The Federal Court has ordered by consent that Australian Power & Gas Company Limited (APG) pay a penalty of $1.1 million for illegal door-to-door selling practices, following action by the Australian Competition and Consumer Commission.
The Court declared that APG, through the conduct of certain sales representatives acting on its behalf, made false or misleading representations while calling on consumers at their homes for the purpose of negotiating agreements for the supply of retail electricity and/or gas by APG.
The Court also declared that APG, by the conduct of one of its contracted sales representatives, engaged in unconscionable conduct during a door to door sale involving a consumer from a non-English speaking background with very limited English reading/writing skills.
“This is another significant result arising from the ACCC’s focus on door-to-door selling practices in the energy industry,” ACCC Chairman Rod Sims said.
“This outcome reinforces the message that businesses who use door-to-door marketing must ensure their practices meet the requirements of the Australian Consumer Law.”
“Door-to-door sellers who use unfair sales tactics and mislead consumers into entering into agreements will face serious consequences. This is particularly the case where sellers target vulnerable or disadvantaged consumers,” Mr Sims said.
The false or misleading representations made to consumers by the sales representatives included that:
- APG had approval from, or was affiliated with, the consumer’s existing energy retailer or distributor;
- APG had approval from, or was affiliated with, the government; and
- the consumer could receive a certain discount off their energy bill by agreeing to receive supply of retail energy from APG, when APG did not offer such a discount.
The Court further declared that APG breached various Unsolicited Consumer Agreement provisions of the Australian Consumer Law, which are designed to protect the rights of consumers in door-to-door transactions. The breaches included failure by certain sales representatives to:
- clearly advise the consumers that their purpose was to seek the consumer’s agreement to a supply of retail electricity and/or gas by APG;
- advise the consumers that the representatives were obliged to leave the premises immediately on request; and
- provide information relating to their identity.
The court also made orders for APG to publish corrective website and newspaper notices and to make a contribution to the ACCC’s costs.
APG is now owned by AGL Energy Limited (AGL). Separate to the proceedings, AGL provided the ACCC with a section 87B undertaking that it would extend the operation of its existing Compliance Program to include APG. A copy of the undertaking will be available on the ACCC’s public register.
The ACCC’s enforcement action in relation to door-to-door selling practices in the energy industry was sparked by a large volume of complaints made to consumer protection agencies. The combined number of complaints received by the various energy ombudsmen during the second half of 2011 was in excess of 2000; while over 1000 complaints were received during the first half of 2012. The ACCC's own Infocentre was recording in the order of 90 – 100 complaints during these same periods.
The ACCC’s guide for consumers Knock! Knock! Who's There? provides information about consumer rights, including asking a sales person to leave which they must do when asked, or asking for time to consider the offer. The ACCC has produced a ‘Do Not Knock’ sticker to help consumers avoid unwanted door-to-door selling.
Background
In September 2013, the ACCC instituted proceedings against Origin Energy Electricity Limited, Origin Energy Retail Limited and marketing company SalesForce Australia Pty Ltd in relation to their door-to-door selling practices. The ACCC alleges Origin and SalesForce engaged in unconscionable conduct, undue harassment and/or coercion, and made false or misleading representations to consumers when calling at their homes. These proceedings are continuing.
In May 2013, AGL Sales Pty Ltd and AGL South Australia Pty Ltd were ordered by consent to pay combined penalties of $1.555 million for false and misleading representations and breaches of the unsolicited consumer agreements provisions. Marketing company, CPM Australia Pty Ltd, was also ordered to pay $200,000 for its role in the conduct.
In March 2013, the ACCC instituted proceedings against EnergyAustralia Pty Ltd (formerly TRUenergy Pty Ltd) and four marketing and sales companies engaged by EnergyAustralia in relation to alleged false and misleading conduct during their door-to-door selling practices. These proceedings are continuing.
In September 2012, the Federal Court ordered by consent Neighbourhood Energy and its former marketing company, Australian Green Credits Pty Ltd, to pay total penalties of $1 million for illegal door-to-door selling practices.