Court agrees that door-to-door sellers illegally 'slammed' telephone customers

24 March 2002

Following Australian Competition and Consumer Commission action, the Federal Court held that door-to-door and tele-marketing sales companies, Benchmark Sales Pty Ltd and Axxess Australia Pty Ltd, breached the Trade Practices Act 1974 when trying to obtain customers for telephone companies.

In many instances the conduct complained of resulted in the unauthorised transfer of the consumer’s telephone service - a practice known in the industry as 'slamming'.

Benchmark and Axxess will now be required to contribute $60,000 to a fund established by the ACCC for the purpose of raising awareness of consumer rights when obtaining phone services. Justice Marshall also ordered Injunctions restraining Benchmark and Axxess from engaging in a range of misleading and deceptive conduct.

"Unfortunately this is yet another example of companies disregarding their obligations under the Trade Practices Act. It is totally unacceptable for companies to use such underhanded and illegal methods of obtaining customers as unconscionably signing up the elderly, visually or hearing impaired people in circumstances where it is obvious that full informed consent has not been given", ACCC Chairman, Professor Allan Fels, said today.

"It is not just in the telecommunications industry that slamming occurs. For instance, as contestability for retail gas and electricity consumers becomes available, the incentives for companies to engage in unscrupulous practices may rise. However, customers must only be won through compliance with the Act and due regard to relevant industry codes and state laws".

Following the ACCC’s case against One.Tel and Primus in late 2000 alleging similar sales misconduct, the ACCC's focus shifted to the sales agents used by telecommunications companies.

"The consumer protection provisions of the Act are directed at protecting consumers from this type of conduct. The telecommunications industry specifically and industry more broadly should take this court action as an unequivocal signal that the only way to gain customers is through lawful means and with the clear consent of the consumer", Professor Fels said.

In documents filed with the Federal Court, the ACCC alleged that these door-to-door and tele-sales agents had illegally obtained signatures and verbal 'authorities' from consumers by:

  • falsely advising them that in initialling a form, or providing the verbal authority requested, that they were simply requesting further information or expressing an interest in the product
  • asking them to sign a form simply to "show my boss I've been to the house" when they were actually signing a transfer form
  • unconscionably signing up the elderly, visually and/or hearing impaired people
  • falsely representing they were from the telephone carrier the consumer was already with
  • unconscionably insisting that the consumer sign the transfer document immediately and without having the opportunity to read or comprehend the document
  • falsely advising consumers over the telephone that the agent was calling on behalf of a 'consumer watchdog' to assist former customers of the failed One.Tel company
  • falsely advising consumers that it was a telephone broking company which was providing discounts to consumers on their existing telephone accounts.

The ACCC accepted undertakings from the companies, and company directors, Peter Slaney and Steve McGovern, acknowledging that they had breached the Act. They agreed to review their trade practices compliance procedures, adopt a number of industry codes of practice and pay the ACCC's costs.

Release number: 
MR 058/02
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