Sales practices | Consumer Law

Sales practices

A GUIDE FOR BUSINESSES AND LEGAL PRACTITIONERS

2 Sales practices

This guide was developed by:

• Access Canberra, Australian Capital Territory

• Australian Competition and Consumer Commission

• Australian Securities and Investments Commission

• Consumer Affairs Victoria

• Consumer and Business Services South Australia

• Consumer, Building and Occupational Services, Tasmania

• New South Wales Fair Trading

• Northern Territory Consumer Affairs

• Queensland Office of Fair Trading

• Western Australia Department of Commerce, Consumer Protection

March 

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Email: medialiaison@treasury.gov.au

A guide for businesses and legal practitioners 3

Contents

Introduction 5

About this guide . . . . . . . . . . . . . . . . . . . . . . . 5

About the other guides . . . . . . . . . . . . . . . . . . . . 5

About the Australian Consumer Law . . . . . . . . . . . . . . 6

Unsolicited supplies 7

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . 7

What are unsolicited supplies?. . . . . . . . . . . . . . . . . 7

Requesting payment for unsolicited goods or services . . . . . . 8

Must someone who receives unsolicited goods or services pay? . . 8

Requesting payment for unauthorised entries or advertisements . . 9

Unsolicited credit or debit cards . . . . . . . . . . . . . . . . 10

Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Unsolicited consumer agreements 11

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . 11

What is an unsolicited consumer agreement? . . . . . . . . . . 11

Kiosks and stalls . . . . . . . . . . . . . . . . . . . . . . . 12

Fundraising . . . . . . . . . . . . . . . . . . . . . . . . . 12

Permitted hours for contacting consumers . . . . . . . . . . . 13

Suppliers’ obligations when calling on consumers . . . . . . . . 13

Requirements for face-to-face and telemarketing approaches . . . 14

When unsolicited consumer agreement laws do not apply . . . . . 19

Supplier responsibility for failing to comply . . . . . . . . . . . 19

Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Pyramid schemes 20

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . 20

What is a pyramid scheme? . . . . . . . . . . . . . . . . . . 20

Marketing scheme or pyramid scheme? . . . . . . . . . . . . . 20

Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Pricing 22

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Multiple pricing . . . . . . . . . . . . . . . . . . . . . . . 22

Penalties—displayed price . . . . . . . . . . . . . . . . . . 22

Component pricing . . . . . . . . . . . . . . . . . . . . . . 22

Penalties—component pricing . . . . . . . . . . . . . . . . . 24

Lay-by agreements 25

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . 25

What is a lay-by agreement? . . . . . . . . . . . . . . . . . . 25

Requirements for lay-by agreements . . . . . . . . . . . . . . 25

When a consumer cancels a lay-by agreement . . . . . . . . . . 25

Termination of lay-by agreements by suppliers . . . . . . . . . . 26

Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . 26

4 Sales practices

Contents continued

Referral selling 27

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . 27

What is referral selling? . . . . . . . . . . . . . . . . . . . . 27

Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Harassment and coercion 28

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . 28

What is harassment and coercion? . . . . . . . . . . . . . . . 28

Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . 29

‘Proof of transaction’ and itemised bills 30

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . 30

What is proof of transaction? . . . . . . . . . . . . . . . . . 30

Supplier must provide proof of transaction . . . . . . . . . . . 30

Itemised bills for services . . . . . . . . . . . . . . . . . . . 30

Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Warranties, refunds, repairs– ‘consumer guarantees’ 31

Glossary and abbreviations 32

Contacts 34

A guide for businesses and legal practitioners 5

Introduction

About this guide

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.

This guide will help businesses and legal

practitioners understand the sales practices

requirements of the ACL.

It covers unsolicited supplies, unsolicited

consumer agreements (door-to-door and

telemarketing), lay-by agreements, pricing, proof

of transaction and itemised bills, referral selling,

pyramid schemes, harassment and coercion.

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

• include examples of the ACL’s application by

Australian Consumer Protection regulators

and by Australian courts.

About the other guides

Other guides in this series cover:

• Consumer guarantees

Covers supplier, manufacturer and importer

responsibilities when there is a problem with

goods and services; refunds, replacements,

repairs and other remedies.

• Avoiding unfair business practices

Covers misleading or deceptive conduct,

unconscionable conduct, country of origin,

false and misleading representations.

• Unfair contract terms

Covers what an unfair term is and which

contracts are affected by the law.

• Compliance and enforcement

Covers how regulators enforce the ACL.

• Consumer product safety

Covers safety standards, recalls, bans, safety

warning notices and mandatory reporting

requirements.

Further information and copies of these and other

publications are available from the Australian

Consumer Law website www.consumerlaw.gov.au

6 Sales practices

Introduction continued

About the Australian Consumer Law

The ACL aims to protect consumers and ensure

fair trading in Australia.

The ACL came into force on 1 January 2011 and

replaced the Trade Practices Act 1974 and

previous Commonwealth, state and territory

consumer protection legislation. It is contained in

Schedule 2 to the Competition and Consumer Act

2010 (Cth) (CCA) and is applied as a law of each

state and territory by state or territory legislation.

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 the ACL are:

• the Australian Competition and Consumer

Commission (ACCC), in respect of conduct

engaged in by corporations, and conduct

involving the use of postal, telephonic and

internet services; and

• state and territory consumer protection

agencies, in respect of conduct engaged

in by persons carrying on a business in,

or connected with, the respective state or

territory.

Some of the consumer protection provisions in

the ACL are mirrored in the Australian Securities

and Investments Commission Act 2001 (Cth)

(ASIC Act) in relation to financial products

and services. The Australian Securities and

Investments Commission (ASIC) is responsible

for administering and enforcing the ASIC Act.

A guide for businesses and legal practitioners 7

Unsolicited supplies

Summary

It is unlawful to:

• request payment for unsolicited goods or

services

• request 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, which must be the most

prominent text in the document: ‘This is not a

bill. You are not required to pay any money’.

In a dispute, the business or person demanding

payment must prove it was reasonable to believe

the entry or advertisement was authorised.

CASE STUDIES

Three men phoned businesses and

pressured them to pay for advertising they

had not ordered. The men 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, permanently restrained them

from selling advertising in any publication

or online, and ordered that they pay costs of

$180,000. The Federal Court order prevents

the men involved from engaging in similar

operations anywhere in Australia.

Legal reference: Bauer v Power Pacific

International Media Pty Ltd [] FCA 

A company which purported to sell

advertising operated a business where

its sales staff made unsolicited phone

calls to Australian small businesses about

advertising in its publications. The sales

staff led the businesses to believe that the

publications were widely distributed and had

an affiliation with charities and community

groups, which was false. After the phone

call, even if the business did not agree to

take out an advertisement, the company

posted a copy of the advertisement as

published in their publication with an invoice

seeking payment. If the business did not

pay the amount outlined in the invoice, the

company made follow-up calls demanding

payment for the unwanted and unordered

advertising.

In March 2013, the Federal Court of Australia

ordered the operators behind the scam (the

company and two individuals) to pay a total

of $750,000 in penalties.

Legal reference: Australian Competition and

Consumer Commission v Adepto Publications

Pty Ltd [] FCA 

10 Sales practices

Unsolicited supplies continued

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 be used to

obtain cash, goods or services on credit.

An item is a debit card if intended to be used 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 ASIC at www.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

• $220,000 for an individual.

…an issuer must not send a credit or

debit card without written authority

from the recipient.

A guide for businesses and legal practitioners 11

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 supplying services, supplying

goods above a certain value, and on

requesting payment during the cooling-off

period.

Consumers have 10 business days to change

their mind and cancel the contract (cooling-off

period). They can also cancel the contract within

three or six months if the supplier has not met

certain obligations.

The Corporations Act 2001 also prohibits

unsolicited hawking of securities, certain

financial products and managed investment

products. More information is available from

ASIC at www.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 –, –

What is an unsolicited consumer

agreement?

An agreement for the supply of goods or services

is unsolicited when:

• a supplier, their salesperson or dealer

telephones or approaches a consumer at a

location other than the supplier’s premises,

without invitation from that consumer

• the agreement results from those

negotiations (even if those were not the only

negotiations that led to the agreement); 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 consumer agreement is also considered

unsolicited 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 (the

negotiation of the sale of goods or services); 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 provide

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 at

the time the quote is provided, this would be an

unsolicited consumer agreement.

12 Sales practices

Unsolicited consumer agreements continued

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 supplier does not initiate or

negotiate an agreement with the consumer

to purchase the goods or services at the

time the quote is provided. 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.

Kiosks and stalls

A sale made at a kiosk or stall in a public area

such as 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 may be more 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, and this supply was an express part

of the agreement, this will be an unsolicited

consumer agreement.

EXAMPLE

• A consumer is approached on the street

by a person collecting donations on behalf

of a charity. The consumer provides a

donation which includes signing up to an

agreement that includes direct debiting

monthly payments from the consumer’s bank

account. This is not an unsolicited consumer

agreement as the money is provided to

charity and no goods or services were

received in return for the donation.

Fundraising is covered by state and territory

legislation in addition to the ACL.

A guide for businesses and legal practitioners 13

Permitted hours for contacting

consumers

Permitted hours for telemarketing are regulated

under the Telecommunications Act 1997 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 Contacts on page .

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

Salespeople or dealers 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 them

to leave

• leave the premises immediately if the

consumer asks them to do so

• explain to consumers before the agreement is

made, and in writing, their right to terminate

the agreement within 10 business days

(cooling-off)

• 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

page .

It is unlawful to coerce or unduly harass someone

about the supply of, or payment for, goods or

services—see Harassment and coercion on

page .

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

including their name and the supplier they

represent, as prescribed in the ACL regulations.

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.

If a consumer visibly displays a sign on their front

door or front gate that states that unsolicited sales

calls are unwelcome (a ‘Do not knock’ sign), this

represents a request to leave. If a salesperson

ignores such a sign, they are in breach of the ACL

and committing trespass. ‘Do not knock’ signs and

‘No door-to-door traders’ stickers are available to

order for free from consumer protection agencies.

14 Sales practices

Unsolicited consumer agreements continued

CASE STUDY

A salesperson acting on behalf of energy

company AGL approached a consumer’s

house that had a ‘Do not knock’ sign clearly

displayed on the front door. The sign had an

image of a fist knocking with a line through

it and the words ‘DO NOT KNOCK Unsolicited

door-to-door selling not welcome here’. The

salesperson continued to knock on the door

and began to negotiate an agreement to

supply energy with the consumer. The ACL

requires salespeople to leave immediately on

the request of the occupier or consumer with

whom they are negotiating.

In December 2013 the Federal Court

determined that the presence of a ‘Do not

knock’ sign is a clear and unambiguous

request to leave the premises without

knocking on the consumer’s door. The

Court also ordered by consent that AGL

and its marketing company pay a total of

$60,000 in penalties for illegal door-to-door

sales practices and for failing to leave a

consumer’s premises despite the presence of

a ‘Do not knock’ sign.

Legal reference: Australian Competition and

Consumer Commission v AGL Sales Pty Ltd

[] FCA ; Australian Competition &

Consumer Commission v AGL Sales Pty Ltd (No )

[] FCA 

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

requirements—see The sales contract on

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

• the most prominent text in the document,

other than the text setting out the dealer’s or

supplier’s name or logo.

During the cooling-off period for an unsolicited

consumer agreement, a supplier must not:

• provide any services

• supply any goods with a total value of over

$500

• accept any payment.

This does not apply to sales for the supply

of electricity or gas to premises not already

connected to such services.

If goods are supplied, and the consumer

exercises their cooling-off rights, the goods

become unsolicited supplies—see Unsolicited

supplies on page .

A guide for businesses and legal practitioners 15

CASE STUDIES

Energy Australia was ordered to pay

penalties of $1.2 million and three marketing

businesses engaged by it to conduct its door-

to-door sales activities were penalised an

aggregate of $290,000 for multiple breaches

of the ACL, including the unsolicited

consumer agreement provisions. The Federal

Court found that some door-to-door sales

representatives had failed to:

>> advise the consumer, clearly or at all, that

their purpose was to seek the consumer’s

agreement to a supply of retail electricity

by the energy company

>> advise the consumer, clearly or at all, that

they were obliged to leave the premises

immediately if the consumer requested

they do so

>> in one instance, leave a premises

immediately on the request of the

consumer, in circumstances where the

consumer had a ‘do not knock’ sign

displayed

>> provide information relating to their

identity.

Legal reference: Australian Competition and

Consumer Commission v Energy Australia Pty Ltd

[] FCA 

In 2013, the Magistrates Court in Queensland

fined a supplier $20,000 and ordered it to

pay compensation of $18,724.74 for failing

to provide the prescribed notice required for

unsolicited agreements and for non-supply

of the systems.

The supplier, Cleaner Energy, contacted

consumers via unsolicited phone calls to sell

solar power systems, panels and inverters.

Cleaner Energy encouraged the consumers to

sign agreements immediately and requested

deposits ranging from $1500 to $5000, which

were taken at the time of the call or shortly

after.

The agreements did not provide the

consumers with information about their

rights to cancel during the cooling-off period

or include the specified text on the front

page. On some occasions, Cleaner Energy

gave the consumers a timeframe as to when

their systems would be installed, however

they were never installed.

Legal reference: Queensland Office of Fair Trading

v Aaron Murray as Chief Executive Officer of

Cleaner Energy Pty Ltd [] MAG–/()

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

• 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.

16 Sales practices

Unsolicited consumer agreements continued

CASE STUDY

In 2014, communications company Startel

Communication was ordered to pay penalties

totalling $320,000 for failing to inform

consumers that they could terminate the

contract within 10 business days, failing

to supply documents which would help

consumers decide whether they wanted to

proceed with the contract, and taking money

out of bank accounts during the cooling-off

period.

Legal reference: Australian Competition and

Consumer Commission v Startel Communication Co

Pty Ltd [] FCA 

Attempts to limit termination rights are unlawful

It is unlawful to exclude, limit, modify or restrict:

• the 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 reference: section 

CASE STUDY

In March 2013, the Magistrates Court

in Queensland fined a supplier $3000

and ordered it to pay a further $3000

compensation for breaching door-to-door

trading laws.

The supplier visited a consumer’s house

without invitation, commenced negotiations

and provided a quote to spray seal bitumen

on a driveway for $3000. A single page

written document outlining the date and the

supplier’s business details was provided to

the consumer. The supplier wrote ‘paid’ on

the document however the consumer had not

paid. One part of the document was titled

‘Terms of Contract’, however no information

was completed under this section. Both

the supplier and the consumer signed the

bottom of the document.

The supplier did not provide the consumer

with information on their right to terminate

the agreement during the termination period

(10 business days) and the supplier did not

advise the consumer that payment could

not be provided during this period. The

prohibited 10 business day period would

have commenced on the first business day

after the agreement was made. The next day

the supplier spray sealed the driveway and

requested a $3000 bank cheque from the

consumer as payment. The supplier cashed

the cheque on the same day.

Legal reference: Queensland Office of Fair

Trading v Graham Edward Devine []

MAG/()

Waivers not permitted

A consumer cannot waive any rights under

the ACL that relate to unsolicited consumer

agreements.

ACL reference: section 

It is unlawful for any supplier to persuade, or

attempt to persuade, a consumer to do so.

A guide for businesses and legal practitioners 17

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 reference: sections , 

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 business day is classified as a Monday,

Tuesday, Wednesday, Thursday or Friday and

does not include public holidays.

A consumer may also terminate an agreement up

to three months after it was made (or received,

for agreements negotiated by telephone) if the

salesperson:

• 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 the 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 with a total value of over $500

during the 10 business days of the cooling-off

period

• supplied services during the 10 business days

of the cooling-off period; or

• accepted or requested any payment during

the 10 business days of 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 during

the cooling-off period is void—effectively

cancelled, or treated as if it never existed.

ACL reference: sections , , ,  and 

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 void. This includes associated

credit or finance agreements.

Where goods or services are bought under

a credit contract that is tied to the purchase

of the goods or services, it is the supplier’s

responsibility to contact the credit provider and

arrange for cancellation. For more information,

contact ASIC at www.asic.gov.au

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 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.

18 Sales practices

Unsolicited consumer agreements continued

A consumer who terminates an unsolicited

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 their control.

EXAMPLE

• A consumer buys an electric mixer from a

door-to-door trader who 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 are not in their

original condition. 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.

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, which occurred three weeks after

agreement was entered into, 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.

Supplying goods or services during the cooling-

off period

During the cooling-off period, a supplier must not:

• supply any goods priced over $500 relating to

the agreement

• supply services relating to the agreement

• accept or require any form of payment.

ACL reference: section 

However, during the cooling-off period, goods

priced up to $500 may be supplied. An energy

supplier can also provide electricity or gas to

premises not already connected to such services,

or where there is already a connection but no

supply.

CASE STUDY

In 2014, the Federal Court ordered a

telecommunications company, which entered

into agreements with consumers following

negotiations by telephone, to pay a penalty

of $225,000 after it found that the company

had breached the unsolicited consumer

agreement provisions of the ACL by:

>> failing to provide consumers with a copy of

their contract within five business days

>> failing to provide consumers with

an agreement that clearly stated the

company’s address and informed

consumers of their cooling-off rights

>> failing to provide consumers with a notice

to cancel the contract and

>> supplying services to consumers during

the 10 day cooling-off period.

Legal reference: Australian Competition and

Consumer Commission v Zen Telecom Pty Ltd

[] FCA 

A guide for businesses and legal practitioners 19

When unsolicited consumer

agreement laws do not apply

Unsolicited consumer agreement laws do not

apply in some instances, including:

• where a person does not meet the definition

of a consumer under the ACL, that is, in cases

where the good or service exceeds $40,000

and is not of a kind ordinarily acquired for

personal, domestic or household use

• discontinued negotiations, where a consumer

asks a dealer or supplier to leave but later

contacts the supplier

• 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, and those goods or services are actually

supplied, 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 Regulation  of the

ACL regulations.

Supplier responsibility for failing to

comply

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.

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 their legal obligations when using

unsolicited marketing approaches.

ACL reference: sections , 

Penalties

Failing to comply with unsolicited consumer

agreement requirements can lead to maximum

civil and criminal penalties of $50,000 per

contravention for a body corporate and $10,000

per contravention for an individual.

20 Sales practices

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 , 

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 also 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 when they fail to attract new members

to join. New members rarely 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 one or more

existing participants in the scheme) to join

• a recruitment payment, promised when a

member recruits others.

These payments 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 may not be the only

requirement for taking part

• a new investor may not have a legally

enforceable right to the promised recruitment

payments

• arrangements are not usually in writing

• the scheme may involve 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.

A guide for businesses and legal practitioners 21

EXAMPLE

• A consumer must pay $1000 upfront 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 minutes on 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 reference: sections , 

CASE STUDIES

Three individuals participated in a

company in the direct-selling industry

which claimed to bring consumers superior

travel and hospitality products and

services. These individuals were actively

and heavily promoting the company to

consumers through websites and Facebook,

encouraging people to participate in the

scheme. People who wished to participate

were required to pay a membership fee of

$330. Once an individual had paid the $330,

they received a ‘travel certificate’ and the

opportunity to receive commission payments

for recruiting other people into the scheme.

It was found that the vouchers were of little

to no value and that the only way a person

could earn income from their participation

in the scheme was from recruiting new

members. The three individuals were fined

penalties totalling $200,000.

Legal reference: Australian Competition and

Consumer Commission v Jutsen (No )

[] FCA 

A business operated in Australia as the

owner of an exclusive distribution licence

for etching products which it claimed would

safeguard vehicles and home contents from

theft. The business was active in several

states, under a model whereby investors

were given the title of state director,

who would then incorporate a company

within that state with rights to distribute

the products. Further employees were

then recruited and were required to make

recruitment payments to the director, even

if no products had been sold. The director of

the business was banned from managing a

company or promoting business activities or

opportunities for five years.

Legal reference: Australian Competition and

Consumer Commission v Stott [] FCA 

22 Sales practices

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 –, –

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 supplier is not obliged to sell

the goods at the lowest price as they have the

option of withdrawing them from sale until the

price is corrected.

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

• 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.

A guide for businesses and legal practitioners 23

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 $2140, or with each

extra cost listed along with the total. The

single price should be as prominent as the

component prices.

A component price is one that is represented to

be only part of the cost. If a business represents

that part of the cost is the total cost, then this

may contravene other provisions such false or

misleading representations in relation to the

price of goods or services.

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).

CASE STUDY

The Federal Court imposed a penalty of

$200,000 against AirAsia for contravening

the single pricing provisions. For 10 months,

AirAsia did not display on its website some

airfare prices inclusive of all taxes, duties,

fees and other mandatory charges in a

prominent way and as a single figure.

Legal reference: Australian Competition and

Consumer Commission v AirAsia Berhad Co

[] FCA 

A single price is not required when advertising

exclusively to a body corporate—see Glossary

and abbreviations on page .

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.

Components that do not need to be included in a

single price are:

• optional extras—additional charges that

a consumer may choose to pay. However,

if an optional extra is depicted in the

advertisement, you must include the price for

that optional extra

EXAMPLE

• A supplier advertises lounge suites for sale.

At the point of sale consumers can pay extra

for fabric protection, which does not form

part of the single price because the consumer

can choose whether to pay the extra charge.

• sending/delivery charges—while mandatory

charges for sending or delivering products

need to be specified in the advertisement,

they do not have to be included in the

total price (unless the supplier is aware

of a minimum charge that must be paid).

You could, however, choose to do so. It is

important to note that in the regulators’

view, ‘dealer delivery’ as currently imposed

within the motor vehicle industry would be

considered as a component of the single price

• any components which are not quantifiable at

the time the representation is made

• amounts your business pays to a third party

that are not passed on to the consumer

• amounts a consumer is required to pay

directly to a relevant authority (such as in

used vehicle sales).

Determining whether a component is quantifiable

An amount is quantifiable if, at the time the

representation is made, it is able to be readily

converted into a dollar amount. If a total price

is comprised of a number of components, each

component must be quantified and added up to

the extent that it is possible.

Where a total price involves:

• a combination of quantifiable and non-

quantifiable components; or

• a component amount that fluctuates or varies

(e.g. changes in foreign currency)

the total price is calculated using those

components that are quantifiable at the time.

Consumers must also be clearly advised of the

basis on which the amounts were calculated, and

that they may change as not all components were

able to be included in the single price.

24 Sales practices

Pricing continued

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

• $220,000 for an individual.

CASE STUDY

A motor dealer in Queensland placed

advertisements in a local newspaper as

part of a four week campaign promoting

new vehicles for sale. The advertisements

had a picture of the vehicle with the price

above the picture in large colourful font.

Next to the vehicle price was a caret (^), with

further details provided at the bottom of

the advertisement in small, white font. E.g.

Holden VE Series 11 SV6 Sedans $24,990^.

The statement at the bottom of the

advertisement next to the caret (^) advised

that the prices excluded on-road costs,

government statutory charges and transfer

fees. The motor dealer was advertising

vehicle prices that were only part of the total

vehicle price, with no prominent reference

to the single price. As on-road costs,

government statutory charges and transfer

fees constitute additional costs, they must

be included in the single price.

In May 2013, the Queensland Office of Fair

Trading issued a civil penalty notice of $2040

to the motor dealer.

Exemption for restaurants and café menus

The ACL provides a conditional exemption from

the component pricing requirements to cafés

and restaurants.Café and restaurant menu

surcharges are not required to adhere to the

component pricing requirements, so long as

these conditions are met:

• the menu displays a surcharge for the supply

of food or beverage on specified days by the

restaurant or café; and

• the menu displays the following words ‘a

surcharge of [percentage] applies on [the

specified day or days]’; and

• the prescribed words are displayed in a

transparent and prominent manner on the

menu.

The term ‘transparent’ is defined under the ACL

and requires information about pricing to be

expressed in reasonably plain language, legible,

presented clearly and readily available to the

target audience. The term ‘prominent’ is not

defined but has been interpreted as requiring

information to be conspicuously or noticeably

displayed.

Restaurants and cafés that rely on the exemption

must ensure that a consumer who looks at a price

on a menu can immediately determine that the

price displayed is not actually the final price that

they will be charged on specified days.

The exemption also applies to room service

menus and menus for banquets and other

events if the food and/or beverages delivered or

provided are not expected to be consumed at a

later time.

Restaurants and cafés should note that the

exemption applies only to menus. It does not:

• apply to any other form of advertising, which

must continue to display the single price

of the goods and services including any

surcharge or other compulsory fee

• cover goods other than food or beverages.

If any service charges are applied, such as

corkage or cover charges that are included

on a menu, they must have a single price

displayed for them at all times.

ACL reference: Regulation A

A guide for businesses and legal practitioners 25

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 –

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.

EXAMPLE

• A consumer orders a Christmas hamper in

advance and agrees to pay for it by weekly

instalments over 11 months. This is a lay-by

agreement.

Lay-by agreements that are standard form

contracts may be covered by unfair contract

terms provisions.

ACL reference: Part –

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, and the loss in value of

the goods between the time when the lay-by

agreement was entered into and when it was

terminated. 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.

26 Sales practices

Lay-by agreements continued

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 and

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 the supplier

breached the agreement. 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

A supplier will contravene the lay-by provisions

if they:

• enter into a lay-by agreement without putting

it in writing

• do 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 contravention has maximum civil and

criminal penalties of $30,000 for a body

corporate and $6000 for an individual.

CASE STUDY

In October 2012, a consumer entered into

a written agreement with a supplier to

buy three horse floats and accessories

for $25,100. The consumer paid a deposit

of $6800 with periodic instalments to be

made weekly with final payment due and

payable on 19 November 2012. There was no

termination charge stated in the agreement.

On 6 November 2012 the consumer decided

to cancel the agreement and asked for a

refund of the deposit. The supplier refused to

refund the deposit and the consumer lodged

a complaint with the Queensland Office of

Fair Trading.

The court found the written agreement

entered into was a lay-by agreement and if

the supplier wished to retain the deposit, the

termination charge would have to be set out

clearly and legibly in the agreement so that

the consumer was aware of the amount to

pay if the agreement was cancelled.

In 2013, the Magistrates Court in Queensland

fined the supplier $1500 and he was ordered

to pay $6800 compensation for failing to

refund the consumer the deposit.

Legal reference: Queensland Office of Fair Trading

v Bruce Kalf trading as North Queensland Horse

Float Sales [] MAG-/()

A guide for businesses and legal practitioners 27

Referral selling

Summary

It is unlawful to induce a consumer to buy

goods or services by promising benefits for

assisting the supply of goods or services to

other customers if the benefit depends on other

events, such as subsequent sales.

ACL reference: section 

What is referral selling?

Referral selling is when:

• a consumer is induced 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 buying 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,

where the benefit is not conditional upon any

other event occurring. For example, a supplier

may offer a gift voucher to consumers who

provide the names of their friends that may be

interested in the supplier’s product. The gift

voucher must not be offered on the condition

that it will only be given to the consumer if one of

their friends makes a purchase.

CASE STUDY

The promoters of a worm farm investment

scheme breached the prohibition on referral

selling because the scheme involved

membership of a profit sharing scheme,

under which monthly payments were made.

The level of profit shared amongst members

depended upon the growth of the scheme

membership and on the number of new

members which existing scheme members

could introduce to the scheme.

Legal reference: Australian Competition and

Consumer Commission v Bio Enviro Plan Pty Ltd

[] FCA 

Penalties

The maximum civil and criminal penalties

for referral selling are $1.1 million for a body

corporate and $220,000 for an individual.

28 Sales practices

Harassment and coercion

Summary

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 

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.

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.

EXAMPLES

• 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 could 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 could be

considered coercion.

A guide for businesses and legal practitioners 29

CASE STUDIES

In 2012, a parking business was found to

have engaged in undue harassment when

it threatened to take a motorist to court for

failing to make payment following the issue

of ‘payment notices’ where the parking

business was not able to issue a penalty or

fine and threatened court action.

Legal reference: Director of Consumer Affairs

Victoria v Parking Patrols Vic Pty Ltd

[] VSC 

A debt collection agency was found to have

engaged in undue harassment and coercion

when some of its employees personally

abused and threatened debtors and

threatened to reveal their position as debtors

to their relatives, friends, employers and

neighbours.

Legal reference: ASIC v Accounts Control

Management Services Pty Ltd [] FCA 

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 www.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.

30 Sales practices

‘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 if the

value of the goods or services is less than $75.

ACL reference: sections –

What is proof of transaction?

Proof of transaction for supply of goods or

services to a consumer is a document that

states the:

• identity of the supplier of the goods or

services

• supplier’s ABN or ACN

• date of the supply

• goods or services supplied to the consumer

• price of the goods or services.

Examples of proof of transaction include a:

• GST tax invoice

• cash register receipt

• credit card or debit card statement

• handwritten receipt

• lay-by agreement

• 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 practicable 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)

• 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

• 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.

A guide for businesses and legal practitioners 31

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’.

These consumer guarantees are a comprehensive

set of rights and remedies that apply when goods

and services are defective in certain ways.

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, available

from www.consumerlaw.gov.au

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.

32 Sales practices

Glossary and abbreviations

TERM DEFINITION

body corporate includes a company registered under the Corporations Act 2001 (Cth), 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, or 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 ACL Regulations)

• 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 are not normally used for

personal, domestic or household purposes:

• an air seeder—Jillawarra Grazing Co v John Shearer Ltd [1984] FCA 30

• a large tractor—Atkinson v Hastings Deering (Queensland) Pty Ltd

[1985] 6 FCR 331

• an industrial photocopier—Four Square Stores (QLD) Ltd v ABE Copiers

[1981] ATPR 40–232 at 43,115.

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 to, goods.

liability an obligation to put right a problem—for example, fixing a defective product,

providing compensation or taking other action.

A guide for businesses and legal practitioners 33

TERM DEFINITION

manufacturer includes a person who:

• grows, extracts, produces, processes or assembles goods

• holds him/herself out to the public as the manufacturer of goods

• causes or permits his/her name, business name or brand mark to be

applied to goods he/she supplies

• 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 have a place of business in Australia.

remedy an attempt to put right a fault, deficiency or a failure to meet an obligation.

regulator the Australian Competition and Consumer Commission or state/territory

consumer protection agencies.

services include 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 re-supply) by way of sale,

exchange, lease, hire or hire-purchase

• in relation to services—provide, grant or confer.

Abbreviations

ACCC Australian Competition and Consumer Commission

ACL Australian Consumer Law

ASIC Australian Securities and Investments Commission

ASIC Act Australian Securities and Investments Commission Act 2001 (Cth)

CCA Competition and Consumer Act 2010 (Cth)

FCA Federal Court of Australia

MAG Magistrate Court

VSC Victorian Supreme Court

34 Sales practices

Contacts

Australian Competition and

Consumer Commission

GPO Box 3131

Canberra ACT 2601

T. 1300 302 502

www.accc.gov.au

Australian Capital Territory

Access Canberra

GPO Box 158

Canberra ACT 2601

T. 13 22 81

www.act.gov.au/accessCBR

New South Wales

NSW Fair Trading

PO Box 972

Parramatta NSW 2124

T. 13 32 20

www.fairtrading.nsw.gov.au

Northern Territory

Northern Territory Consumer Affairs

PO Box 40946

Casuarina NT 0811

T. 1800 019 319

www.consumeraffairs.nt.gov.au

Queensland

Office of Fair Trading

GPO Box 3111

Brisbane QLD 4001

T. 13 QGOV (13 74 68)

www.qld.gov.au/fairtrading

A guide for businesses and legal practitioners 35

South Australia

Consumer and Business Services

GPO Box 1719

Adelaide SA 5001

T. 131 882

www.cbs.sa.gov.au

Tasmania

Consumer Building and

Occupational Services

PO Box 56

Rosny Park TAS 7018

T. 1300 654 499

www.consumer.tas.gov.au

Victoria

Consumer Affairs Victoria

GPO Box 123

Melbourne 3001

T. 1300 55 81 81

www.consumer.vic.gov.au

Western Australia

Department of Commerce

Locked Bag 14

Cloisters Square WA 6850

T. 1300 30 40 54

www.commerce.wa.gov.au

Australian Securities and

Investments Commission

PO Box 9827 (in your capital city)

T. 1300 300 630

www.asic.gov.au

Government of Western

Australia

Department of Commerce

Consumer Protection