AGL ordered to pay $1.5 million for illegal door-to-door sales practices

21 May 2013

The Federal Court has ordered by consent that AGL Sales Pty Ltd and AGL South Australia Pty Ltd pay combined penalties of $1.555 million for illegal door-to-door selling practices, following action by the Australian Competition and Consumer Commission. CPM Australia Pty Ltd, the marketing company used by the AGL companies, was also ordered to pay $200,000 for its role in the conduct.

“These significant penalties send a clear message to businesses that do not adhere to their obligations under the Australian Consumer Law. The ACCC will not hesitate to take action to protect consumers in their homes from unscrupulous sales tactics and enforce compliance with the laws,” ACCC Chairman Rod 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 salespeople. In September 2012, Neighbourhood Energy Pty Ltd and Australian Green Credits Pty Ltd were ordered by consent to pay penalties of $1 million for door-to-door sales conduct, highlighting significant concerns regarding these sales practices in Australia.” 

In summary, the Court declared that a salesperson engaged by CPM to sell electricity and gas on behalf of AGL Sales in Victoria made false representations and engaged in misleading and deceptive conduct during uninvited calls on consumers.

This included conduct that was clearly designed to mislead consumers about the salesperson’s reason for calling, such as representing that he was not there to sell anything. He also made a number of false or misleading statements about the price of AGL’s products and consumers being overcharged by their current supplier. A second salesperson in South Australia also engaged in misleading and deceptive conduct.    

The Court also declared that the salespeople breached the Australian Consumer Law (ACL) because they did not clearly advise consumers that the salesperson’s purpose in calling on the consumer was to seek the consumer’s agreement for the supply of electricity and gas or that they would be obliged to leave immediately upon request.

The sole contested aspect of the hearing was whether the salesperson in South Australia broke the law by starting to negotiate despite the presence of a ‘Do Not Knock’ sign on the consumer’s front door. The ACL requires salespeople to leave immediately on request of the occupier or consumer with whom they are negotiating and the ACCC submits that a ‘Do Not Knock’ sign is such a request. Justice Middleton has reserved his judgment on whether a request was made in this instance.

The Court ordered the companies to contribute to the ACCC’s costs and granted other remedies to protect consumers from unlawful sales practices and to inform them of their rights. These include corrective advertising and compliance programs. 

The ACCC’s action against AGL is part of a broader interest in the conduct of energy retailers and their door-to-door sales activities. In March 2013, the ACCC instituted proceedings against Energy Australia and four marketing and sales companies engaged by Energy Australia in relation to their door-to-door selling practices. These proceedings are continuing.

The ACCC’s guide for consumers Knock! Knock! Who's There? provides information about consumer rights, including asking a sales person to leave which they must do when asked, or asking for time to consider the offer. The ACCC has produced a ‘Do Not Knock’ sticker to help consumers avoid unwanted door-to-door selling.

Release number: 
104/13
Media enquiries: 
Ms Meg Macfarlan - (03) 9290 1836 or 0408 995 408
Additional contacts: 
General Inquiries: 1300 302 502

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