Five years have passed since the Australian Consumer Law (ACL) was introduced. Since that time, many direct selling companies and their independent distributors have had to comply with the requirements concerning “unsolicited consumer agreements” (UCAs) contained in the ACL. This has involved, for example, the preparation of documents which address the very prescriptive UCA disclosure and notice requirements.

Direct selling companies may be interested to know that Consumer Affairs Australia and New Zealand (CAANZ) is conducting a review of the ACL on behalf of the Federal, State and Territory governments to determine whether:

  • the ACL is operating as intended;
  • the ACL’s administration is effective; and
  • the ACL’s framework is flexible enough to respond to new and emerging issues.

The review presents direct selling companies, whose distributors’ sales methods must comply with the UCA requirements, with an opportunity to provide feedback and recommendations concerning the UCA provisions.

Background

On 31 March 2016, CAANZ released an Issues Paper to seek feedback from stakeholders as part of the review process.1 The Issues Paper, identifies, among other things, uninvited sales and UCAs as issues on which CAANZ is seeking comments.

Uninvited Sales and Unsolicited Consumer Agreements

The Issues Paper2 poses the following questions in respect of uninvited sales and unsolicited consumer agreements for discussion purposes:

  • Are the provisions flexible enough to deal with emerging business models eg pop-up stores in shopping centres?
  • Is it appropriate to maintain the distinction between solicited and unsolicited sales?
  • Should the unsolicited sales provisions also apply to business consumers?
  • Is the exemption for allowing goods (up to the value of $500) to be supplied during the cooling-off period appropriate? Should it be extended to also permit the supply of services during the cooling-off period?
  • Should suppliers also be allowed to accept payment for goods (and services) during the cooling off period?
  • Should consumers be required to “opt in” within a specific time (without further contact from the supplier) to confirm their decision to enter into the sale agreement?

Many of the above matters may not be considered attractive to direct selling companies. If so, CAANZ would be interested in receiving a submission.

  • We also consider the following are worth discussion:
  • Whether the threshold for an unsolicited sale to be treated as a UCA should be raised from $100 and, if so, to what amount;
  • Whether it is appropriate to extend the range of agreements excluded expressly by Regulations from being a UCA. For example, agreements made at a party-plan event are excluded currently; and
  • Whether the exemption allowing goods up to the value of $500 to be supplied during the cooling off period is appropriate and, if so:
    • whether suppliers should be allowed to accept or require payment during the cooling off period;
    • whether suppliers should be allowed to supply services during the cooling off period; and
    • whether the limit on the supply of goods should be increased from $500 to a higher amount.

It is clear that a number of the prescriptive requirements in the ACL were not tested at the time the legislation commenced.  Indeed, some of the principles might be considered arbitrary and it is now an appropriate time to question some of the assumptions underlying the objections relating to UCAs. 

Emerging consumer policy issues

The Issues Paper also identifies “selling away from business premises” as an emerging policy issue.3 In particular, the following questions are posed:

  • Does the ACL adequately address consumer harm from unsolicited sales? Are there areas of the law requiring amendment? Direct selling companies may consider that the UCA provisions go beyond what it necessary for consumer protection.
  • Is the distinction between “solicited” and “unsolicited” sales valid?
  • Is this distinction becoming blurred? Should protections apply to all sales conducted away from business premises or all sales involving “pressure selling”? How might this work in practice?
  • Do the UCA provisions require clarification in respect of sales made away from business premises, for example, pop-up stores in a shopping centre? You may consider that the current requirement that a sale takes place away from “business or trade premises” requires clarification.
  • Is the definition of a “UCA” broad enough or too broad?

Interested parties are invited to consider how other countries are dealing with UCAs, uninvited sales and distance selling. Does another country have the right regulatory model that Australia should follow?

For example, the Issues Paper refers to the relatively new UK law, Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013. These Regulations apply to all purchases, including those made at a distance or face-to-face outside of a trader’s premises (such as over-the-phone, door-to-door and online). The scope of the Regulations is much broader than the UCA provisions in the ACL. Currently online sales, for example, are not covered by the UCA provisions in the ACL.

Next Steps

Interested parties have until Friday 27 May 2016 to lodge submissions. It is expected that an interim report will be released later in 2016 with the final report due to be released during 2017.

We understand that Direct Selling Australia, the direct selling industry association, will be considering a response to the Issues Paper.