Unlawful Sales Practises Under Australian Consumer Law
Updated: Jun 15
What do fair sales tactic look like? When you desire to grow your business, it can be easy to go too far and breach Australian Consumer Law. Conversely, it can be easy to be too conservative, failing to promote your product in the best way and losing to the competition.
Australian Consumer Law sits within the Competition and Consumer Act and is enforced by state and territory legislators. Its purpose is to unify and formalise the rights of consumers and the responsibilities of businesses.
Below is a brief overview of sales practices that are unlawful under Australian Consumer Law, provided by Arida Lawyers.
Breaches that can attract a potential penalty of $1.1 million for a body corporate or $220,000 for an individual.
Requesting payment for unsolicited goods and services that the consumer has not requested to buy or receive.
Pyramid Schemes, which involve the recruitment of other salespeople, with the money-making pathway relating to this recruitment and not to any legitimate product being sold.
Inconsistent pricing. If prices differ in different display contexts, then the business may need to remove the goods until rectification, or sell them at the lesser price. This point also relates to the advertisement of partial or incomplete costs that do not accurately reflect the overall price.
Referral selling, whereby the consumer is encouraged to help the trader sell to other clients for a commission or a benefit.
Harassing or coercing clients when attempting to sell or to recover payment.
Breaches that can attract a potential penalty between $6,000 and $50,000
Salespeople making unsolicited contact with consumers for purposes of making sales. However, unsolicited sales activity is permitted under certain circumstances. Conditions relate to the hours for contact, necessitate the disclosure of information, the nature of the agreement, and the value of the services, and the cooling-off period. They also relate to the type of product being sold, with financial products being especially restricted under Australian Consumer Law. Telemarketing and door-knocking businesses need to exercise caution in this space.
Unlawful lay-by agreements. A business must put agreements and terms and conditions in writing and distribute these. They can only cancel a lay-by agreement under selective circumstances, and can only charge a fee for the client cancelling under certain conditions.
Failing to provide proof of transactions in the correct format.
All business owners and operators should have an in-depth understanding of the sales practices that are lawful and unlawful under Australian Consumer Law, so that they can proceed with confidence. They should seek legal aid if ever in doubt as to the legitimacy of their sales practices, or if a situation arises in which they are being challenged by a consumer.
Paramatta law firm Arida Lawyers can assist by providing legal services across contract law, employment law, building and construction law, and consumer law. Contact us on firstname.lastname@example.org or 1300 146 390 if you need support ensuring your sales practices are lawful or if your business is being accused of unlawful sales practices.
This article provides general information relevant to our expert services. It is not legal advice and should not be relied upon as such. If you are seeking legal advice, you should contact us for a free initial consultation.
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