Following action by the Australian Competition and Consumer Commission, the Federal Court has found that Lux Pty Ltd engaged in unconscionable conduct in breach of the Trade Practices Act 1974 in relation to the door-to-door sale of a $949 Lux vacuum cleaner to a vulnerable consumer.
The court also found that the Lux door-to-door sales agent who made the sale, Mr Dennis Podger, was knowingly concerned and a party to Lux's breach.
The allegations by the ACCC centred around the door to door sale of a vacuum cleaner to a clearly vulnerable woman while she was home alone at her house in Port Pirie, South Australia.
In handing down his judgment, Justice Robert Nicholson concluded that it should have been apparent to Mr Podger that the consumer, a woman who was home alone at the time Mr Podger came to her door:
- was substantially illiterate
- was unable to understand commercial matters in any depth
- was unlikely to be able to make a worthwhile judgement as to whether buying the vacuum cleaner would be in her best interest and
- was, therefore, patently a person of some vulnerability.
Justice Nicholson found that Mr Podger did not give the woman the opportunity to get independent advice or assistance before having her sign up to the contract to buy the vacuum cleaner.
Justice Nicholson considered that, in all the circumstances, the meeting at the woman’s home was "irreconcilable with what was right or reasonable" and declared that Lux, through the actions of Mr Podger, acted unconscionably in breach of sections 51AB of the Trade Practices Act 1974.
In view of the court's findings, the court gave the parties time to come back to it with submissions in relation to the other relief sought by the ACCC which include costs, injunctions restraining Lux from engaging in similar conduct in the future and orders requiring Lux to publish a public notice and implement a trade practices compliance program.
The court did not find that Lux engaged in undue harassment of coercion in respect of the conduct as alleged by the ACCC.
ACCC Chairman, Mr Graeme Samuel, said today: "Businesses and their sales agents have a responsibility to ensure that they do not take unfair advantage of vulnerable consumers by pressuring or causing them to enter into contracts in circumstances where it is, or should be, reasonably apparent that they may not have the capacity to make an informed or reasoned decision as to the implications of their entering into that contract.
"This decision is very significant as it sends a clear message to businesses and their sales agents that such behaviour is not only considered to be against conscience but also unlawful.
"It's important to note, however, that the court's decision does not mean that businesses cannot contract or do business with persons who appear to suffer from disadvantage or vulnerability", Mr Samuel said. "What it does mean is that if it is apparent that a potential customer may not have the capacity to make a voluntary or informed decision about the implications and/or benefits of his or her entering into a particular contract, then businesses need to act responsibly and take extra care in their dealings to ensure that unfair advantage of the person is not taken.
"This may mean ensuring a guardian, carer or other appropriate person is present to either act on the customer's behalf and/or help explain/assist the customer with the decision or recommending that the customer seek independent advice or assistance before proceeding with the transaction".