Reader's Digest (Australia) Pty Ltd, one of Australia's largest direct marketing companies and the publishers of a popular monthly magazine, has admitted that it demanded payment for unsolicited mail order products from consumers, after an Australian Competition and Consumer Commission investigation into a significant number of serious complaints about its marketing practices.
Reader's Digest has provided court-enforceable undertakings that it will:
- appoint an independent auditor to review its internal operations
- implement the recommendations of that auditor
- write to all people on its mailing list acknowledging its failed processes and informing them of the new compliance measures
- produce a direct marketing trade practices training video, to be seen by Reader's Digest staff and made available to all Australian Direct Marketing Association members
- place disclosure notices on its website
- implement a trade practices compliance program
- place corrective advertisements in its magazine and capital city newspapers and
- give refunds to two customers.
"The ACCC had received numerous complaints from consumers who said that Reader's Digest had demanded payment for unsolicited books and audio and video tapes which it had sent them in the mail", ACCC Chairman, Mr Graeme Samuel, said today. "In some instances consumers paid for goods they did not order under the belief that they were required to do so.
"The ACCC has also received complaints from consumers that they had received unsolicited copies of the Reader's Digest monthly magazine in the mail, followed by invoices for subscriptions and, in some cases, demands for payment. In all instances the consumers told the ACCC that they neither took out a magazine subscription nor had one been given to them.
“After lengthy investigation of the complaints by the ACCC and discussions with Reader’s Digest, Reader’s Digest agreed to provide the undertakings described above.
“Reader’s Digest has accepted that due to a failure in its processes, it has contravened sections 52, 53 and 64 of the Trade Practices Act 1974 with the result that it sent some customers goods that they had not ordered. It then demanded payment for those unsolicited goods when it did not have reasonable cause to believe that it was entitled to payment.
"Section 64 of the Act makes it quite clear that a company cannot demand payment for goods that a consumer has not requested. Consumers should return the goods or notify the trader in writing that they did not request the goods. The ACCC’s investigation arose from concerns that Reader's Digest's marketing practices led to consumers paying for goods that they did not want due to their lack of knowledge of their legal rights under the Act. The ACCC is pleased to have gained refunds for two such consumers.
The ACCC formed the view during the course of its investigation that Reader's Digest's internal operations and its record-keeping processes require significant review and restructure. The ACCC has received stringent undertakings to remedy these issues. It appreciates that the internal reviews will take some time but expects breaches of the Act to cease.
"This matter is a warning to all direct marketing companies that the ACCC views demanding payment for unsolicited goods very seriously. It will take strong action when confronted with such conduct in the future".