A win for vulnerable consumers in the Federal Court

The Full Federal Court has declared that Lux Pty Ltd engaged in unconscionable conduct in relation to in-home sales of vacuum cleaners to three elderly consumers, overturning an earlier decision which held that Lux was not in breach of unconscionable conduct laws. The appeal was brought by the Australian Competition and Consumer Commission (ACCC) who appealed against Jessop J’s decision in ACCC v Lux Distributors Pty Ltd [2013] FCA 47.

The ACCC claimed that from 2009 to 2011, Lux breached section 51AB of the Trade Practices Act 1974 (CTH) and section 21 of the Australian Consumer Law (ACL) by engaging in unconscionable conduct in relation to unfair and high pressure sales tactics.  The ACCC alleged that a Lux sales representative visited five elderly women in their homes under the pretence of a free vacuum cleaner maintenance check, and subjected each of the women to unfair and coercive sales tactics to induce them into buying an expensive vacuum cleaner costing up to $2280. The appeal to the Full Federal Court was in relation to three of these consumers.
The Full Federal Court said that state and Commonwealth consumer protection laws highlight society’s well-known values and expectations that consumers will be dealt with honestly, fairly and without deception and unfair pressure.

The Court also said:

“(t)he norms and standards of today require businesses who wish to gain access to the homes of people for extended selling opportunities to exhibit honesty and openness in what they are doing, not to apply deceptive ruses to gain entry”.

ACCC Chairman Rod Sims said,

“This is a significant decision for the ACCC as it provides important clarity regarding the scope and operation of the unconscionable conduct provisions in the ACL. In particular, the decision has important implications for conduct which occurs in breach of consumer protection legislation, particularly where this conduct involves vulnerable consumers.”

“The Court’s decision represents a positive outcome for consumers and serves as a warning for businesses”.

“The ACCC will continue to take enforcement action if it considers that companies have engaged in unconscionable conduct, particularly in cases involving vulnerable consumers and where there have been other breaches of consumer protection provisions of the ACL.”

The matter will be listed for a directions hearing.

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ACCC Media Release