $150.
>��� A packet of Christmas cards arrives in the
mailbox of a consumer, who has not asked for them. The envelope is addressed to
her and includes a letter that says she can either pay for them or return the
packet by post. She does not have to pay for the cards. She also does not have
to return them � unless the sender asks for them back within three months of
the date she received the packet.
Requesting
payment for unauthorised entries or advertisements
It is unlawful to ask for payment for an entry or
advertisement relating to a person or their
profession, business, trade or occupation, that was not first authorised by the person or business concerned.
An advertisement or entry is authorised when the
person, business or their nominee has signed a document that:
>��� authorises
the entry or advertisement
>��� specifies the details of the entry or advertisement, the name and address of the
person publishing the entry, and the charges that will apply, and
>��� was
provided before payment was requested.
It is possible to send an invoice for an unauthorised
entry or advertisement, if it contains the warning statement required by the
ACL Regulations: �This
is not a bill. You are not required to pay any money�.
This warning must be the most prominent text in the
document.
In a dispute, the business or person demanding payment
must prove it was reasonable to believe
the entry or advertisement was
authorised.
For
example:
Three Queensland men phoned businesses and pressured
them to pay for advertising they had not ordered. These scammers led businesses
to believe the advertisements would run in publications supporting worthy
causes in the community, but no proceeds went to assist the community or to
community-based activities. Businesses were threatened with legal action if
they did not pay, and consequently many businesses did pay.
In March 2007, the Federal Court of Australia sentenced
the men, who had ignored a court order to stop running an invoice scam, to six
months� imprisonment suspended for two years, banned them for life from the
advertising industry, and ordered that they pay costs of $180,000. The Federal
Court order prevents the scammers from engaging in similar operations anywhere
in Australia.
Legal reference: Bauer v
Power Pacific International
Media Pty Ltd [2007] FCA 349
Unsolicited
credit or debit cards
Generally, an issuer must not send a credit or debit
card without written authority from the recipient.
An item is a credit card if
intended to obtain cash, goods or services on credit. For example,
store-branded credit cards are credit cards.
An item is a debit card if intended to access an account held by the consumer for the
purpose of withdrawing or depositing cash or obtaining goods or services.
Issuers must not send anything that could be used as a credit or debit card to someone unless:
>��� the
recipient requested, in writing, the card from the issuer, or
>��� it is a
replacement, renewal or substitution for a card previously sent to the person
and used for the same purpose.
An issuer must not enable a credit card to also be used
as debit card, or vice versa, unless the recipient has requested this in
writing.
More information about unsolicited credit and debit
cards is available in Regulatory Guide 201 by the Australian Securities and
Investments Commission at asic.gov.au.
Penalties
The maximum civil and criminal penalties for requesting
payment for unsolicited goods or unauthorised advertisements, for failing to
include the required warning notice on an invoice, and for sending an
unsolicited debit or credit card are:
>��� $1.1
million for a body corporate, and
>��� $220,000
for an individual.
02.
Unsolicited consumer agreements
Summary
Salespeople who make unsolicited contact with consumers
in order to sell them goods or services must comply with:
>��� limited
hours for contact with consumers
>��� disclosure
requirements when making an agreement
>��� criteria
for the sales agreement, including that it must be in writing
>��� restrictions
on supply and requesting payment during the cooling-off period.
Consumers have 10 business days to change their mind
and cancel the contract (cool off). They can also cancel the contract within
three or six months if the supplier has not met certain obligations.
The Corporations Act 2001 prohibits
unsolicited hawking of securities,
certain
financial products and managed investment products. More information is available from the Australian Securities and
Investments Commission at asic.gov.au.
Failing to comply with requirements for unsolicited
consumer agreements can lead to maximum civil and
criminal penalties of $50,000 for a body corporate and $10,000 for an individual.
ACL reference: sections 69-95, 170-187
What
is an unsolicited consumer agreement?
An agreement for the supply of goods or services is
unsolicited when:
>��� a
supplier, their salesperson or dealer approaches or telephones a consumer
without invitation from that consumer
>��� it results
from negotiations by telephone or at a location other than the supplier�s
premises, and
>��� the total value of the goods or services is
more than $100, or the value was not established when the
agreement was made.
For
example, unsolicited consumer agreements may result from:
>��� door-knocking households to sell goods or
services, or to ask consumers to switch to a different service provider
>��� telephoning
consumers to sell goods or services
>��� approaching
consumers in the common area of a shopping centre to sell goods or services.
A sale will be an unsolicited consumer agreement if it
is negotiated under the following circumstances:
>��� the consumer gave his or her contact details
to a supplier for one purpose (for example, a competition entry), and the
supplier contacts the consumer for another purpose, or
>��� the consumer returns a missed call from a
supplier or responds to any unsuccessful attempt by the supplier to contact the
consumer.
A consumer who has invited a supplier to give a quote
for certain goods or services � for example, measuring for blinds � is not
soliciting the supplier to actually sell them those goods or services. If the
supplier does negotiate a sale, this would be an unsolicited consumer
agreement.
For
example:
>��� A consumer enters a competition sponsored by
a supplier. It is a condition of entry that the consumer agrees to be contacted by the supplier with information about the product. If
the supplier contacts the consumer about anything other than the competition or
the product, and negotiates a sale, that sale agreement is considered
�unsolicited�.
>��� A supplier leaves a quote for the consumer
to consider. The consumer approaches the supplier to accept the quote or
negotiate different terms, which leads to an agreement. This is not an
unsolicited consumer agreement, because the consumer initiated the contact.
>��� The above agreement would be unsolicited if
the supplier had negotiated it with the consumer when they provided
the quote.
In a dispute, it is up to the supplier to prove that the consumer solicited the agreement.
Shopping
centre kiosks and stalls
A sale made at a kiosk or stall in the public area of a
shopping centre is unlikely to be an �unsolicited consumer agreement� when:
>��� the kiosk
or stall is the operator�s business or trade premises, and
>��� the
salesperson remains within the kiosk or stall.
If the salesperson were to approach or intercept a
consumer and negotiate a sale outside the kiosk or stall, this would be an
unsolicited consumer agreement.
A kiosk or stall that is partly or fully enclosed, and subject to an ongoing lease that
marks out the area allocated to the
kiosk or stall operator, is more likely to be seen as business or trade premises.
A sale made at an unenclosed trestle table or temporary
stand is likely to be an unsolicited consumer agreement.
Fundraising
An unsolicited consumer agreement must involve a supply
in trade or commerce of goods or services to a consumer. This means donations
to charity are not unsolicited consumer agreements � including donations
received by a third party or contractor on the charity�s behalf.
However, if a contractor or someone else supplies goods
or services worth $100 or more on behalf of a charity to a donor in return for
the donation, this will be an unsolicited consumer agreement.
Permitted
hours for contacting consumers
Permitted hours for telemarketing are regulated under
the Do
Not Call Register Act 2006 and associated telemarketing
standards. The standards do not allow telephone and fax marketing to
consumers:
>��� on a
Sunday or a public holiday
>��� before 9am
or after 8pm on a weekday
>��� before 9am
or after 5pm on a Saturday.
Other forms of contact, such as door-knocking, are regulated by the ACL. Under this law, a
salesperson must
not call on a consumer to negotiate a sale:
>��� on Sunday
or a public holiday
>��� before 9am
or after 6pm on a weekday
>��� before 9am
or after 5pm on a Saturday.
Some states and territories have different hours �
contact the relevant consumer protection agency for more information (see page
30 for agency contract details).
A salesperson can visit at any time if an appointment
was made beforehand with the consumer�s consent. This appointment must be
arranged by telephone or in writing � it cannot be made in person.
Suppliers�
obligations when calling on consumers
Suppliers who call on a consumer, other than by
telephone, must:
>��� explain
up-front the purpose of the visit and produce identification
>��� inform the
consumer that they can ask the supplier to leave
>��� leave the
premises immediately if the consumer asks them to do so
>��� explain to
consumers their right to terminate the
agreement within 10 business days (cooling-off rights), and
>��� provide
their contact details in the agreement.
Similar obligations apply when contacting consumers by
telephone � see �Requirements for
face-to-face and telemarketing approaches� on p13.
It is unlawful to coerce or unduly harass someone about the supply of, or payment for, goods or services.
For more information, see Harassment and coercion on page 25.
Disclose purpose and show
identification
Before giving a sales pitch, a salesperson or dealer
must clearly inform the consumer of the purpose of the visit and provide
identification.
The identification must include information as
prescribed in the ACL Regulations, including the name of
the
salesperson and the organisation they represent.
All businesses must comply with the ACL regulations
from 1 July 2011.
Transitional arrangements are in place to give
businesses time to comply with the ACL. Until �30 June 2011, a
salesperson or dealer must comply with the identification requirements of
either:
>��� the ACL
Regulations, or
>��� the relevant state or territory laws that
applied prior to the ACL. If so, consumer protection agencies will consider the
salesperson or dealer has complied with the ACL.
For more information, contact the relevant state or
territory consumer protection agency (see page 30 for agency contact details).
Cease to negotiate
A salesperson must explain that they are required to
leave the consumer�s premises upon the consumer�s request.
When a salesperson is told to leave, they must not
contact the consumer on behalf of the same supplier again for at least 30 days.
However, a salesperson can visit the same consumer about the sale of goods or
services on behalf of a different supplier.
Contact details
An agreement signed by a salesperson on the supplier�s
behalf must state:
>��� that the
salesperson is acting on the supplier�s behalf
>��� the salesperson�s full name, business or
residential address (not a post box), and
email address (if they have one).
Requirements
for face-to-face and telemarketing approaches
When a salesperson negotiates an unsolicited consumer
agreement:
>��� the
salesperson must inform the consumer of their termination rights before the
agreement is made
>��� the
consumer must be given a written copy of the agreement
>��� the
written agreement must meet specific criteria (see The sales contract, on
this page)
>��� both
parties must sign the agreement and any amendments.
Information about the consumer�s termination rights
must be given to them in writing and must be:
>��� attached
to the agreement
>��� transparent
� expressed in plain language, legible and clear, and
>��� the most prominent text in the document,
other than the text setting out the dealer�s or supplier�s name or logo.
For an unsolicited consumer agreement, a supplier must
not provide any goods or services, or accept any payment, during the
cooling-off period � unless supplying electricity or gas to premises not
already connected to such services.
The sales contract
Consumers must be given a copy of an unsolicited
consumer agreement.
If negotiated in person, the copy must be given to the
consumer immediately after it is signed.
If negotiated by telephone, the copy must be given to
the consumer:
>��� in person,
by post, or electronically (if the consumer agrees)
>��� within
five business days of the agreement (or longer if the consumer agrees).
The
document must be:
>��� transparent
� expressed in plain language, legible and clear, and
>��� printed �
although any changes to the agreement may be handwritten (and signed by both
parties).
The
document must clearly state:
>��� the
consumer�s cooling-off and termination rights
>��� the full
terms of the agreement
>��� the total
price payable, or how this will be calculated
>��� any postal
or delivery charges
>��� the
supplier�s:
����� � name
����� � business
address (not a post box number)
����� � Australian
Business Number (ABN) or Australian Company Number (ACN)
����� � fax number
and email address, if they have these.
The front page of the document must include the
following text:
>��� �Important
Notice to the Consumer�
>��� �You have a right to cancel this agreement
within 10 business days from and including the day after you signed or received
this agreement�
>��� �Details about your additional rights to cancel this agreement are set out in the information attached to
this agreement�.
The front page must also be signed by the consumer and include the date it was signed.
The document must also be accompanied by a notice that
the consumer can use to terminate the contract.
This notice is available from consumerlaw.gov.au.
Attempts to limit termination rights are unlawful
It is unlawful to exclude, limit, modify or restrict:
>��� a right of
the consumer to terminate the agreement
>��� the effect
or operation of the ACL as it relates to
unsolicited consumer agreements.
Any attempts to do so in an agreement have no effect
(ACL section 89).
Waivers not permitted
A consumer cannot waive any rights under the ACL that
relate to unsolicited consumer agreements (ACL section 90).
It is unlawful for any supplier to persuade, or attempt
to persuade, a consumer to do so.
Cooling off and termination requirements
Consumers who agree to unsolicited agreements have 10
business days to reconsider, during which they can cancel the agreement without
penalty. This is called the �cooling-off� period (ACL sections 76 and 82).
For agreements negotiated by telephone, the cooling-off
period begins on the first
business day after the consumer
receives the agreement document.
For other agreements, the cooling-off period begins on
the first business day after the agreement was made.
A consumer may also terminate an agreement up to three
months after it was made (or received, for agreements negotiated by telephone)
if the supplier:
>��� visited
outside permitted selling hours
>��� did not
disclose the purpose of the visit
>��� did not
produce identification, or
>��� did not
leave the premises upon request.
The termination period is extended to six months if a
salesperson:
>��� did not
provide information about cooling-off rights
>��� breached requirements for unsolicited
consumer agreements (such as failing to provide a written copy or not including
required information)
>��� supplied
goods or services during the 10 business days of the cooling-off period, or
>��� accepted
or requested payment during the cooling-off period.
A consumer may terminate an agreement verbally or in
writing. The termination date is
when the consumer gives or sends the notice.
When a consumer �cools off� or terminates
An agreement terminated by a consumer at any time is
void � effectively cancelled, or treated as if it never existed (ACL sections 83, 84, 85, 87 and 88).
If the consumer terminates an unsolicited consumer
agreement, the agreement is void:
>��� whether or
not the supplier receives written notice of termination
>��� even if
the goods or services supplied have been wholly or partly consumed or used.
When a consumer terminates an unsolicited consumer
agreement, any related contract or agreement is also void.
This includes associated credit or finance agreements.
For goods bought on credit or finance, it is the supplier�s
responsibility to contact the credit provider and arrange for
cancellation. For more information, contact the Australian Securities and
Investments Commission � asic.gov.au.
For
example:
A consumer approached by a door-to-door trader agrees
to buy a washing machine for $900. The consumer has 10 business days to change
their mind.
As part of this sale, there is an associated service
agreement (an agreement to service the washing machine).
If the consumer cools off on the $900 contract to buy the washing machine, the related
service contract is also cancelled.
A supplier must promptly return or refund any money
paid under an agreement or related contract when
a consumer
cools off.
If the consumer has terminated the unsolicited consumer
agreement, the supplier cannot:
>��� take action against the consumer to recover
any money allegedly payable under the agreement
or any related contract
>��� place or
threaten to place the consumer�s name on a list of defaulters or debtors.
A consumer who terminates an agreement must, within a
reasonable time, return any goods that have not been consumed or tell the
supplier where to collect them.
If a consumer has not taken reasonable care of the
goods, the supplier can seek compensation for the damage to the goods or the
drop in value. The consumer does not have to pay compensation for normal use of
the goods or circumstances beyond the consumer�s control.
For
example:
A consumer buys an electric mixer from a door-to-door
trader. The trader does not tell her about the cooling-off period. Four months
later, the consumer realises she had the right to cool off. She decides that
she would not have followed through with the purchase had she known she could
cool off. She writes to the supplier, requests a full refund and asks the
supplier to collect the appliance. She has prepared several desserts during the
four months, so the mixer blades do not look pristine. The supplier is not
entitled to compensation for the blades, as this was normal use of the mixer.
If a supplier does not collect the goods within 30 days
after a contract was terminated, and the consumer told the supplier where to
collect the goods, the goods become the consumer�s property.
If an agreement is terminated after the cooling-off period, and a service has been provided to the consumer in that time, the
consumer may have to pay for the service.
For
example:
>��� A telemarketer sells a carpet cleaning
package to a consumer. The package includes a clean every three months for a
special price. The salesperson fails to tell the consumer about his cooling-off
rights. After the first clean, the consumer realises the salesperson did not
provide information about his rights and decides to end the agreement. The
consumer must pay for the carpet cleaning already carried out, but is released
from the contract and any obligation for the remaining two cleans.
Transitional arrangements for agreements and agreement documents
Transitional arrangements are in place to give
businesses time to comply with the ACL.
Before 1 July 2011, businesses must comply with either
the ACL Regulations or the relevant state or territory laws that applied prior
to the ACL, when it comes to:
>��� information
to be given to the consumer about termination periods
>��� information
that is to appear on the front page of an
agreement
>��� the front
page of an agreement to be signed and dated by the consumer, and
>��� use of an
approved form to terminate agreements.
From 1 July 2011, businesses must comply with the ACL.
For more information, contact the relevant
state or
territory consumer protection agency (see page 30 for agency contact details).
Supplying goods or services during the cooling-off period
During the cooling-off period, a supplier must not:
>��� supply any
goods or services relating to the agreement
>��� accept or require any form of payment (ACL section 86).
However,
during the cooling-off period an energy supplier
can provide electricity or gas to
premises not already connected to such services,
or where there is already a connection but no
supply.
Previous
state and territory laws did not allow payment for services during the
cooling-off period, and some also did not allow
supply of goods during this time.
To give businesses time to adjust to the ACL,
businesses may, for a limited time, comply with previous state and territory
laws relating to the payment and supply of goods or services during cooling-off
periods for door-to-door trading.
This means that, until 31 December
2011:
>��� in Victoria and the Australian Capital
Territory, businesses may receive payment for goods � but not services
� during the cooling-off period
>��� in New South Wales, businesses must not
collect any fees during the cooling-off period for services supplied
during that period
>��� in Queensland, South Australia, Western
Australia, Northern Territory and Tasmania, businesses cannot receive payment
for goods or services during the cooling-off period � regardless of whether the
agreement resulted from door-to-door trading or was negotiated by telephone.
They must also not provide services during the cooling-off period.
If the supplier does not comply with the relevant state
or territory provisions between 1 January 2011 and 31 December 2011, they must
comply with the ACL. Failing to
comply withthe ACL can lead to the penalties outlined on page 17.
For more information, contact the relevant state or
territory consumer protection agency (see page 30 for agency
contact details).
When
unsolicited consumer agreement laws do not apply
Unsolicited consumer agreement laws do not apply in
some instances, including:
>��� business contracts, when goods are not of a
kind ordinarily acquired for personal, domestic or household
use or consumption
>��� discontinued
negotiations, if a consumer tells a dealer to go away but later contacts the
same dealer
>��� party plan events, when the host makes it
clear that a consumer is invited to the party to be sold something,
and at least three people are invited to the event
>��� renewal of contracts, when a business
contacts a consumer and asks if they want to renew an existing contract (for
example, a home telephone contract)
>��� when the agreement is not with a consumer �
for example, the agreement is with someone who is buying goods to on-sell or to use to manufacture something
else
>��� subsequent
contracts with the same consumer for the
same kind of goods or services.
When a consumer enters into an
unsolicited consumer agreement with a particular supplier or dealer, the
supplier or dealer does not need to comply with the unsolicited consumer
agreement provisions for any other sales of
the same
kind to that
consumer during the next three months.
����� However,
these extra sales must not add up to more than
$500.
Any unsolicited approach for sale of goods or services over the $500 limit must comply with the laws on unsolicited consumer agreements � as must
any unsolicited approach made after three months from the date the goods or
services were supplied under the initial agreement.
For other exemptions, see the ACL Regulations.
Supplier
responsibility for failing to comply � unsolicited agreements
A supplier cannot enforce an unsolicited consumer
agreement if the supplier or the supplier�s dealer � for instance, a
telemarketer or door-to-door salesperson � has breached the law on unsolicited consumer agreements (ACL sections 93 and
77).
Both the supplier and their salesperson or dealer may
be liable for the breaches.
Suppliers are responsible for ensuring their
salespeople and other representatives are fully aware of legal obligations when
using unsolicited marketing approaches.
Penalties
Failing to comply with unsolicited consumer agreement
requirements can lead to maximum civil
and criminal penalties of $50,000 for a body corporate and $10,000 for an individual.
03.
Pyramid schemes
Summary
Pyramid schemes make money by recruiting people rather
than by selling a legitimate product or providing a service.
Pyramid schemes are illegal. A business or person must
not participate in, or persuade others to participate in, a pyramid scheme.
A court can consider several factors to identify a
pyramid scheme.
Criminal and civil penalties apply.
ACL reference: sections 44 and 46
What is a pyramid scheme?
Pyramid schemes make money by recruiting businesses or
people rather than by selling a legitimate product or providing a service �
even if they are selling a product.
New participants make a payment, known as a
�participation payment�, to join. They are promised payments for recruiting
other investors or new participants. Pyramid schemes inevitably collapse and
new members never make money; they usually lose the money they have paid to
participate.
It is unlawful to participate in, or to persuade
someone to participate in, a pyramid scheme.
There are two payments associated with a pyramid
scheme:
>��� a participation
payment to join
>��� a
recruitment payment, promised when a member recruits others.
These may be a financial or non-financial benefit, paid
either to the new participant or to
someone else.
The recruitment payment helps define a pyramid scheme � it must be the only or main reason a
member joins.
A pyramid scheme may also have any or all of the following characteristics:
>��� participation
payments may (or must) be made when
joining the scheme
>��� a
participation payment is not the only requirement for taking part
>��� a new
investor does not have a legally enforceable right to the promised recruitment
payments
>��� arrangements
are not usually in writing
>��� the scheme
involves promoting and selling goods or services (or both).
Marketing
scheme or pyramid scheme?
To distinguish between a pyramid scheme and other
promotions that may be legitimate, a court considers:
>��� the value of the participation payments
compared with any goods or services that participants are entitled to receive
under the scheme
>��� the emphasis placed on participants�
entitlement to receive goods or services under the scheme, compared with the
emphasis on their entitlement to receive future recruitment payments
>��� whether recruitment payments are the only or
main reason a new participant becomes involved.
The ACL does
not limit the matters a court can consider when working this out.
For
example:
>��� A consumer must pay $1000 up front to
participate in a new internet business. This payment entitles him to
1000 shares, which can only be sold back to the company or to other
participants after 12 months.
The consumer is promised $100 in cash immediately for recruiting new people to
the scheme. He attends a
90-minute promotional seminar about the scheme. The presenter spends 70 minutes on how to recruit new
investors and 20 minuteson the internet business.
The following characteristics help to define this as a
pyramid scheme:
����� � �the shares are frozen for
12 months
����� � it pushes
recruitment very hard
����� � recruitment
payments are a substantial reason to join.
Penalties
A business or person must not participate in, or
attempt to persuade others to
participate in, a pyramid scheme.
The maximum civil and criminal penalties are $1.1
million for a body corporate and $220,000 for an individual
(ACL sections 44, 164).
04.
Pricing
Summary
Multiple pricing
A supplier who displays multiple prices for the same
goods must either:
>��� sell the
goods for the lowest �displayed price�
>��� withdraw
the goods from sale until the price is corrected.
A price published in a catalogue or advertisement is a
�displayed price�.
Mistakes in catalogues and advertisements can be fixed
by publishing a retraction in a publication with a similar circulation to the
original advertisement.
Component pricing
A supplier must not promote or state a price that is
only part of the cost, unless also prominently advertising the
single price.
ACL reference: sections 47-48, 165-166
Multiple
pricing
A supplier who displays the same item with more than
one price � �multiple pricing� � must sell it for the lowest displayed price or
withdraw the goods from sale until the price is corrected. This applies
regardless of where the price is displayed � for example, in a catalogue,
online or in a television advertisement.
The �displayed price� is a price:
>��� attached to or on:
�
the goods
�
anything connected or used with the goods
�
anything used to display the goods
>��� published in a catalogue available to the public, when:
�
the deadline to buy at that price has not passed
�
the catalogue is current (not out-of-date)
>��� that
reasonably appears to apply to the goods,
including a partly-obscured price,
or
>��� displayed
on a register or scanner.
A price is not a �displayed price� when it is:
>��� entirely obscured by another price
>��� a price per unit of measure and shown as an
alternative means of expressing the price
>��� not in Australian currency, or unlikely to
be interpreted as Australian currency.
A price published in a catalogue or advertisement
ceases to be a displayed price when a retraction is published to a similar
circulation or audience.
If a supplier specifies that a catalogue price applies
only in a particular region, they can display a different price in a catalogue
for another region.
Penalties
� displayed price
Failing to sell goods for the lowest displayed price
can lead to maximum civil and criminal penalties of $5000 for a body corporate and $1000 for an individual.
Component
pricing
A supplier must not promote or state a price that is
only part of the cost, unless also prominently advertising the single (total)
price.
This applies to the supply and promotion of goods or
services usually used for
personal, domestic or household use or
consumption.
For
example:
>��� An electrical goods retailer advertises a
60cm LCD television for $1990**. In fine print at the bottom, it states this
price excludes commission and warehouse retrieval fees.
The commission is $100 and warehouse
retrieval fee is $50. These are known
costs and part of the single price.
The television should have been
advertised for either a single price of $2240, or with each extra cost listed
along with the total. The single price should be as prominent as the component
prices.
The single price must be:
>��� clear at
the time of the sale
>��� as
prominent as the most prominent component of the price.
The single price is the total of all measurable costs
and includes:
>��� any charge
payable, and
>��� the amount
of any tax, duty, fee, levy or charges (for example, GST).
The single price does not have to include a charge for
sending goods from the supplier to the consumer, unless the supplier is aware
of a minimum charge that must be paid.
For
example:
>��� A supplier
advertises lounge suites for sale. At the point of sale consumers can pay extra
for fabric protection.
The fabric protection charge does
not form part of the single price because the consumer can choose whether to
pay the extra charge.
A single price is not required when selling to a body corporate (see definitions, page 28).
A single price for services supplied under a contract
that allows periodic payments does
not have to be displayed as
prominently as the component prices.
Penalties
� component pricing
The maximum civil and criminal penalties for failing to
comply with single price requirements are:
>��� $1.1
million for a body corporate, and
>��� $220,000
for an individual.
05.
Lay-by agreements
Summary
Lay-by agreements must be in writing, expressed in
plain language, legible and clearly presented.
A consumer can cancel a lay-by agreement but may have
to pay a termination charge.
A supplier may only cancel a lay-by agreement under
certain circumstances.
ACL reference: section 96-99
What is a lay-by agreement?
An agreement is a �lay by� if the consumer:
>��� pays for the goods in at least three
instalments (when the agreement is not stated as �lay by�) or in two or more
instalments (when the agreement states it is �lay by�), and
>��� does not
receive the goods until the full price has been paid.
Any deposit paid by the consumer is an instalment.
For
example:
>��� A consumer orders a Christmas hamper in
advance and agrees to pay for it by weekly instalments over one month. This is
a lay-by agreement.
Lay-by agreements that are standard form contracts may
be covered by unfair contract terms provisions in
Part 2-3 of
the ACL.
Requirements
for lay-by agreements
Suppliers must ensure a lay-by agreement offered to a
consumer:
>��� is in
writing
>��� specifies
all terms and conditions, including any termination charge
>��� is
transparent, which means that it must be expressed
in plain language, legible and clearly presented.
A lay-by agreement may not be transparent if, for
example, terms and conditions are hidden in fine print or schedules, phrased in
legal jargon, or given in complex or technical language.
A supplier must give a copy of the agreement to the
consumer.
When
a consumer cancels a lay-by agreement
The consumer can cancel the lay-by agreement any time
before delivery of the goods. If the consumer cancels, the supplier must refund all amounts paid by the consumer,
less any termination fee that was clearly specified in the lay-by agreement.
There is no set amount or percentage for a termination
fee, but it must not be more than the supplier�s �reasonable costs� relating to
the agreement � for example, storage and administrative costs. What is
�reasonable� will depend on the circumstances, and suppliers should be prepared
to justify claims for reasonable costs.
If the consumer�s lay-by payments do not cover the
termination charge, the supplier can recover the outstanding amount as a debt.
This should be stated clearly and legibly in the lay-by agreement, along with
any other details of termination fees. Failing to do so may breach the
requirement that lay-by agreements be transparent.
For
example:
>��� In June, a consumer enters into a lay-by
agreement to buy a $600 winter coat and pays instalments totalling $150. In
August, she decides to cancel the agreement asks for a refund of all payments.
As retailers discount winter coats to half-price in July, the supplier can now
only sell the coat for $300.
The termination charge could include
an amount to make up for the need to discount the coat to $300. However, the
details of the termination charge would have to be set out clearly and legibly
in the lay-by agreement so that the consumer is aware that they may have to pay
for such an amount.
The supplier cannot charge a termination fee if the
consumer cancelled because of something that was the supplier�s fault. For example, after the
consumer has paid all instalments, the
supplier advises that the
consumer�s goods were damaged while in
storage.
A supplier who cancels the lay-by agreement cannot
charge a termination fee.
Apart from the termination charge, a supplier is not entitled to damages or any other remedy for the termination
of the lay-by.
Termination
of lay-by agreements by suppliers
Suppliers must not terminate a lay-by agreement, except
when:
>��� the consumer has breached a term of the
agreement. For example, they failed to make a scheduled payment on time
>��� the
supplier is no longer engaged in trade or commerce, or
>��� the goods are no longer available due to
circumstances outside the supplier�s control (not because the supplier decided
to withdraw the goods from sale).
Penalties
It is an offence for a supplier to:
>��� enter into
a lay-by agreement without putting it in writing
>��� not give
the consumer a copy of the written agreement
>��� refuse to
refund all of the consumer�s money (except for the termination charge)
>��� charge a termination fee that is higher than
the reasonable costs associated with the agreement, or when the supplier has breached the lay-by agreement.
Each offence has maximum civil and criminal penalties
of $30,000 for a body corporate and $6000 for an individual.
06.
Referral selling
Summary
Promising future commissions or rebates that depend on
other events � for example, subsequent
sales � is illegal in certain circumstances.
It is unlawful to persuade a consumer to buy goods or
services by promising benefits for assisting the supply of goods or services to
other customers.
ACL reference: section 49
What is referral selling?
Referral selling is when:
>��� a consumer is persuaded to buy goods or
services by promises of a rebate, commission or
other benefit for supplying information that helps the trader sell to other
consumers, and
>��� the consumer does not get the promised benefit unless some other event happens after the agreement is made � for example, other consumers also have to buy the goods or services from the same
supplier.
It is not �referral selling� for a supplier to promise
a benefit for simply providing the names of consumers or helping the trader
supply goods.
Penalties
The maximum civil and criminal penalties for referral
selling are $1.1 million for a body
corporate and $220,000
for an individual.
07.
Harassment and coercion
Harassment
and coercion
It is unlawful to use physical force, coerce or unduly
harass someone about the supply of, or payment for,
goods or services.
ACL reference: section 50
What
is harassment and coercion?
It is unlawful to use physical force, coercion or undue
harassment in connection with the:
>��� supply or
possible supply of goods or services
>��� payment
for goods or services
>��� sale or
grant, or the possible sale or grant, of an interest
in land, or
>��� payment
for an interest in land.
Undue harassment means unnecessary or excessive contact
or communication with a person, to the point where
that person
feels intimidated, tired or demoralised.
Coercion
involves force (actual or threatened) that restricts another person�s choice or
freedom to act. Unlike harassment, there is no requirement for behaviour to be
repetitive in order to amount to coercion.
Legal reference: ACCC v
Maritime Union of Australia [2001] FCA 1549
Financial institutions are entitled to attempt to
collect debts but their conduct may be undue harassment or coercion when it
involves frequent unwelcome approaches and requests or threats for payment.
Laws relating to privacy, harassment and misleading or deceptive conduct apply
to all businesses � including debt collection agencies.
For
example:
>��� A woman
went into arrears on her credit card debt when she lost her job and had to care for her ill mother.
The bank sold the debt to a debt
collection company. The company told the woman that, if she left Australia, she
would not be able to return while the debt was unpaid.
The company also obtained details
and other information about the woman�s family. They did this by contacting her
friend, pretending the woman had applied for a home loan and seeking
information to verify her home loan application.
The company used this information to
embarrass the woman and continued to call her, despite her request that they
contact her through her financial counsellor.
����� The
company�s actions would be considered harassment.
>��� A retirement village was sold by its owners.
This led to a change in management. During the transfer of ownership, an energy
company salesperson visited residents.
The door-to-door salesperson
explained to all residents that because the management of the complex was
changing, their power would be cut off unless they changed energy supplier.
This would have to happen immediately to maintain their power supply.
Almost all of the residents signed
with the new supplier. This created confusion for the residents, causing issues
with payment plans, concessions, and multiple bills.
����� The
salesman�s statements couldbe considered coercion.
For more information about acceptable debt collection
practices, see Debt collection guideline: for collectors and
creditors. This joint publication by the ACCC and ASIC is available from accc.gov.au.
Penalties
The maximum civil and criminal penalties for harassment
and coercion are $1.1 million for a body corporate and $220,000 for an
individual.
08.
�Proof of transaction� and itemised bills
Summary
Suppliers must provide proof of transaction to
consumers for goods or services valued at $75 or more. A GST tax invoice is
sufficient proof of transaction.
Consumers may request an itemised bill.
ACL reference: section 100
What
is proof of transaction?
�Proof of transaction� for supply of goods or services
to a consumer is a document that states the:
>��� supplier
of the goods or services
>��� supplier�s
ABN, if they have one
>��� supplier�s
ACN, if they have one but do not have an ABN
>��� date of
the supply
>��� goods or
services supplied to the consumer, and
>��� price of
the goods or services.
Examples
of proof of transaction:
>��� GST tax
invoice
>��� cash
register receipt
>��� credit
card or debit card statement
>��� handwritten
receipt
>��� lay-by
agreement, or
>��� confirmation
or receipt number provided for a telephone or internet transaction.
Supplier
must provide proof of transaction
A supplier must give proof of transaction when a
consumer:
>��� buys goods
or services worth $75 or more (excluding
GST), as soon as possible after the transaction
>��� asks for
proof of transaction for goods and services costing less than $75, within seven days.
Itemised
bills for services
A consumer can ask a supplier for an itemised bill that
shows:
>��� how the
price was calculated
>��� the number
of labour hours and the hourly rate (if
relevant), and
>��� a list of
the materials used and the amount charged
for them (if relevant).
This request must be made within 30 days of whichever happens later:
>��� the
services are supplied, or
>��� the
consumer receives a bill or account from the supplier for the supply of the
services.
The supplier must give the consumer the itemised bill, without
charge, within seven days of the
request. It must be expressed in plain language, legible and clear.
Penalties
The maximum civil penalties for failing to provide consumers with a proof of transaction, or
not providing it within the required
time, are $15,000 for a body corporate and $3000 for an individual.
09.
Warranties, refunds, repairs
� �consumer guarantees�
The ACL sets out protections for consumers who buy
goods and services from suppliers, manufacturers and importers � the �consumer
guarantees�.
The consumer guarantees are a comprehensive set of
rights and remedies that apply to defective goods and services.
A consumer has these rights
regardless of any other warranty provided
by the supplier or manufacturer.
For more information, see another guide in this series
� Consumer
guarantees: a guide for businesses and legal practitioners.
This guide includes:
>��� what
consumer guarantees apply to certain goods and
services
>��� who is
responsible for satisfying the requirements of the consumer guarantees
>��� when to
offer a remedy, such as a refund, repair or
replacement.
Glossary
and abbreviations
|
Term |
Definition |
|
body corporate |
includes a company
registered under the Corporations Act 2001, an incorporated association, a
co-operative or an owners corporation |
|
business day |
Monday to Friday,
except public holidays |
|
buy |
to take possession of
something by hiring, leasing or buying it, and by exchange or gift |
|
consumer |
a person who buys: >��� any type of goods or services costing up
to ����� $40,000 (or any other amount
stated in the >��� goods or services costing more than
$40,000, ����� which would normally be
for personal, ����� domestic or
household use, or >��� goods which consist of a vehicle or
trailer used ����� mainly to transport
goods on public roads. Australian courts have
said that the following >��� an airseeder >��� a large tractor >��� an industrial photocopier. |
|
goods |
include, among other
things: >��� animals, including fish >��� gas and electricity >��� computer software >��� second-hand goods >��� ships, aircraft and other vehicles >��� minerals, trees and crops, whether on or ����� attached to land >��� any component part of, or accessory |
|
liability |
an obligation to put
right a problem � for example, fixing a defective product, providing
compensation or taking other action |
|
manufacturer |
includes a person who: >��� grows, extracts, produces, processes >��� holds him/herself out to the public >��� causes or permits his/her name, >��� permits him/herself to be held out as the ����� manufacturer by another person, or >��� imports goods into Australia where the ����� manufacturer of the goods does not |
|
remedy |
an attempt to put right
a fault, deficiency |
|
regulator |
the Australian
Competition and Consumer Commission, the Australian Securities and
Investments Commission or state/territory |
|
services |
duties, work,
facilities, rights or benefits provided in the course of business. For
example: >��� dry cleaning >��� installing or repairing consumer goods >��� providing swimming lessons >��� lawyers� services. |
|
supplier |
someone who, in trade
or commerce, sells goods or services and is commonly referred to as a
�trader�, �retailer� or �service provider� |
|
supply |
includes: >��� in relation to goods � supply (including >��� in relation to services � provide, grant |
Abbreviations
ACL���� Australian
Consumer Law
ACCC�� Australian
Competition and Consumer Commission
ASIC��� Australian Securities and Investments Commission
Contacts
Australian Competition
and Consumer Commission
GPO Box 3131
Canberra ACT 2601
T. 1300 302 502
accc.gov.au
Australian
Capital Territory
Office of Regulatory Services
GPO Box 158
Canberra ACT 2601
T. (02) 6207 0400
ors.act.gov.au
New
South Wales
NSW Fair Trading
PO Box 972
Parramatta NSW 2124
T. 13 32 20
fairtrading.nsw.gov.au
Northern
Territory
Office of Consumer Affairs
GPO Box 1722
Darwin NT 0801
T. 1800 019 319
consumeraffairs.nt.gov.au
Queensland
Office of Fair Trading
GPO Box 3111
Brisbane QLD 4001
T. 13 QGOV (13 74 68)
fairtrading.qld.gov.au
South
Australia
Office of Consumer & Business Affairs
GPO Box 1719
Adelaide SA 5001
T. (08) 8204 9777
ocba.sa.gov.au
Tasmania
Office of Consumer Affairs & Fair Trading
GPO Box 1244
Hobart TAS 7001
T. 1300 654 499
consumer.tas.gov.au
Victoria
Consumer Affairs Victoria
GPO Box 123
Melbourne 3001
T. 1300 55 81 81
consumer.vic.gov.au
Western
Australia
Department of Commerce
Locked Bag 14
Cloisters Square WA 6850
T. 1300 30 40 54
commerce.wa.gov.au
Australian Securities and
Investments Commission
PO Box 9827
(in your capital city)
T. 1300 300 630
asic.gov.au