Justice Middleton of the Federal Court in Melbourne has ordered AGL Sales Pty Ltd and AGL South Australia Pty Ltd to pay penalties of more than $1.5 million for illegal door-to-door sales practices.
The action was brought by the ACCC as part of their crackdown on sales practices used by energy retailers. In particular, the ACCC has focused on door-to-door sales tactics with the launch of its Do Not Knock campaign in 2012.
ACCC Chairman, Rod Sims, has said that “these significant penalties send a clear message to businesses that do not adhere to their obligations under the ACL. The ACCC will not hesitate to take action to protect consumers in their homes from unscrupulous sales tactics and enforce compliance with the laws.”
The illegal conduct was the action of a single salesman who made a number of misleading and deceptive representations to unsuspecting consumers in order to convince them to purchase gas and electricity between September and November 2011. In one instance, the salesman told a consumer that AGL would have charged her between $200 and $300 less than the price charged by her current gas supplier for her last bill. In another, the salesman represented that he was investigating and checking the gas and electricity meters because of a requirement to return money to the consumer. In both cases these representations were found by the court to be false in breach of the ACL.
Other conduct which was also found to be illegal by the court included the salesman failing to inform the customer as soon as practicable that their purpose was to sell gas and electricity, or failing to advise the consumer that the salesman was obliged to leave the premises immediately on request as required by the unsolicited consumer agreements provisions of the ACL.
The ACCC has also alleged that AGL breached the ACL by virtue of a salesman starting to negotiate with a consumer despite the presence of a ‘Do Not Knock’ sign on the consumer’s door. The ACCC has submitted that the ‘Do Not Knock’ sign itself constitutes a request to leave the premises immediately. Justice Middleton has reserved judgment on this point.
AGL announced in February this year that it would cease all unsolicited door-to-door energy sales activity to residential customers. Group General Manager Retail Energy, Stephen Mikkelsen, said in a media release last week that “this case demonstrates how difficult it is to control what salespeople do when they are at people’s premises. Even if a company puts significant training and compliance mechanisms in place, doorknocking remains a risky sales technique.”
However, the ACCC’s actions in the last 12 months have shown that it isn’t just doorknocking that presents a risk to business. Recent cases, such as that brought against a number of Harvey Norman stores, show that all representations to consumers, whether on the shop floor, at the sales counter, online or over the phone, poses a potential risk to business. Businesses need to make sure that the people they have chosen to represent their business understand that misleading consumers in order to make a sale can have significant ramifications.