The Federal Court has ordered Lux Distributors Pty Ltd (Lux) pay pecuniary penalties totalling $370,000 for engaging in unconscionable conduct, in proceedings brought by the Australian Competition and Consumer Commission.
The Court’s orders follow declarations by the Full Court of the Federal Court in August 2013 that Lux had engaged in unconscionable conduct when selling vacuum cleaners to three elderly women.
The sales occurred after a Lux sales representative called on the women in their homes under the premise of a free vacuum cleaner maintenance check, but with the purpose of selling a vacuum cleaner. The women were then subjected to unfair sales tactics, and pressured into purchasing a vacuum cleaner.
“The substantial penalties imposed against Lux reflect the nature of the breaches, which involved taking advantage of a “deliberate ruse” to gain access to consumers’ homes and then engaging in pressure sales tactics so that these vulnerable consumers agreed to make a purchase,” ACCC Commissioner Sarah Court said.
“The Full Court noted in its judgment in 2013 that consumer protection laws reinforce societal values and expectations that consumers will be dealt with honestly and fairly, and without deception.”
“As the national consumer protection regulator, consumer protection issues that affect vulnerable members of the community and unconscionable conduct are priority areas for the ACCC,” Ms Court said.
The Court also made orders for injunctions preventing Lux from engaging in similar conduct in the future and requiring the establishment of a compliance and education program for all Lux employees and its agents.
The ACCC instituted proceedings against Lux in May 2012. The ACCC alleged that between 2009 and 2011, Lux engaged in unconscionable conduct in relation to the sale of vacuum cleaners to five elderly consumers in contravention of section 51AB of the Trade Practices Act 1974 and section 21 of the Australian Consumer Law.
In February 2013, Justice Jessup dismissed the ACCC’s Application, finding that Lux had not engaged in unconscionable conduct during its dealings with the consumers.
The ACCC appealed the decision in relation to three of the consumers, and in August 2013 the Full Court of the Federal Court found that Lux had engaged in unconscionable conduct in respect of each of the three elderly consumers.