Other unfair practices under the ACL
Unsolicited Supplies
There are also provisions dealing with unsolicited supplies. They provide for:
- prohibition of sending unsolicited credit or debit cards (s39);
- prohibition on asserting a right to payment for unsolicited goods or services or for making an entry in a directory (ss40and 43);
- regulation of the rights of recipients of unsolicited goods (s41) or services (s42);
Pyramid Selling
The ACL section 44 prohibits a person from participation in, or inducing another to participate in, a pyramid selling scheme. These provisions are quite detailed because it is necessary to differentiate between legitimate promotional schemes and prohibited pyramid selling.
A pyramid selling scheme is defined as a scheme with both the following characteristics:
- To take part in the scheme, some or all new participants must make a payment (a participation payment ) to another participant or participants in the scheme; and
- The participation payments are entirely or substantially induced by the prospect held out to new participants that they will be entitled to a payment (a recruitment payment) in relation to the introduction to the scheme of further new participants.
Pricing
The ACL deals with various pricing practices. It is prohibited for a person to display multiple prices for goods and not be prepared to sell for the lowest displayed price in accordance with Section 47.
It is also required that a single price be displayed in certain circumstances Section 48.
This section was amended in 2018 and now specifically contemplates online shopping.
The intention of the law is that consumers are not unwittingly charged for extras when they make an online purchase.
The ACL now includes the following explanatory example of how this works:
“An airline advertises a flight for sale.
Persons have the option of paying for a carbon offset.
If the carbon offset is preselected on the airline’s online booking system, the single price for the flight must include the carbon offset charge.
This is because the person has not, at or before the time of the representation, deselected the charge on the online booking site.
If the person deselects the optional carbon offset charge later in the online booking process, the single price does not need to include the carbon offset charge after the charge is deselected.”
Referral selling
Referral selling is prohibited under section 49 Referral selling is where a customer is told that he or she will receive a rebate, commission or other benefit in return for:
- giving the person the names of prospective customers; or
- otherwise assisting the person to supply goods or services to other consumers
if receipt of the rebate, commission or other benefit is contingent on an event occurring after that contract is made.
Harassment and coercion
Under ACL Section 50 a person must not use physical force, or undue harassment or coercion, in connection with:
- The supply or possible supply of goods or services; or
- The payment for goods or services; or
- The sale or grant, or the possible sale or grant, of an interest in land; or
- The payment for an interest in land.
Unsolicited Consumer Agreements (Door-to-Door Sales and Similar Practices)
Elaborate provisions of the Australian Consumer Law (Part 3-2 Division 2) regulate the practice of door-to-door or telephone selling – called an ‘unsolicited consumer agreement’.
Under Section 89 these provisions cannot be modified or excluded by contract.
Nor is a consumer able to waive rights provided by this legislation – this is set out in Section 90.
Breaches of these provisions constitute offences under ACL Part 4-2 Division 2.
The legislation also deals with the complex possibility that either the consumer or the supplier may assign its rights under an unsolicited consumer agreement.
For example, if someone signs up to a phone contract with a door-to-door salesperson but then the original phone company is sold to another provider.
In this case the agreement can be enforced by, or against, the new phone company under Section 91.
If goods or services are bought for a third party then that third party has the same rights as the original purchaser Section 92.
Definition of unsolicited consumer agreement
There are a number of laws under the ACL which limit the types of agreements door-to-door sales people and telemarketers can put in place.
For these laws to apply to apply the agreement has to meet the definition of an “unsolicited consumer agreement” for the purposes of the legislation.
The definition of an unsolicited consumer agreement is set out in Section 69 in the following terms:
- The agreement is for the supply, in trade or commerce, of goods or services to a consumer (that is, a consumer as defined for the purpose of consumer guarantees); and
- The agreement is made as a result of negotiations between a dealer and the consumer in each other’s presence at a place other than the business or trade premises of the supplier of the goods or services; or by telephone whether or not they are the only negotiations that precede the making of the agreement; and
- The consumer did not invite the dealer to come to that place, or to make a telephone call, for the purposes of entering into negotiations relating to the supply of those goods or services (whether or not the consumer made such an invitation in relation to a different supply); and
- The agreement is for goods or services worth more than $100, or, the amount the goods or services cost when the agreement is made is not ascertainable.
‘Dealer’ is defined in Section 71 to mean a person who either enters into negotiations or telephones for the purpose of making a sale.
There is a presumption under Section 70 that the agreement is an unsolicited consumer agreement if one party asserts that it is and the other party does not prove otherwise.
Negotiating an unsolicited consumer agreement
Sections 73-77 specify certain requirements for the negotiating process.
These parts of the ACL also place limitations on when door-to-door salespeople and telemarketers can try to sell to people.
- A dealer must not without prior agreement call on a person to negotiate an unsolicited consumer agreement on Sundays or public holidays or before 9.00am or after 6.00pm (5.00 pm on Saturdays) on other days in accordance with Section 73;
- The dealer must disclose his or her purpose, tell the customer that the dealer will leave on request and provide any prescribed details about the dealer specified in the Regulations in accordance with Section 74;
- The dealer must leave the premises on request by the customer and must not attempt to contact the customer in the next 30 days, the relevant for this law being Section 75;
- The dealer must tell the customer about the cooling off period before any sale is made and this must be confirmed in writing (whether negotiations are face to face or by telephone), under Section 76. The form of writing may be the subject of prescription by Regulation.
- If a dealer acting for the potential supplier other than the dealer breaches these requirements, the supplier is also in breach Section 77.
If you believe any of the laws above have been breached you should seek legal advice before taking legal action to try and assert these rights.
In the case of breaches of the ACL, by telemarketers or door-to-door salespeople it may be appropriate to raise the issue with the ACCC.
Requirements for unsolicited consumer agreements
Sections 78-81 of the ACL set out special requirements which govern contracts between door-to-door salespeople an telemarketers and their customers.
Firstly, Section 78 states the seller must provide a copy of the signed written agreement to the customer immediately, if the sale takes place face-to-face.
If the sale is over the phone the signed contract must be delivered within five business days.
However, in the case of over the phone sales a longer period can be agreed to.
The agreement can be delivered by post, personally or by email if the customer has consented.
Section 79 provides that the agreement itself:
- Must set out in full all the terms of the agreement, including
(i) the total amount of money to be paid or provided by the consumer under the agreement or,
(ii) if the total amount of money is not ascertainable at the time the agreement is made, the way in which it is to be calculated; and any postal or delivery charges to be paid by the consumer; - The agreement’s front page must include:
(i) A notice that conspicuously and prominently informs the consumer of the consumer’s right to terminate the agreement; and
(ii) Conspicuously and prominently sets out any other information prescribed by the regulations;
(iii) And complies with any other requirements prescribed by the regulations; - It must be accompanied by a notice that:
(i) May be used by the consumer to terminate the agreement; and
(ii) Complies with any requirements prescribed by the regulations; - It must conspicuously and prominently set out in full:
(i) The supplier’s name; and
(ii) If the supplier has an ABN—the supplier’s ABN; and
(iii) If the supplier does not have an ABN but has an ACN—the supplier’s ACN; and
(iv) The supplier’s business address (not being a post box) or, if the supplier does not have a business address, the supplier’s residential address; and
(v) If the supplier has an email address—the supplier’s email address; and
(vi) If the supplier has a fax number—the supplier’s fax number; - It must be printed clearly or typewritten (apart from any amendments to the printed or typewritten form, which may be handwritten);
- It must be transparent.
Section 80 provides that if the dealer is acting for a supplier in a fact-to-face sale then the dealer’s details must be given to the customer.
Any changes to the written document must be signed by both parties to the agreement, in accordance with Section 81.
Terminating unsolicited consumer agreements (‘cooling off period’)
If a contract for goods or services meets the definition of an unsolicited consumer agreement (which is set out above) the ACL makes it easier than usual to terminate that agreement.
Successfully terminating the agreement means the customer doesn’t need to pay the business and the business can not chase them for the money owed.
Firstly, under Section 82 a person who has entered into a contract with a telemarketer or a door-to-door salesperson gets a cooling off period of 10 days.
If the agreement is signed in a face-to-face context this cooling off period goes for ten days from the date of signing.
If the agreement is set up over the phone the time limit of ten business days starts from the day of the delivery of the written agreement.
The cooling off period extends to three months if the dealer has contravened Section 73 (permitted hours for negotiating an unsolicited consumer agreement).
The same is true if there has been a breach of Section 74 under which door-to-door salespeople and telemarketers need to disclose their purpose and identity.
Finally, under Section 75 door-to-door sales people and telemarketers need to cease negotiating when they’re requested to.
If this law is breached, again the cooling off period is extended to three months.
The cooling off period is extended to six months if the dealer has contravened Section 76 (informing consumer of the cooling off period of ten days).
The effect of termination is that the contract is taken to have been rescinded by mutual consent and any ‘related contract or instrument’ is void under Section 83.
A ‘related contract or instrument’ includes a guarantee, indemnity or mortgage/charge taken by the supplier but does not include a tied continuing credit contract or linked credit provider arrangement within the meaning of Sections 127(2) or (3) of the Schedule to the National Consumer Credit Protection Act 2009).
The customer can terminate even if the goods or services have been partly or wholly consumed or used under Section 83(3)(b).
This is justified by the prohibition in section 86 on supplying the goods or services or receiving payment for them for 10 business days after contract signing or delivery in the case of a telephone contract.
In other words there is a cooling off period on performance of the contract as well.
Once termination is effected, the supplier must refund any money paid under Sections 84 and 87 and the customer must return any goods not consumed or notify the supplier where they can be collected under Section 85.
If the supplier fails to collect them within 30 days the goods become the property of the consumer.
The customer may be liable to compensate the supplier for damage to goods due to lack of care by the customer but not for fair wear and tear.
The customer may also be liable to pay for any service delivered after the 10-day cooling off period.
The supplier must not attempt to enforce a terminated contract nor provide the customer’s name as a defaulter or debtor to a credit agency Section 88.
You should consider seeking legal advice before asserting any of the legal rights set out above.
This is particularly true if the legal remedy you intend to undertake involves court action and will lead to you risking getting a costs order against yourself, or, spending money on associated legal services.
Page last updated 15/12/2020