Business snapshot don't take advantage of disadvantage

Business snapshot

Compliance is not just about obeying the

law, it makes good business sense

Businesses that accommodate the special needs of

consumers get a good reputation in all areas of their

business. Businesses that take advantage of vulnerable or

disadvantaged consumers get a bad reputation, not just

with the consumer involved, but with their family, friends,

carers and the broader community.

This guide will help you recognise when you are dealing with

disadvantaged or vulnerable consumers and the factors you

may need to consider in these situations, including relevant

court decisions.

Businesses are encouraged to deal with all consumers.

However, if it is apparent that a potential customer may not

have the capacity to make a voluntary or informed decision

about the implications and/or beneﬁts of their purchasing

or contractual decisions, then businesses need to act

responsibly and take extra care in their dealings to ensure

that no unfair advantage is taken.

This guide outlines your rights and responsibilities in dealing

with disadvantaged or vulnerable consumers.

don’t take advantage of disadvantage

A compliance guide for businesses dealing with disadvantaged

or vulnerable consumers

Business snapshot—don’t take advantage of disadvantage

What do we mean by ‘disadvantaged’ or ‘vulnerable’?

Some consumers may be disadvantaged or vulnerable in

some marketplace situations if they:

• have a low income

• are from a non-English speaking background

• have a disability—intellectual, psychiatric, physical,

sensory, neurological or a learning disability

• have a serious or chronic illness

• have poor reading, writing and numerical skills

• are homeless

• are very young

• are old

• come from a remote area

• have an Indigenous background.

Of course, not all consumers with these characteristics are

more at risk of making poor business decisions. But be

aware that your marketing message and conduct may affect

some consumers differently when making decisions about

buying goods or services.

Your business should consider that consumers:

• whose English language skills are not good, or who

are visually impaired may not be able to compare

written contracts with your advertisements or verbal

representations—they are at risk if representations

abouttheterms of the contract are unclear, incorrect or

failto mention key terms

• in Indigenous communities may have had limited

exposure to commercial transactions and have little

understanding ofcommercial documents

• on low incomes may be more inclined to pursue claims

about low prices, but they may also suffer greater

ﬁnancial impact if the claims are unclear, incorrect

orsimply untrue

• who live in remote areas may have limited choices, and

may therefore feel pressured to accept unfair terms

• particularly those from non-English speaking or

Indigenous backgrounds, may view transactions

according to cultural values rather than market values.

Why does my business need to be aware of

theseissues?

If your business deals with consumers it is likely that some of

these consumers will have one or more of the characteristics

of disadvantage or vulnerability listed above. You may even

deal in products or services which are speciﬁcally designed

for or target such consumers. It is therefore important for

your business to be aware of these issues.

Research has shown that most dissatisﬁed consumers do

not complain to a business until things get really bad. Even

then, around a quarter of consumers will not complain to

a business when things go really wrong. However,this

does not mean that they remain silent. The research also

estimated that a person with a complaint will tell an average

of nine other people (friends, family and workmates)

about the poor service they received and name the

company involved. When a business’ conduct is harmful

to disadvantaged or vulnerable consumers, damage to the

reputation of a business is probably even more likely.

Businesses generally have more information about the

goods or services they sell and/or more bargaining power

than their consumers. This imbalance may be greater for

disadvantaged or vulnerable consumers than for other

consumers. Disadvantaged or vulnerable consumers may

also have less understanding of the consequences of a

particular action or transaction or may believe that the

traderis acting in their best interests in situations where

theyare not.

All consumers need sufﬁcient and accurate information to

make an informed decision. Special care may be needed

when dealing with disadvantaged or vulnerable consumers.

Be aware that you and your staff or agents are responsible

for ensuring that consumers have that information.

Tips for business

Preparing your business:

• Are your staff aware of fair trading, anti-discrimination

and other relevant laws? Have they received relevant

training?

• Be alert to any special needs your consumers have

andmake sure you have systems in place to prevent any

unfair treatment.

• Is your marketing message clear and accurate? Keep

in mind the different needs of current and potential

consumers.

• Are all documents you use to market goods or services

to consumers clear and simple?

During a transaction:

• Have you clearly disclosed important or unusual terms or

conditions of the agreement?

• Does the consumer understand the terms of any

agreement associated with the transaction? Has the

consumer had an opportunity to consider the offer

properly?

• Make sure the consumer is not ﬂustered, agitated or in

a highly emotional state when they enter into a contract.

Observe any cooling-off periods that may apply or

consider offering a cooling-off period in writing.

• Consider that it may be appropriate for a guardian, carer

or other appropriate person to be present to either act on

the consumer’s behalf and/or help explain and assist the

consumer with the decision.

• If you are in any doubt, give the consumer an opportunity

to seek advice about the contract before they sign it.

• Make sure your actions, whether intentional or not, do

not take advantage of any characteristic listed under

theheading.

Business snapshot—don’t take advantage of disadvantage

After a transaction:

• If things go wrong, be open to resolving complaints and,

where appropriate, setting aside contracts or agreements.

• Do not reward your staff or agents for unfair,

pressure-based selling.

What does the ACL say?

Many of the fair trading provisions in the ACL

(includingthose discussed below) take into account

the circumstances, including the characteristics, of

thepeopleaffected.

Misleading or deceptive conduct

The ACL prohibits misleading or deceptive conduct

whichcan include:

• leading someone to a wrong conclusion

• creating a false impression

• leaving out or hiding important information

• making false claims about products or services.

This applies to all interactions with the public—from

the overall impression you create in your advertising to

one-on-one sales situations.

Unconscionable conduct

Unconscionable conduct is difﬁcult to deﬁne or describe

as it varies on a case-by-case basis. It requires something

substantially more than just being ‘unfair’ or hard commercial

bargaining. As a general rule, it is conduct that is against

conscience as judged against the norms of society.

Disadvantaged or vulnerable consumers may be especially

vulnerable to unfair business conduct. Make sure consumers

understand everything you say. If you are unsure, give them

the opportunity to think about it or talk it over with someone

else.

The ACL sets out a number of factors the courts may

consider in deciding whether conduct was unconscionable,

including:

• the relative bargaining strength of the parties

• whether any unreasonable (including unnecessary)

conditions were imposed on the consumer

• whether the consumer was able to understand the

documentation used

• the use of any undue inﬂuence or pressure tactics

• the terms on which the consumer could have bought

the same or equivalent goods or services from another

business (including the price).

The courts may also consider any other factors that are

relevant in the circumstances, including whether the

consumer possesses any ‘special disadvantage’. In the

unwritten law (also known as Common Law), ‘special

disadvantage’ means that the consumer has a condition

or is in a circumstance that seriously affects their ability to

judge what is in their best interests.

Factors that may give rise to a special disadvantage

include an ignorance of important facts known to the staff

or agent of the business, illiteracy or lack of education,

poverty or need of any kind, the consumer’s age, inﬁrmity

of body or mind, drunkenness, or lack of explanation and

assistance where necessary. Many of these factors match

the categories of disadvantage or vulnerability that the

ACCChas identiﬁed.

ACCC v Craftmatic Pty Ltd

The ACCC instituted proceedings against Craftmatic Pty

Ltd alleging that Craftmatic had acted unconscionably

against senior citizens in the door-to-door sale of beds by

taking advantage of the commercial inexperience of elderly

and housebound consumers through high pressure sales

tactics.

Between August 2005 and at least 1 June 2008,

Craftmatic used misleading and unfair tactics to convince

elderly people to agree to a home presentation by one of

Craftmatic’s sales representatives. Once at the consumer’s

home, an elaborate and well rehearsed sales process was

used to persuade the consumer to buy a Craftmatic bed,

in some cases costing more than $10 000.

While some consumers were happy to buy a bed, others

who indicated that they either didn’t want, or could not

afford, to buy a bed were subjected to a barrage of unfair

sales techniques to change their mind.

The Federal Court of Australia declared, by consent, that

Craftmatic’s method of promotion and sale consisted

of steps designed, scripted and conducted to unduly

inﬂuence potential customers and to create and take

advantage of an unequal bargaining position.

The Federal Court ordered injunctions for a period of

seven years restraining Craftmatic from a wide range

of conduct that was found to be misleading and

unconscionable, in breach of the Trade Practices Act

(renamed Competition andConsumer Act 2010 on

1January 2011).

ACCC v NuEra Health Pty Ltd

The ACCC alleged that NuEra Health Pty Ltd and the

family members who operated NuEra Health engaged in

unconscionable conduct in the marketing of the ‘RANA

System’ to highly vulnerable consumers when signing

them up to pay for alternative cancer treatments.

The RANA System was described as ‘an alternative

approach to cancer care which offers HOPE to cancer

sufferers’. The System included a variety of products

and services including, vitamin and mineral supplements,

Cesium or high PH therapy, Zen Chi Massages Magnetic

Pulsers, coffee enemas, ozone therapy, diets described

as eating according to blood type, live blood analysis and

thermal imaging, which cost up to $35 000.

In marketing the RANA System, NuEra falsely claimed

thatit:

• could cure cancer, or reverse, stop or slow its progress

or would prolong the life of a person suffering cancer

• was based on generally accepted science, when this

wasnot correct.

The Federal Court of Australia described the conduct of

NuEra as ‘unconscionable in the full sense meant under

the Trade Practices Act’ (renamed the Competition and

Consumer Act on 1 January 2011) and ‘of the most

reprehensible kind, revealing a cynical and heartless

exploitation’.

The NuEra companies, and the family members who ran

NuEra were permanently restrained by the court from

engaging in any of the offending conduct.

ACCC v Ramon Lal Keshow

The ACCC brought an action alleging unconscionable

conduct against Mr Keshow who was marketing

educational materials to Indigenous people in the Northern

Territory. The ACCC identiﬁed eight Indigenous women

who had signed forms allowing automatic deductions

from their bank accounts into accounts controlled

by MrKeshow as payment for educational materials.

JusticeMansﬁeld found that for a signiﬁcant proportion of

Mr Keshow’s customers, the goods were not supplied and

excessive payments were deducted from the customers’

accounts.

The court not only found that Mr Keshow was

unconscionable in his dealings with the particular

consumers, but also found him to have acted

unconscionably in relation to Indigenous consumers in

the Northern Territory generally—based on his ‘way of

operating’.

This general unconscionable course of conduct did not

depend on the particular interactions or transactions of the

witnesses produced by the ACCC. Mr Keshow’s ‘way of

operating’ included:

• not offering the consumers a written record of the

contracts they entered into, which involved automatic

bank account deductions as well as other conditions

that the Federal Court found were not reasonably

necessary to protect Mr Keshow’s legitimate business

interests

• being aware of his consumers’ relative poverty, cultural

differences and lack of experience in commercial

matters but not notifying consumers of the excessive

payments, not holding the excessive payments on

behalf of the consumers and not advising consumers

how to stop theautomatic payments.

The Federal Court banned Mr Keshow from entering

Indigenous communities to conduct his business, and also

placed restrictions on his receipt of automatic payments

for goods or services.

Harassment or coercion

While a business has the right to market its goods or

services and reasonably pursue a debt owed to it, when a

sustained marketing or debt collection effort is unwarranted,

unreasonable, excessive or too intense, it can constitute

‘undue harassment’ or ‘coercion’ and breach the ACL.

A person is ‘coerced’ when they are made to do or not

do something (for example, buy a product or obtain legal

advice) by force or threat of force or other intimidation.

Actions that may be reasonable for most consumers

may distress or intimidate disadvantaged or vulnerable

consumers.

Collection House Limited v Taylor

An unemployed mother of a deaf dependent child was

cold-called by a Collection House Limited collector

who questioned her about her personal and ﬁnancial

circumstances. The collector implied that legal

proceedings may be instituted if no payment was made

on a debt of $10 000 that, unknown to the debtor, was

statute-barred.

The court found the collector’s conduct to be

unconscionable and noted that the circumstances were

sufﬁcient to require the collector to establish that the

transaction was fair, just and reasonable—which the

collector did not do.

Be fair and be aware—the role of the Australian

HumanRights Commission

You also need to be aware of your obligations under anti-

discrimination legislation. In some cases, discriminating

against consumers who experience vulnerability or

disadvantage may break the law.

This could include refusing to deal with these consumers or

treating them less favourably than other consumers. Contact

the Human Rights Commission or the state or territory

equivalent for more information.

The Human Rights Commission can help you with any

questions in relation to anti-discrimination laws.

Telephone: (02) 9284 9600

Complaints Infoline: 1300 656 419

Privacy Hotline: 1300 363 992

General inquiries and publications: 1300 369 711

TTY: 1800 620 241

Facsimile: (02) 9284 9611

Website: www.humanrights.gov.au

Email: [email protected].au to request

information on lodging or responding to a complaint. Please

note that this email address is an information service only.

You can lodge a complaint online from the Human Rights

Commission website.

Where can I get more information?

For more information on the Competition and Consumer

Act, visit the ACCC website www.accc.gov.au or call the

ACCC’s Small Business Helpline on 1300 302 021.

You can also visit www.consumerlaw.gov.au for an overview

of the Australian Consumer Law—the new consumer law

regime operating across Australia.

For other business information go to www.business.gov.au

ACCC contacts

Infocentre 1300 302 502

Website www.accc.gov.au

For information in languages other than English,

call 131450 and ask for 1300302502

TTY service for people with hearing or speech difculties:

1300303 609 www.accc.gov.au

Important notice

This publication has been updated to refer to the Competition and

Consumer Act 2010 which replaces the Trade Practices Act 1974 on

1January 2011. For more information on the Australian Consumer Law

changes see www.consumerlaw.gov.au

The information in this publication is for general guidance only. It does

not constitute legal or other professional advice, and should not be relied

on as a statement of the law in any jurisdiction. Because it is intended

only as a general guide, it may contain generalisations. You should obtain

professional advice if you have any speciﬁc concern.

The ACCC has made every reasonable effort to provide current and

accurate information, but it does not make any guarantees regarding the

accuracy, currency or completeness of that information.

ISBN 978 1 921887 51 2

ACCC 11/14_44164_217

ACCC addresses

National ofﬁce

23 Marcus Clarke Street

Canberra ACT 2601

GPO Box 3131

Canberra ACT 2601

Tel: 02 6243 1111

Fax: 02 6243 1199

New South Wales

Level 20,

175 Pitt Street

Sydney NSW 2001

GPO Box 3648

Sydney NSW 2001

Tel: 02 9230 9133

Fax: 02 9223 1092

Victoria

Level 35,

The Tower

360 Elizabeth Street

Melbourne Central

Melbourne Vic 3000

GPO Box 520

Melbourne Vic 3001

Tel: 03 9290 1800

Fax: 03 9663 3699

Queensland

Brisbane

Level 24,

400 George Street

Brisbane Qld 4000

PO Box 12241

George Street Post Shop

Brisbane Qld 4003

Tel: 07 3835 4666

Fax: 07 3835 4653

Townsville

Level 6,

Central Plaza

370 Flinders Mall

Townsville Qld 4810

PO Box 2016

Townsville Qld 4810

Tel: 07 4729 2666

Fax: 07 4721 1538

South Australia

Level 2,

ANZ House

19 Grenfell Street

Adelaide SA 5000

GPO Box 922

Adelaide SA 5001

Tel: 08 8213 3444

Fax: 08 8410 4155

Western Australia

3rd ﬂoor,

East Point Plaza

233 Adelaide Terrace

Perth WA 6000

PO Box 6381

East Perth WA 6892

Tel: 08 9325 0600

Fax: 08 9325 5976

Northern Territory

Level 8,

National Mutual Centre

9 –11 Cavenagh Street

Darwin NT 0800

GPO Box 3056

Darwin NT 0801

Tel: 08 8946 9666

Fax: 08 8946 9600

Tasmania

3rd ﬂoor,

AMP Building

86 Collins Street

Hobart Tas 7000

GPO Box 1210

Hobart Tas 7001

Tel: 03 6215 9333

Fax: 03 6234 7796