Unsolicited sales practices

 

The national consumer law offers protection against unsolicited and direct selling practices, including the right to ask a dealer to leave the premises immediately, to have a cool-off period and to restrict cold-calling to certain hours. Consumers can prevent tele-marketing by joining the Do Not Call Register.

Key rules under the ACL

The ACL includes a single national law covering unsolicited sales practices, including door-to-door selling, telephone sales and other forms of direct selling that do not take place in a retail context.

The unsolicited consumer agreements law in the ACL contains the following key rules:

supplier obligations about the way in which consumers are approached;

supplier disclosure obligations about the making of contracts;

consumer rights, including a 10-day cooling-off right and the right to terminate a contract after the 10-day cooling-off period in various circumstances; and

supplier obligations about post-contractual behaviour.

Definition of “unsolicited consumer agreements”

Section 69(1) of the ACL provides that an “unsolicited consumer agreement” has four elements.

1 The agreement must be for the supply, in trade or commerce, of goods or services to a consumer.

2 The agreement must have resulted from negotiations between a dealer and the consumer either in person (at a place other than the supplier’s place of business) or by telephone.

3 The consumer must not have invited the dealer to approach or telephone them for the purpose of entering into negotiations to supply goods or services.*

4 The total price paid or to be paid under the agreement is over $100 or cannot be determined at the time the agreement is made.

* In relation to the third element, an invitation to quote a price for a good or service is not taken to be an invitation to enter negotiations (s 69(2) ACL). Also, a consumer who provides their contact details other than for the predominant purpose of entering into negotiations, or contacts the dealer in connection with an unsuccessful attempt by the dealer to contact the consumer, is not taken to have invited the dealer to enter negotiations (s 69(1A) ACL). This provision overcomes a loophole where consumers are taken to have invited a salesperson to visit them in their home, even where the invitation was engineered by the seller (e.g. when consumers give their contact details to the seller for another reason, such as a competition entry form filled out at a shopping centre).

A dealer can be, but need not be, a supplier; however, a supplier will be liable for the actions of a dealer in circumstances where the dealer is not the supplier (ss 71, 77 ACL).

There is also a rebuttable presumption (taken to be true unless proved otherwise) that an agreement or a proposed agreement is an unsolicited consumer agreement (s 70 ACL).

Obligations and rights

Approaching consumers

The ACL sets out the default permitted hours for calling on (as opposed to telephoning) a consumer:

Monday to Friday, 9 am to 6 pm; and

Saturday, 9 am to 5 pm.

Dealers are prohibited from calling on a consumer on a Sunday or a public holiday. The permitted hours specified in the ACL are default times and may be varied by individual states and territories by regulation under their respective application laws (s 73 ACL).

A dealer who calls on a consumer must, prior to commencing negotiations, clearly advise their purpose for calling, and provide information about their identity (s 74 ACL).

A dealer who calls at any premises must leave immediately if so requested by the occupier, any person acting with the occupier’s authority, or the prospective consumer. If such a request is made by the prospective consumer, that consumer must not be contacted for a similar purpose for at least 30 days after the request was made, but only in relation to that supplier (s 75 ACL). The Federal Court has held that a clearly displayed “do not knock” sign amounts to a request to leave under section 75 of the ACL.

Prior to making an agreement with a consumer, a dealer must give the consumer information about:

the consumer’s right to terminate the agreement during the termination periods; and

the way in which the person can exercise that right (s 76 ACL).

Disclosure

The ACL sets out the express disclosure obligations and other obligations about the making of agreements. A dealer must give the consumer either:

if the agreement was made in person – a copy of the agreement after the agreement has been signed by the consumer; or

if the agreement was made by telephone – a document evidencing the agreement,

within five days after the agreement was made (or a longer period agreed by the parties). This document can be given personally, by post, or with the consumer’s consent, by email (s 78 ACL).

There are also formal requirements for a valid agreement. The documents that are required to be given to the consumer must comply with the following requirements:

it must be printed clearly or typewritten, setting out the full terms of the agreement, the total consideration and postal or delivery charges;

on the front page, it must have a notice advising of the cooling-off period;

it must be accompanied by a notice that the consumer can use to cancel the agreement;

it must state the full name, business address, email address and fax number of the supplier; and

it must be transparent (s 79 ACL).

If an agreement was made in person (i.e. not over the telephone), the agreement must comply with additional requirements:

it must be signed by the consumer;

if it is signed by a person on the supplier’s behalf, it must state that person’s name, business address and email address (s 80 ACL).

If there are any amendments to the agreement, they must be signed by both parties (s 81 ACL).

Consumer cancellation rights

The ACL contains express consumer rights, including a 10-day cooling-off right and the right to terminate an agreement after the 10-day cooling-off period in various circumstances. It also contains provisions outlining how consumers may exercise their termination rights and the effect of termination.

Consumers have a right to terminate the agreement during four time periods.

1 The consumer can cool-off on their decision to enter into the agreement within 10 business days.

2 If the supplier contravenes its obligations relating to the permitted hours for negotiation, disclosure of purpose and identity, or ceasing to negotiate on request, the consumer can terminate the agreement within three months.

3 If the supplier contravenes its obligations relating to informing the consumer of the cooling-off period or the required contents of an unsolicited consumer agreement, the consumer can terminate the agreement within six months.

4 The consumer can terminate the agreement within a period stated by the agreement (s 82 ACL).

A consumer can terminate the agreement in each of the circumstances outlined above by giving oral or written notice of termination to the supplier by using:

the termination notice that the consumer is required to be given; or

another form of written notice, regardless of its form or content.

A consumer can give the supplier written notice personally or by post, fax or email (s 82 ACL). A consumer will need to prove that they have sent a written notice of termination. Evidence to support the consumer’s claim might include a post office receipt, a fax transmission, record, a copy of the email and/or a copy of the written notice of termination.

An agreement that is terminated is deemed to have been rescinded by mutual consent and any related contract or instrument is void. The agreement is terminated even if the supplier has not received the notice of termination, or the consumer has used or consumed the goods and services (s 83 ACL).

Post-contractual rights and obligations

A supplier must not supply goods or services to a consumer under an unsolicited consumer agreement or accept or require any payment during the 10-day cooling-off period (s 86 ACL). Goods can be supplied under an unsolicited consumer agreement within the 10-day cooling-off period if the total price payable for the goods under the agreement is $500 or less (r 95 Competition and Consumer Regulations 2010).

If an unsolicited consumer agreement is terminated:

the supplier must immediately return or refund any money or payment;

the consumer must return to the supplier any goods that the consumer has not already consumed, or notify the supplier of the place where the supplier may collect the goods.

If the supplier does not collect the goods within 30 days after termination of the contract, the goods become the property of the consumer (s 85 ACL).

Case example

Australian Competition and Consumer Commission v AGL Sales Pty Ltd [2013] FCA 1030

The ACCC alleged that Mr Kansagara (a sales representative for AGL Sales’s subcontractor) contravened section 75 of the ACL by starting to negotiate with Ms Plant (the consumer) despite the presence of a “do not knock” sign on Ms Plant’s front door. The court noted that:

section 75 does not provide expressly the manner in which the request must be made; therefore a “request” can be made orally, in writing or by conduct;

the provision should be construed broadly as it is directed at unsolicited visits by salespersons to consumers in their homes and is designed to protect consumers due to the inherent vulnerability of the relationship;

a “do not knock” sign could constitute a request, even if the request was not made in the context of face to face communication between the consumer and sales representative; and

a “do not knock” sign does not contain an express request to leave the premises but, depending on the facts, it could constitute an implied request.

AGL Sales was ordered to pay a $1.55 million penalty for its conduct, and its sub-contractor was ordered to pay $200,000.

Telemarketing

The Telemarketing and Research Calls Industry Standard (“the Standard”), which regulates the conduct of calls offering or advertising the supply of goods or services, sets out standards in four areas:

1 The times when a telemarketer may call a consumer;

2 Specific information a telemarketer must provide during a call;

3 Termination of calls; and

4 Telemarketers to enable calling line identification.

For example, the Standard provides that telemarketing calls are prohibited:

before 9 am and after 8 pm on weekdays;

before 9 am and after 5 pm on Saturdays; and

on Sundays and national public holidays.

The ACL does not duplicate or overlap with the Standard or the Do Not Call Register Act 2006 (Cth) in respect to the conduct of telemarketing calls. The Act came into effect in 2007. It enables consumers to join a “do not call” register to opt out of receiving certain telemarketing calls (for more information, or to join the register, go to www.donotcall.gov.au). However, the requirements of the ACL concerning consumers’ and suppliers’ rights and obligations under agreements formed through telemarketing calls, such as cooling-off periods, will apply.