The ACCC has released a revised ‘Advertising and Selling Guide’, which highlights the legal rights and obligations incumbent upon business, when selling or promoting products and services.

The revised guide has a particular focus on marketing in the online sphere. It is a useful reference point and provides clear overview of key aspects of the Australian Consumer Law (ACL) and Competition and Consumer Act 2010.

While the guide is created with business as the target audience, financial counsellors can use it as a tool when advising clients with complaints about misleading or deceptive conduct, consumer guarantees, unfair contract terms and unsolicited consumer agreements. New guidance is provided in regards to ‘was/now’ or ‘strike through’ pricing, reviews and testimonials, online group buying, claims relating to environmental and organic merits, and country and place of origin.

Social media and moderation  

Clients with complaints stemming from social media have equally as valid claims as those coming from traditional media formats. Laws relating to making false and misleading or deceptive claims about goods and services similarly apply on social media channels, such as Facebook and Twitter. Business can be held responsible for posts or public comments made by others on their social media pages.

A good case study relating to claims made on social media business pages can be found here: Australian Competition and Consumer Commission v Allergy Pathway Pty Ltd (No 2) [2011] FCA 74 (10 February 2011).

Reviews and Testimonials  

A fake review or testimonial, one that does not genuinely reflect the view held by the author, may also contravene the ACL. Complaints relating to false consumer opinions provided by a business, such as reviews on Yelp or Urbanspoon etc., could be grounds for a misleading or deceptive conduct claim.

These types of business behaviour may be in breach of the ACL:

• Use of fake reviews
• Influencing a consumer to provide a positive review or refrain from a negative review
• Selectively removing or editing reviews on their websites or on review platforms

Terms and Conditions

Consumers shouldn’t be required to search exhaustively for qualifications and exclusions in advertisements. The advertiser is required to clearly direct consumers’ attention to the most significant terms and conditions, so that informed judgement can be made.

Businesses cannot make terms and conditions unreadable by:

• Placing text in obscure positions;
• Using text that is too small;
• Flashing disclaimers on screen for only a moment; and
• Using voice overs that are too quick or too quiet.

Asserting right to payment and unsolicited supplies

Where a consumer has received goods and services they didn’t request they are deemed unsolicited supplies. Part 3-1, Division 2 ACL prohibits a business from requesting payment for unsolicited supplies. If an invoice has been rendered it must include a clear message including the text ‘…This is not a bill. You are not required to pay money’. It is the onus of the business demanding payment to prove the legitimacy of their right to payment in such disputes. If your client inadvertently paid for unsolicited goods or services, you may have recourse under the ACL.

Referral selling

If a consumer has been persuaded to buy goods based on benefits from supplying goods or services to other consumers, then a breach of section 49 ACL may have occurred.

Wrongly accepting payment

If a consumer has paid a business for goods and services and the business:

• Has no intention of supplying goods or services at all;
• Intends to supply materially different goods or services; or  
• Should have known that it could not provide the goods or services within the specified time or a reasonable time,

the business may be in breach of s36 ACL.

Online group buying

Recent complaints regarding ‘daily deals’ and ‘group buying’ websites have revolved around non or incomplete supply of services, and the difficulty of booking services before they expire.

To ensure compliance with the ACL, these websites must make clear:

• Exactly what goods and/or services are being offered and what is not included;
• The total price inclusive of compulsory charges;
• All the terms and conditions; and
• Remedies available with regard to complaints and who is responsible.

Pricing

The total price of goods and services must be presented to customers including tax, duty, fees, levies, or other additional charges. If advertising a part price, the full price must also be shown at an equal size. Restaurants and cafes have an exemption under Competition and Consumer Regulation 80A, with conditions.

Comparison pricing must not be misleading for customers. See the recent ACCC action against ‘Compare the Market / Meerkat'. If using a comparison to a competitor’s product, businesses must be comparing it to the same market and geographical location; otherwise they may be in breach of the ACL.

Unsolicited Consumer Agreements

Part 301, Division 2 ACL includes rules on unsolicited sales practices, including door-to-door selling, telemarketing, and other forms of direct selling.

The ACL allows for cooling off periods of 10 days where customers can change their minds and cancel the contract. Additionally, they are able to cancel the contract within three or six months if the supplier has not met certain obligations.

The business must provide a copy of the agreement to the customer after it is signed if the agreement is made in person. If it is made over the telephone, the business must provide a document evidencing the agreement within 5 days, unless agreed otherwise by the parties. This notice must be delivered in person, by post or via email if agreed to by the customer.

Telemarketing and door to door salespeople are required by law to clearly explain the purpose of the visit and produce identification, explain cooling off rights and leave the premises upon request. Clients with complaints relating to telemarketing and door to door sales may have a cause of action for breach of the ACL.

A Do Not Knock sticker or sign suffices as a request to leave the premise. Also consider registering for the Australian Do Not Call and Do Not Mail Registers.

A good case study relating to door to door sales and consumer rights can be found here: Australian Competition and Consumer Commission v AGL Sales Pty Ltd (No 2) [2013] FCA 1360 (12 December 2013)

Consumer Guarantees

Consumer guarantees require goods to be of acceptable quality, fit for any disclosed purpose, match the sample or demonstration model and sold ‘unencumbered’ with clear title and undisturbed possession. Consumer guarantees on services require that they be provided with due care and skill, fit for the specified purpose, and provided within a reasonable time where no time has been set.

Consumer guarantees cannot be excluded by contract, or altered or waived by either party. Consumer rights cannot be restricted or limited under contractual guarantees or indemnities, and attempts to do so may constitute misleading or deceptive conduct.

Consumers with complaints in this area can seek a remedy from the supplier or manufacturer/importer. Consumers are entitled to seek repair, replacement or refund, or request that services be performed again to a satisfactory level. For minor breaches, the supplier can choose the appropriate remedy. For a major failure, the consumer gets that option. Compensation may also be available through complaints in the NCAT if a consumer can demonstrate they have suffered loss or damage due to the failure, and the loss or damage was reasonably foreseeable.

Unfair Contract Terms

Businesses cannot include unfair terms in their standard form agreements. Terms deemed unfair will be void. A three-step test can determine whether a contract presented to your client is unfair. Look to see whether the term:

• Would cause a significant imbalance in the parties’ rights and obligations;
• Is reasonably necessary to protect legitimate interests of one of the parties; and
• Would cause detriment if applied or relied on.

The ACCC guide provides examples of unfair terms, such as those that prevent the consumer from relying on representations made by the business or it’s agents.

Unconscionable Conduct  

The concept of 'unconscionable conduct' is not strictly defined in the ACL; these common elements have been interpreted by the courts as indicators of ‘unconscionability’. Where one party knowingly exploits the special disadvantage of another, or engages in behavior which is oppressive or harsh, this may constitute unconscionable conduct.

In assessing unconscionable conduct, the ACCC has provided the following indicative factors:

• The relative bargaining strength of the parties
• Conditions imposed on the weaker party that were not reasonably necessary to protect legitimate interests of the stronger party
• The price the weaker party would be able to buy/sell similar products/services
• Requirements of applicable industry codes
• The willingness of the stronger party to negotiate
• Whether the stronger party has the right to unilaterally change contract terms
• The extent to which the parties acted in good faith to each other
• Any factor suggesting the stronger party acted with little or no regard to conscience

A good case study relating to mobile phone sales methods and contracts can be found here: Australian Competition and Consumer Commission v Excite Mobile Pty Ltd [2013] FCA 350.

Harassment and Coercion  

The ACL prohibits coercion, undue harassment or physical force in connection with the supply or possible supply of goods or services, or the payment for them under section 50. Ignoring requests to leave and persistent telephone calls are both considered forms of harassment. Aggressive or excessive calls from debt collectors will be considered as falling within this category as well.

If you believe your client may subject to a breach of the ACL, contact the RLC Credit & Debt service for assistance on 9698 7277.