Submission to Standing Committee of Officials Of Consumer Affairs (SCOCA) on draft Australian Consumer Law Regulations

Transcription

1 Submission to Standing Committee of Officials Of Consumer Affairs (SCOCA) on draft Australian Consumer Law Regulations October

2 1. About the Australian Direct Marketing Association ADMA is the peak industry body of the Australian direct marketing industry. ADMA was formed in 1966 and during its 44 years of operation has been involved in the formulation of law relevant to the direct marketing industry. Predominantly our focus has been the Privacy Act 1988, the Spam Act 2003, the Trade Practices Act 1974 and the Do Not Call Register Act ADMA has also been involved in co-regulatory and self-regulatory solutions over many years. ADMA operates a Direct Marketing Code of Practice which is a self regulatory code. Compliance with the Direct Marketing Code of Practice is a pre-requisite of our membership. The Direct Marketing Code of Practice is overseen by an independent Code Authority. ADMA s primary objective is to help companies achieve better marketing results through the enlightened use of direct marketing. ADMA has over 500 member organisations including some of Australia s biggest and most trusted brands. Our members include major financial institutions, telecommunications companies, energy providers, travel service companies, major charities, statutory corporations, educational institutions and specialist suppliers of direct marketing services. Almost every Australian company and not-for-profit organisation directly markets, including unsolicited selling in one form or another, to its current and potential customers as a normal and legitimate part of its business activities and the ability to continue to conduct this activity underpins a good proportion of Australia s economic activity. 2

3 2. Introduction ADMA welcomes the opportunity to comment on the Australian Consumer Law draft regulations (the draft regulations). ADMA wishes to express its significant dismay that the draft regulations still remain unsettled less than three months from the 1 January 2011 implementation date. The draft regulations contain significant potential changes to the Australian Consumer Law (ACL) regime and will have a significant bearing on what organisations need to do to be ready for the 1 January 2011 commencement date. For these reasons, ADMA suggests that the actual commencement date of the ACL regime should be deferred by at least 6 months to give organisations enough time to prepare for the new laws. As an overall comment however ADMA commends many of the inclusions proposed in the draft regulations. In particular, we strongly support inclusion of the following exemptions in the regulations from the unsolicited agreements regime: - business contracts - exemptions for contracts of the same kind of goods (although we propose that the exemption be extended for a short period after a contract expires) - voluntary contact by a consumer ADMA also supports an exemption for publishers and large companies for the purposes of subsection 43(3)(d) of the ACL. ADMA does have significant concerns about the adoption of obligations that require a dealer to provide their home address as this may jeopardise the safety of the dealer and those that live in their house (including potentially children). ADMA still retains significant concerns about section 82 (6) of the ACL and strongly urges that the regulations be extended to clarify the minimum information that a consumer must provide when terminating an agreement. The current law in this regard is far too uncertain. There is also a strong case for the inclusion of an exemption for requests for in-place telephone service requests that result from a telephone company contacting a consumer who is about to or has recently moved to a new residence which we urge Treasury and SCOCA to consider. ADMA was unsure why such an exemption was only proposed for energy suppliers. ADMA also proposes that an additional exemption to those already proposed under the draft regulations be included. This additional exemption would clarify that sales made in common areas of retail premises in retail kiosks (whether permanent or temporary), or on or in tables, stall, stands or booths would not be unsolicited consumer agreements. Lastly, ADMA seeks clarification on the term public holiday as specified in section 73 of the ACL. ADMA submits that industry should be required to not make unsolicited sales on national and state public holidays but that regional holidays are difficult and costly to implement and should be excluded from section 73. ADMA notes that section 5 of the Telecommunication (Do Not Call Register) (Telemarketing and Research Calls) Industry Standard 2007 prohibits telemarketing calls to be made on specified national public 3

4 holidays and by doing this provides a clear and easy to implement approach to public holidays. ADMA urges that the same approach is adopted in ACL. 4

5 3. Comments on the Draft Regulations Prescribed Requirements for Asserting the Right to Payment Warning Statements on documents and invoices Is the proposed warning statement appropriate? Are there any other requirements that should be prescribed? The proposed warning statement provides significant additional protection to consumers and will guard against confusion that may be caused by providers presenting material that appears to be a bill when it is not. Exemptions for publishers and large companies Is the Audit Bureau of Circulations the correct body to be prescribed under section 43 of the ACL? Are there other bodies that should be prescribed for the purposes of subsection 43(3) of the ACL? ADMA fully supports the inclusion of an exemption for publishers. The use of the Audit Bureau of Circulations appears to be a sensible basis on which to determine if an entity is a publisher. Should bodies other than large proprietary companies, listed companies and their subsidiaries be exempt under paragraph 43(3)(d) of the ACL? ADMA fully supports the inclusion of an exemption for large proprietary companies, listed companies and their subsidiaries in the ACL regulations. 5

6 Agreements that are not unsolicited consumer agreements A number of specific exemptions are outlined below. Are there additional exemptions that should be made? For example, one proposal that has not been adopted in the draft regulations is for an exemption based on membership of an association of people involved in direct selling. Should an exemption of this nature be made by regulation? ADMA supports any proposal that recognises that in the majority organisations that are members of industry associations, through a process of self selection, do demonstrate a higher commitment to industry best practice. On this basis ADMA would support the creation of an exemption for organisations that become members of an association of people involved in direct selling or members of other industry associations including members of the Australian Direct Marketing Association. Party Plans Should Party Plans be exempt from the provisions of the ACL dealing with unsolicited consumer agreements? Is the definition of a party plan event appropriately adapted to business practices in this area? Is there potential for sales practices to develop that may inappropriately exploit this exemption? ADMA does not offer a comment on this issue. 6

7 Business Contracts Should business contracts be exempt from the provisions of the ACL dealing with unsolicited consumer agreements? ADMA strongly supports the inclusion of an exemption from the provisions of the ACL for business contracts as proposed in draft regulation 81(4). ADMA submits however that the current wording should be revised so as to avoid significant and unwarranted cost to business. The exemption should apply whenever a business acquires goods or services and not depend on whether a good or service is one ordinarily used for personal, domestic or household use or consumption. ADMA submits that draft regulation 81(4) would be much clearer and easier and less costly to implement if it were reworded as follows: A contract (known as a business contract) for the supply of goods or services to a business is not an unsolicited consumer agreement. Is the definition of business contract appropriately adapted to business practices in this area? The proposed definition of business contract is probably not as well suited to business practices as it might be. Under the current proposed definition of business contract, businesses will have to assess each product and form a view on whether a good or service is of the kind ordinarily used for personal, domestic or household use. This criterion is far from clear and open to differing points of view and subject to change over time. It would be much easier to apply this exemption if the term business contract was defined as a contract for the supply of goods and services to a business. This criteria is far easier to assess by both consumers, businesses, regulators and the courts and we urge Treasury and SCOCA to consider this alternative approach. Further the current proposed definition will prevent consumers being able to access the unsolicited selling protections afforded under ACL in circumstances where they purchase goods and services ordinarily used by businesses. The definition proposed in the draft regulations would mean that consumers would not be given protection under the unsolicited consumer agreement regime for these types of purchases. An example might include purchase of water filters ordinarily provided to businesses. However under the definition proposed by ADMA these consumers will be covered by the unsolicited selling provisions. In addition to the comments above, there is one significant omission in this category of exemption and this is the purchase of goods and services by government. ADMA proposes that an additional exemption should be included in the regulations to address this omission. This could be drafted along the same lines as ADMA proposes for business contract: A contract (known as a government contract) for the supply of goods and services to government (Federal, State or local) is not an unsolicited consumer agreement. 7

8 Renewal of contracts of the same kind Should contracts of the same kind be exempt from the provisions of the ACL dealing with unsolicited consumer agreements? ADMA strongly supports the inclusion of an exemption from the provisions of the ACL where there is an existing relationship and the approach is for the same kind of goods or services. Is the definition of contracts of the same kind appropriately adapted to business practices in this area? ADMA notes the underlying logic for this exemption being that consumers sometimes acquire goods and services that are required on an ongoing basis under contracts that expire periodically. Noting this underlying rational, ADMA submits that draft regulation 81(5) should be broadened to deem an agreement for a subsequent contract of the same kind is not an unsolicited agreement if the consumer and a supplier are a party to a contract that is in force or was in force in the three months before the relevant agreement is made with the consumer. In addition, ADMA also submits that it would be particularly helpful if more complex examples were included in the ACL guide on this issue. An example might include a telephone carrier that calls an existing customer just prior to their phone contract expiring. The customer has a phone that had a significant amount of functionality at the time the contract commenced however a new more technologically advanced phone has come out and is offered along with the required broadband features and access to social media networks. Access to social media networks, an appropriate data plan and a new carry bag should be considered to be a good or service of the same kind. ADMA also seeks clarification either by way of regulation or inclusion in the guide that minor changes such as upgrades or downgrades of data usage plans or the addition of extra features that are closely related to the goods or services being acquired (such as a data pack for a mobile phone) would also be considered as contracts of the same kind and exempt from the unsolicited consumer agreements regime. This may be covered off by inclusion in the guide or alternatively an additional exemption could be included in the regulations that specifies that minor changes to an existing contract are exempt from the unsolicited consumer agreements regime. ADMA notes that similar provisions relating to minor changes already exist in NSW, Victorian and ACT legislation. 8

9 Voluntary contact with the same supplier Should circumstances in which a consumer voluntarily contacts a supplier subsequent to an unsolicited approach lead to an exemption from the unsolicited consumer agreement provisions of the ACL? ADMA strongly supports the inclusion of this exemption. If a consumer voluntarily contacts a supplier subsequent to an unsolicited approach then it should not be considered an unsolicited consumer agreement. The consumer, having had the time to consider the offer of the company, has voluntarily decided to take up the offer and solicited the products and services. Other Exemptions not already covered in the draft regulations ADMA is very concerned about a statement in the Sales Practices A guide for businesses and legal practitioners (the Sales Guide) that states sales made in shopping malls and public places would be considered unsolicited. This new perspective that Australian Consumer Law covers sales made in shopping malls and public raises significant concerns. The legislation has not been drafted with this application in mind as can be evidenced by the very provisions of the law, specifically sections 73, 74 and 75. Such an interpretation is a step too far and cannot be practically implemented because the unsolicited selling provisions of ACL are simply not crafted to accommodate this interpretation. If such an extension of unsolicited consumer agreements were to occur it would be a significant move away from the objectives of this legislation. On this basis ADMA strongly urges that the Sales Guide is revised to remove this reference. In addition ADMA submits that the draft regulations should put it beyond doubt that ACL does not apply in these situations. In conjunction with this sales made at a permanent or temporary fixed structure, table, stall, stand or both in, on or from which, goods or services are sold should also be excluded from the the unsolicited selling provisions of the ACL. ADMA proposes the inclusion of two new draft regulation as follows 81 Agreements that are not unsolicited consumer agreements general Other places of business An agreement for the supply of goods or services not made at a consumer premises. An agreement for the supply of goods or services made with a consumer at a permanent or temporarily fixed structure, table, stall, stand or booth in, on or from which, goods or services are sold is not an unsolicited consumer agreement. 9

10 Information relating to the identity of a dealer Is there additional information that should be prescribed under subparagraph 76(a)(iii) of the ACL? ADMA is extremely concerned about the proposal to require dealers to provide residential address if they do not have a business address. If a dealer is acting on behalf of a supplier then the provision of the supplier s address should be adequate. The objective of traceability and transparency for dealers is a key consideration. However, an inappropriate transaction could lead to aggrieved consumers taking it upon themselves to visit the dealer s house where there may be other individuals including children. Consumer protection with respect to laws is important but the physical security of dealers and their families is perhaps more important. Another solution to providing residential address or simply dropping this requirement would address these concerns. Form and way of providing information about termination periods Are there any other requirements that should be prescribed under subsection 76(d) regarding the form and way in which consumers are given information about their termination rights? ADMA makes no comment on this question. Information and requirements for front page of agreements and agreement documents Should additional information be prescribed for the front page of an agreement or an agreement document? Noting section 82 (6) specifies that there are no requirements relating to the form or content of a notice that a consumer needs to give when terminating an unsolicited consumer agreement. Industry still retains grave concerns that under the law a consumer could contact a company to terminate an agreement during the termination period without providing any identifying information at all. It would be a strange outcome indeed if the company could be held in breach of the legislation for not actioning the request to terminate in such circumstances. To mitigate this ADMA strongly urges that the regulations be extended so they specify that consumers need to provide some basic information to suppliers if they decide to terminate an agreement during the termination period. Perhaps organisation could be required to include in agreement documents guidance for the consumer about the information that they need to provide to the organisation should they decide to terminate the agreement (such as name, address and telephone number) to allow the organisation to process the termination request. From a logistical perspective, organisations should also be able to specify phone numbers to which verbal requests for termination should be directed. 10

11 Approved form for agreement or agreement document Emergency Report Contracts Should emergency repair contracts be exempt from the unsolicited consumer agreement provisions of the ACL? ADMA offers no comment on this. Some tradespersons are required to be licensed in order to supply certain types of services to consumers. When such licences are required, should the exemption extend only to persons holding the relevant licence? ADMA offers no comment on this. Are there other factors that should be taken into account as part of the proposed exemption? ADMA offers no comment on this. Potential Exemptions from Unsolicited Consumer Agreement Provisions Charities Should charities be exempt from the unsolicited consumer agreement provisions of the ACL? ADMA offers no comment on this. Potential exemption from unsolicited consumer agreement provisions energy supplies Should an unsolicited consumer agreement entered into for the supply of energy be exempt from the prohibition on supply for 10 business days under the ACL when a consumer does not have an existing supply of energy? ADMA strongly supports this proposal. ADMA submits that electricity is not the only essential service that may have in place services (services that are operating at a premises prior to when a consumer moves in) and these may also include telephone services. Should a customer be contacted over the phone or in a door to door context when they have just started using an in-place service then the request for connection will be subject to timeframes specified under the Customer Service Guarantee Standard and where a member of the household has life threatening medical condition the timeframes specified under Priority Assistance. ADMA wishes to note that calls to consumers when they are moving are quite common and can arise as a result of consumers nominating through real estate agents or intermediary organisations to be contacted by prospective suppliers. 11

12 Organisations will be left in the unenviable situation of having to choose between complying with the Customer Service Guarantee and Priority Assistance timeframes or the Australian Consumer Law provisions, in instances where the organisation has contacted the individual. It will be of significant detriment to consumers in this instance if the provision of their service is delayed by 10 business days plus the 5 business days that it takes to deliver an agreement document (in the case of a telephone sale). In fact, the carrier may have to disconnect an active service to meet the ACL requirements. Should an unsolicited consumer agreement entered into for the supply of energy be exempt from the prohibition of supply for 10 business days under the ACL when a consumer enters into that agreement during the operation of a deemed energy contract? ADMA makes no comment on this question. Requirements for warranties against defects Are these prescribed requirements for warranties against defects appropriate? Should additional requirements be prescribed? ADMA makes no comment on this question. Requirements for Repair Notices Are these prescribed requirements appropriate? Should additional notices be prescribed related to the repair of consumer goods? ADMA makes no comment on this question. The proposed prescribed notice related to refurbished goods would apply only to suppliers who intend to provide refurbished goods to consumers. An alternative would be to apply the requirement more broadly to suppliers who sometimes provide refurbished goods in response to a request for repair. Would this alternative be more appropriate? ADMA makes no comment on this question. Are the prescribed requirements sufficiently clear? One suggestion for alternative wording that has been made would be for the notice to include the words if it is the practice of a repairer of goods to supply refurbished goods as an alternative to repairing a consumer s own goods, the notice must disclose that practice. Is this wording to be preferred? ADMA makes no comment on this question. 12

13 Reporting requirements for goods or product-related services associated with death, serious injury or illness. Are there additional laws that should be prescribed? ADMA makes no comment on this question. 13

14 4. Other Comments 4.1 Public Holidays ADMA notes that dealers must not call on a person on a public holiday. ADMA fully supports that this obligation should apply to national public holidays and in a specific state there is a state public holiday however we are concerned that regional public holidays would also apply. Implementation of obligations for regional public holidays is technically complex, not the least because it will require organisations to map specific postcodes where the public holidays apply and where they don t. ADMA notes also that the rules for telemarketing under Do Not Call Register legislation (specifically section 5 of the Telecommunication (Do Not Call Register) (Telemarketing and Research Calls) Industry Standard 2007) prohibits telemarketing calls to be made on specified national public holidays and by doing this provide a clear and easy to implement approach to public holiday. ADMA urges that the same approach is adopted in ACL with the exception that ACL includes state public holidays as well as national public holidays. 14