ACCC v Chrisco Hampers Australia Ltd [2015] FCA 1204: Court finds Chrisco's lay-by Agreements Unfair
Friday 13 November 2015 @ 9.35 a.m. | Legal Research | Trade & Commerce
In a recent ACCC Media Release, it was reported the Federal Court found Chrisco Hampers Australia Ltd (Chrisco) [ACCC v Chrisco Hampers Australia Ltd [2015] FCA 1204 (10 November 2015)] had breached the Australian Consumer Law (ACL) [contained in Sch 2 to the Competition and Consumer Act 2010 (Cth) (the Act)] in relation to its sale of hampers to consumers by lay-by agreement, in proceedings brought by the Australian Competition and Consumer Commission (ACCC).
Background
The Court found that Chrisco included an unfair contract term in its 2014 lay-by agreements relating to its “HeadStart Plan”, which allowed Chrisco to continue to take payments by direct debit after the consumer had fully paid for their lay-by order. Consumers were required to “opt out” in order to avoid having further payments automatically deducted by Chrisco after their lay-by had been paid for.
The Judgment
In concluding, Edelman J said at [para 159]:
“…
(1) The 2014 HeadStart term was an unfair term within the meaning of s 24 of the ACL;
(2) the ACCC did not prove that Chrisco contravened s 97(3) by its cancellation charges in its agreements; and
(3) Chrisco contravened s 29(1)(m) of the ACL between 1 January 2011 and about December 2013, by the representation in its website terms and conditions and its Order Confirmation that ‘your order cannot be cancelled once it is fully paid for’. “
The Court also found (at [para 158]) that between January 2011 and December 2013, Chrisco made a false or misleading representation to consumers that they could not cancel their lay-by agreement after making their final payment, when the ACL provides that consumers have the right to terminate a lay-by agreement at any time before delivery of the goods.
Reaction from the ACCC
The Commissioner of the ACCC, Sarah Court, said:
“The Court’s findings send a strong message to traders that they must comply with all of their obligations under the Australian Consumer Law, including the unfair contract terms laws that are in place to protect consumers from unfair terms in standard form consumer contracts. Purchasing goods by way of a lay-by agreement is a convenient way to shop for many Australian consumers, particularly in the lead up to Christmas. Businesses that use lay-by as a method of sale need to ensure that they are meeting their ACL obligations to their customers.”
Further allegations made by the ACCC
The ACCC had also alleged that Chrisco’s conduct contravened the lay-by termination charge provision in the ACL, which requires suppliers to ensure lay-by termination charges are not more than their reasonable costs. The Court held that the ACCC had not proved this alleged contravention.
In a statement released by Chrisco, it said customers can opt out of the "headstart" term:
"The headstart term in Chrisco's 2015-16 agreements has been substantially reworded to make it clearer for customers. We are proud of the role that we play in helping our customers remove the stress and worry of big bills and debt so they can enjoy a magical Christmas."
TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products.
Sources:
Federal Court rules Chrisco acted unfairly by taking payments from customers after they paid off their Christmas hampers – smartcompany.com.au
Federal Court finds Chrisco's lay-by agreements contained unfair contract term – ACCC Release MR 221/15
Australian Competition and Consumer Commission v Chrisco Hampers Australia Limited [2015] FCA 1204 (10 November 2015)
