The Australian Competition and Consumer Commission (ACCC) has issued a warning against an online retailer over allegations it has been demanding payments from customers for products they were sent but had not intended to purchase.
Denmark-based Lux International Sales ApS, trading as LuxStyle, has been the subject of 127 complaints to the ACCC since January.
The company’s sales methods are alleged to involve advertising products on social media, with users that click the links then directed to a website that will not display prices of products until a mailing address and email address are entered.
After entering details, customers who have not then proceed with the purchase have been sent the products anyway along with an invoice demanding payment, the consumer watchdog alleges.
The ACCC claims multiple follow-up invoices have been sent to customers, along with threats to refer the case to Australian debt-collectors in some cases.
The commission issued the public warning notice on the basis there were reasonable grounds to suspect LuxStyle business practises are contravening Australian Consumer Law.
Specifically, the business is contravening the area of the ACL, which protects consumers from businesses asserting a right to payment for unsolicited goods.
“The ACCC is very concerned that consumers are reporting that, in response to demands from LuxStyle, they have paid for goods that they did not order and do not want,” ACCC deputy chair Delia Rickard said in a release.
“The Australian Consumer Law provides specific protection to Australian consumers. If a business sends unsolicited goods to an Australian consumer, the consumer is not required to pay for the goods, nor is the consumer required to pay to return the goods.”
The business is also being investigated by the Danish Consumer Ombudsman, which reports it has also received complaints from New Zealand and Canada.
The business has informed the Danish Consumer Ombudsman it does not consider its trading practice to be in violation of the law, the commission said in a statement.
Businesses advised to send back any unsolicited goods
Damien Timms, practise leader and commercial lawyer at LegalVision, told SmartCompany that seeing such allegations at a retail level is unusual.
“The idea of sending unsolicited goods is seen more often in a commercial context, with businesses dealing with high volumes of product,” Timms says.
“It’s basically dodgy practice [if it’s] happening at a retail level like this.”
Narissa Corrigan, commercial lawyer at Ampersand Legal, agrees, telling SmartCompany that claims around the business’ practice “clearly” seem like a breach of the ACL.
“If a company sends someone unsolicited goods, they can’t require a person to pay for things they haven’t asked for,” she says.
For businesses and individuals alike that have received unsolicited goods or products, Timms has one piece of advice: Send it back.
“If you get something in the mail you haven’t sought out or paid for, send it back. Don’t open the package or engage in any way, just send it back,” he says.
While consumers or businesses are not required to pay for unsolicited goods, they do have obligations when it comes to returning the item. The ACCC advises businesses may recover the product within a certain time period, and consumers cannot “unreasonably refuse” to allow the business to recover the products.
Timms believes scenarios in which unsolicited goods are delivered are a case of businesses attempting to “prey on the weak”.
“This is preying on the weak and vulnerable. If a pensioner receives unsolicited goods and a couple of heavies come to the door demanding payment, it’s easier to pay them to make them go away than fight it,” he says.
Unsolicited bill demands targeting businesses
Corrigan notes she has also seen cases in which businesses have been sent unsolicited invoices for services.
“I’ve seen when a company send a business a trademark registration bill demanding $2,000 for their trademark to appear in some register,” she says.
“Companies will often pay because they think it’s real. That’s the exact same scenario, except it’s a service rather than a good.”
The ACCC put out a warning in December last year about businesses receiving unsolicited invoices for domain name registration.
Corrigan believes the consumer watchdog could intend to take further action on LuxStyle.
“ACCC has gone to the effort of making this warning, so they’re probably going to take action,” she says.
“I’d be surprised if they didn’t.”
SmartCompany contacted LuxStyle but did not receive a response prior to publication.