As a business owner, you may engage salespeople to make unsolicited approaches to your potential customers so that you can sell your goods or services. However, such approaches are classified as unsolicited consumer agreements under the Australian Consumer Law (ACL). The law sets out certain rules that businesses must follow if they enter into unsolicited consumer agreements with customers. This article explains how unsolicited consumer agreements are formed and how you can comply with the relevant law.
What Are Unsolicited Consumer Agreements?
Unsolicited consumer agreements are formed when you approach customers directly to make a sale. Some examples of people engaged in direct selling include:
- door-to-door salespeople;
- telemarketers; and
- salespeople who approach you in a shopping centre or shopping district.
Generally, an unsolicited consumer agreement is formed when:
- you contact the customer by phone or at a location that is not your place of business;
- you approach the customer directly; and
- your product or service is worth more than $100 or is unknown.
You also form an unsolicited consumer agreement if you:
- receive a potential customer’s contact details for one purpose (such as if they enter a competition) and you contact them to sell a good or service that is unrelated to that purpose; or
- call a customer to make a sale and fail to reach them at first, but the customer calls you back.
How Can Businesses Approach Customers And Make Sales?
Businesses engaged in direct selling are bound by certain obligations under the ACL. If they do not comply with those obligations, any unsolicited consumer agreement they form with customers may not be valid or enforceable.
There are five important obligations that you or your salespeople need to know before making direct approaches to customers.
1. Time Constraints
You can only call or visit a customer on certain days and times, unless the customer has made an appointment with you for the call or visit.
Calls: You cannot call a customer on Sundays or public holidays. On weekdays, you cannot call before 9am or after 8pm. On Saturdays, you cannot call before 9am or after 5pm.
Visits: You cannot visit a customer on Sundays or public holidays. On weekdays, you cannot visit before 9am or after 6pm. On Saturdays, you cannot visit before 9am or after 5pm.
You are required to provide the following information, such as:
- the reason for your visit or phone call;
- your identification details (including the details of the business that you represent);
- details of consumer rights (including the customer’s right to request you to leave and their right to terminate a contract during a cooling-off period); and
- a written copy of your agreement that you can provide to the customer following your approach.
3. Contract Clauses
You must provide the customer with a valid written and easy-to-understand contract that sets out your terms and conditions. You should include the:
- price of the goods or services (and any additional costs such as delivery);
- details of your business, such as contact details; and
- details of the cooling-off period.
You will need to provide a hard copy of the agreement, including a form that the consumer can use to start the cooling-off period. The agreement will also need to be signed and dated by both parties.
4. Request to Leave
If a customer has requested that you leave the premises, you will need to follow this direction immediately. You will not be able to contact the customer for at least 30 days after the leave request.
If you are a door-to-door salesperson and you see a sign at a person’s home that says “Do Not Knock”, you must leave the premises immediately.
5. Cooling-Off Period
If a customer enters into an unsolicited consumer agreement with you, a cooling-off period of 10 days will apply. During this time, the consumer can cancel the agreement without any reason or penalty.
What Happens if My Business Does Not Comply With the ACL?
You cannot contract out of the ACL when entering into unsolicited consumer agreements. Therefore, you must ensure you comply with all obligations under the ACL when making direct approaches to customers for sales.
If you fail to comply, the customer can make a complaint or take legal action against you. The Australian Competition and Consumer Commission (ACCC) can investigate complaints and issue fines if they agree with the customer’s complaint.
Consequently, any unsolicited consumer agreements that you make with customers may not be enforceable. As you lose sales, your business’ profitability and reputation will suffer.
You can avoid such a situation by ensuring your business and its employees are aware of their obligations under the ACL as part of a compliance program.
Making unsolicited approaches to customers can be an effective way to generate sales. However, the ACL regulates these unsolicited consumer agreements by setting out certain rules for businesses to follow.
You should ensure your business is able to comply with these obligations. Otherwise, your business will struggle to make any sales. If you have any questions, get in touch with LegalVision’s competition lawyers on 1300 544 755 or fill out the form on this page.
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