Digital platforms provide businesses with access to a larger and more diverse market in which to promote and sell their products and services. It’s important to familiarise yourself with the local regulatory environment, particularly when your customers may be located overseas.
The Australian Competition and Consumer Commission (ACCC) recently issued a Public Warning Notice about the alleged misconduct of the Danish online retailer, Lux International Sales ApS (a company better known by the name, LuxStyle). Since January this year, the ACCC has dealt with 127 complaints from consumers who have received products from LuxStyle that they never ordered.
We set out how businesses can avoid LuxStyle’s mistakes by failing to understand local laws when promoting and selling products in Australia.
The LuxStyle Advertising Method
LuxStyle’s social media ads directed customers to a website that only revealed the prices of products once the customer provided an email. As a result, LuxStyle was capturing personal details and using this information to mail out their products, which the company then followed with invoices demanding payment.
In some instances, LuxStyle have commissioned debt collectors to retrieve payments from consumers. The ACCC took action because LuxStyle’s conduct in demanding payment for unsolicited goods from Australian consumers contravenes the Australian Consumer Law (ACL).
Unsolicited supply is when a business provides products or services that a customer has not ordered or requested. The ACL specifically states that if a business sends unsolicited goods, the customer does not have to pay for the goods or their return. The responsible business can face penalties of up to $1.1 million.
A business can only send an invoice for unsolicited goods or services if the invoice contains:
- the amount of the payment; or
- a warning statement displayed prominently, “This is not a bill. You are not required to pay any money.”
Displaying prices online must comply with the same requirements as any promotional material. However, you should also be aware of potential issues that are unique to the internet, for instance:
- Who can access your website?
- What currency are they viewing your prices?
- Are your prices clear, accurate and don’t mislead consumers?
Rectifying a Mistake
If you mistakenly send products to a customer without receiving an order, you should take steps to correct the situation. Once you have identified the error, businesses can recover the goods within the ‘recovery period’ (up to three months after the consumer receives the goods). However, the recovery period may be reduced to one month if the consumer sends a notice or complaint about receiving unsolicited supply. In the event of a dispute arising from customer complaints, it is up to the business operator to prove that they have reasonable grounds to believe that the customer owes them payment.
Businesses must ensure they are familiar with their obligations under Australia’s consumer law framework. An important takeaway is that these laws differ between countries. So, before you consider expanding into other markets, first research the local laws and regulations. Price transparency will also help you avoid misleading customers.