Business planning, Legal, Management, Sales and marketing

Companies hit with $1 million penalty for door-to-door selling practices

Michelle Hammond /

The Federal Court has ordered two businesses to pay a total penalty of $1 million for illegal door-to-door selling practices, following action by the competition watchdog.

 

Neighbourhood Energy, a Victorian-based electricity retailer and a wholly-owned subsidiary of Alinta Holdings, has been ordered by consent to pay a penalty of $850,000.

 

Australian Green Credits, the former door-to-door marketing contractor for Neighbourhood Energy, has been ordered by consent to pay $150,000.

 

In the first case to be brought under the Unsolicited Consumer Agreement provisions of the Australian Consumer Law, the court declared both retailers engaged in multiple breaches of the ACL, including a failure to leave the homes of consumers when requested.

 

According to Rod Sims, chairman of the Australian Competition and Consumer Commission, these orders are “hugely significant” because they represent three “firsts”.

 

“This is the first court outcome arising from the ACCC’s focus on door-to-door sales activity,” Sims said in a statement.

 

“It is the first ACCC case to be bought under the Unsolicited Consumer Agreement Provisions of the ACL, and it provides the first guidance as to the importance of ‘Do not knock’ stickers.”

 

Every time a salesperson ignores a visible “Do not knock” sign on a consumer’s door, the company they represent is exposed to a maximum penalty of $50,000, Sims said.

 

“The ACCC has previously put energy retailers on notice that it is closely watching their use of door-to-door selling practices and the conduct of their door-to-door salespeople,” he said.

 

The court declared door-to-door salespeople engaged by Australian Green Credits to sell electricity on behalf of Neighbourhood Energy failed to leave the homes of two consumers upon request.

 

In both instances, the initial request was made by a notice that stated “Do not knock” and indicated that unsolicited door-to-door selling was unwelcome at that home.

 

The court also declared Neighbourhood Energy and Australian Green Credits engaged in misleading and deceptive conduct.

 

Salespeople representing Neighbourhood Energy made misleading and deceptive statements to consumers, including that the salesperson was not there to sell anything.

 

The court also granted the ACCC additional remedies to protect consumers from unlawful sales practices and to inform them of their rights.

 

These include injunctions restraining Neighbourhood Energy and Australian Green Credits from engaging in similar conduct in future, corrective advertising and compliance programs.

 

The ACCC’s action against Neighbourhood Energy and Australian Green Credits is part of a broader ACCC interest in the conduct of energy retailers in their door-to-door sales activities.

 

It follows a joint letter from the ACCC and the Australian Energy Regulator in 2011 in which it reminded retailers of their obligations and placed them on notice of the ACCC’s focus.

 

The ACCC continues to investigate a number of other retailers in relation to door-to-door sales activity.

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