The Law Handbook 2024

Chapter 7.2: Consumer protection laws 693 Scope As with misleading or deceptive conduct, the prohibition applies to any conduct, not just conduct at the time of entering into a contract. However, the majority of the case law to date has dealt with procedural unfairness – that is, matters leading up to the formation of a contract, rather than with the substantive unfairness of a contract itself. Moreover, the case law highlights the unsettled nature of what is meant by unconscionable conduct under the ACL. Case examples ACCC v Keshow [2005] FCA 558 Members of Aboriginal communities in the Northern Territory entered into agreements for the supply of children’s educational materials and household goods with a supplier. The supplier arranged for the consumers to enter into open-ended periodic payment authorities for payment upon receipt by the consumer of the goods. The court found that the consumers were required to comply with conditions that were not reasonably necessary to protect the supplier’s legitimate interests. Both entering into the transactions and the receipt of the periodic payments was found to be unconscionable within the meaning of section 51AB of the TP Act. ACCC v Excite Mobile [2013] FCA 350 Excite Mobile supplied mobile telephone services promoted through telemarketing calls, including to Aboriginal communities without comprehensive mobile coverage. A gift of a free holiday and mobile phone was offered as an incentive to signing up to a 24-month plan. The plan consisted of a minimum monthly fee; however, customers were also restricted by a daily cap of $2.20 a day for calls and texts on the monthly plan. The daily cap was only disclosed after the customer had agreed to the terms of the contract. In the event of the customer wishing to terminate the contract within the mandatory cooling-off period of 10 days, they were required to pay a $75 ‘cooling-off fee’. If the phone or its packaging were damaged when returned, the customer was required to pay for the phone outright ($195). Payments were to be by direct debit; telemarketers obtained consent to debit these payments and in the event an account remained outstanding, the amount owing would be withdrawn from the customer’s account. The court found that the sales method, including the daily cap, the direct debit arrangement and the ‘cooling-off charges’, amounted to unconscionable conduct. ACCC v Lux Distributors Pty Ltd [2013] FCAFC 90 An employee of Lux used existing customer databases to contact householders, including the five witnesses who were elderly women in their 80s and 90s. The call was ostensibly to offer a free maintenance check on the householder’s existing vacuum cleaner, but was in reality a ruse to get a ‘foot in the door’. At each premises, the Lux representative tested the customer’s existing vacuum cleaner and conducted a test that compared that vacuum cleaner with a near- new demonstration model. The representative used the results of the demonstration together with other selling techniques to convince the customer to buy a new Lux model. The trial judge determined that the conduct was not unconscionable as it did not involve a significant element of ‘moral obloquy’, which involves deliberate wrongdoing. The judge noted that a sale should not generally be regarded as unconscionable merely because the purchaser has been persuaded to proceed against their better judgment where the contract contains specific terms that allow it to be cancelled (as an unsolicited agreement, the contract included a mandatory cooling-off period). The decision was overturned on appeal. The full Federal Court found that while ‘moral tainting’ is relevant, whether conduct is against conscience should be considered by reference to the norms of society. The court noted that today’s norms and standards require businesses that wish to gain access to people’s homes for direct selling to exhibit honesty and openness in what they are doing. The court found that the relative bargaining strengths between Lux and the consumers and the deception combined to show that the sales were a result of pressure tactics. On that basis, the conduct was found to be unconscionable. The court also paid particular regard to two aspects of Lux’s conduct: the failure to comply with the door-to-door selling requirements; and the ‘deceptive ruse’ used to enter the women’s homes. ACCC v Kobelt [2019] HCA 18 The respondent, Mr Kobelt, operated a general store in Mintabie, South Australia, called ‘Nobbie’s Mintabie General Store’. The store sold second-hand