Origin to pay $2 million for unlawful door-to-door sales tactics

30 March 2015

The Federal Court has ordered Origin Energy Electricity Limited (Origin) to pay $2 million in penalties in relation to unlawful door-to-door selling practices in proceedings brought by the Australian Competition and Consumer Commission. The Court also ordered Origin’s marketing company, SalesForce Australia Pty Ltd (SalesForce), to pay $325,000 in penalties.

The penalties were imposed following the Court’s findings against Origin and SalesForce of unconscionable conduct, undue harassment or coercion, false or misleading representations and breaches of the unsolicited consumer agreement provisions of the Australian Consumer Law (ACL).

“These are the highest penalties to have been ordered against an energy retailer and an individual marketing company in relation to illegal door-to-door behaviour,” ACCC Chairman Rod Sims said.

“This reflects the serious nature of the contravening conduct, including the fact that Origin and SalesForce were held to have engaged in unconscionable conduct and undue harassment or coercion.”

“The message is clear – energy companies must ensure their sales representatives do not use illegal tactics when negotiating with consumers at their door,” Mr Sims said.

The Court declared that Origin and SalesForce, through the conduct of sales representatives acting on their behalf, had engaged in a range of unlawful conduct in breach of the ACL while calling on ten consumers at their homes in New South Wales, Victoria, Queensland and South Australia to negotiate electricity contracts with Origin.

The Court held that the actions of sales representatives in two instances constituted unconscionable conduct. In one instance, the sales representative continued to negotiate with the consumer, who was a native Tamil speaker, after being advised that the consumer had difficulty understanding English. This included prompting the consumer to say ‘yes’ to questions on a phone call to confirm an electricity contract with Origin.

In the second instance, the sales representative continued to negotiate with a consumer after she informed him that she was not the authorised account holder, and repeatedly advised that she was not interested in changing her electricity retailer. During a phone call to confirm a contract with Origin, the sales representative instructed the consumer to state that her husband, who was the authorised account holder, had signed an agreement when that was not the case. This conduct was also held to constitute undue harassment or coercion.

“In each case the sales representative practised deceptions on the consumers in order to secure their custom,” her Honour Justice Katzmann stated in her judgment. “They preyed on the vulnerable and the ill-informed.”

“[The conduct] is serious, not only because of the deliberate deceptions and the exploitation of vulnerable consumers, but also because of the location and context in which the conduct occurred: at private homes to which the respondents were not invited,” Justice Katzmann said.

The Court declared that Origin and SalesForce, through the actions of sales representatives, made false or misleading representations to a number of the consumers in breach of the ACL, including that:

  • there was a mistake on the consumer’s electricity bill issued by their current electricity supplier;
  • the consumer had to change to Origin because of changes implemented by the government;
  • the consumer would not be charged an exit fee if he changed his electricity supplier to Origin;
  • the sales representative was part of a government-commissioned study investigating complaints about the cost of energy; and
  • the consumer was signing an expression of interest and would not change her electricity retailer unless she contacted Origin.

In addition, the Court declared that Origin and SalesForce breached a number of the unsolicited consumer agreement provisions of the ACL by:

  • failing to clearly advise consumers that the purpose of their visit was to seek the consumer’s agreement to enter into an electricity contract with Origin;
  • failing to leave the premises immediately on the request of the consumer, including one instance where the consumer had a ‘do not knock’ sticker displayed;
  • calling on consumers outside permitted hours; and
  • failing to inform consumers in writing of their right to terminate their contract within the cooling-off period.

The Court ordered Origin and SalesForce to jointly publish a corrective newspaper notice, maintain compliance programs and contribute to the ACCC’s costs.

Origin and SalesForce agreed to joint submissions on penalties and a statement of agreed facts to be filed with the Court, and consented to the other orders made by the Court. 

Background

These are the fifth proceedings the ACCC has taken against an energy retailer in relation to inappropriate door-to-door marketing activities.

In April 2014, EnergyAustralia was ordered to pay $1.2 million in penalties. Its marketing companies, Multiple Stores Pty Ltd, Australian Sales and Promotions Pty Ltd and Sales Marketing and Real Technologies – SMART Pty Ltd, were ordered to pay combined penalties of $290,000.

In May 2013, AGL Sales Pty Ltd and AGL South Australia (AGL SA) were ordered to pay combined penalties of $1.555 million. Their marketing company, CPM Australia Pty Ltd (CPM), was ordered to pay $200,000. In addition, following a contested hearing, in December 2013 AGS SA and CPM were ordered to pay further penalties of $35,000 and $25,000 respectively. The Court held that AGL SA and CPM had breached the UCA provisions by negotiating with a consumer who had a ‘do not knock’ sticker displayed, which constituted a request to leave.

In November 2013, Australian Power & Gas Ltd was ordered to pay $1.1 million in penalties.

In September 2012, Neighbourhood Energy was ordered to pay $850,000 in penalties. Its marketing company, Australian Green Credits, was ordered to pay $150,000 in penalties.

Origin, EnergyAustralia and AGL stopped all door-to-door marketing of their energy products in 2013.

Release number: 
MR 45/15
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