The Federal Court has ordered by consent that mobile services company Startel Communication Co Pty Ltd (Startel) publish a web page educating consumers about their rights in relation to the unsolicited consumer agreement (‘cold-calling’) provisions under the Australian Consumer Law (ACL). This is the third ever community service order imposed by the Court in relation to misleading and deceptive conduct – the first of which also involved a telco in relation to the sale of mobile phone services1.

Last week the Court held that Startel failed to inform consumers of their right to a 10-day cooling off period, supplied services and accepted payment for those services during the cooling off period, failed to provide consumers with relevant sales documentation within 5 days of negotiating the phone sale and when it did provide that documentation, failed to comply with formalities required under consumer law.

In doing so, the small telco breached the misleading and deceptive conduct provisions of the ACL as well as specific provisions designed to regulate unsolicited consumer agreements.

In addition to the community service order, the Court among things ordered by consent that the company:

  • pay a $320,000 penalty, 
  • develop and implement a compliance program to train its staff on their responsibilities under the ACL, and
  • refrain from making misleading representations about consumers’ rights, or entering into or negotiating unsolicited consumer agreements without complying with the ACL’s cold-calling provisions.

This is an area in which we are likely to see further action by the Australian Competition and Consumer Commission (ACCC) – the regulator having identified telemarketing practices that mislead consumers in the telecommunications and energy sectors as one of its priorities for 20142. In furtherance of those priorities, the ACCC has this year instituted proceedings against another telco for misleading telemarketing practices. 

Companies using telemarketing as part of their sales strategy should ensure that staff are aware of their obligations under the ACL and that marketing materials and customer agreements are updated to ensure they comply with consumer law.