$1 million in penalties for door-to-door sales

The Federal Court has ordered Neighbourhood Energy Pty Ltd and Australian Green Credits Pty Ltd by consent to pay a total penalty of $1 million for illegal door-to-door selling practices following action by the Australian Competition and Consumer Commission.

In the first case to be brought under the Unsolicited Consumer Agreement provisions of the Australian Consumer Law (ACL), the Court declared that Neighbourhood Energy and Australian Green Credits engaged in multiple breaches of the ACL. These breaches included a failure to leave the homes of consumers when requested, including by way of a ‘do not knock’ sign.

“These orders are hugely significant and represents three ‘firsts’,” said ACCC Chairman Rod Sims.

“This is the first court outcome arising from the ACCC’s focus on door-to-door sales activity; it is the first ACCC case to be brought under the Unsolicited Consumer Agreement Provisions of the ACL, and it provides the first guidance as to the importance of ‘do not knock’ stickers”

“The effect of the Court’s order is that every time a salesperson ignores a visible ‘do not knock’ sign on a consumer’s door, the company they represent is exposed to a maximum penalty of $50,000,” ACCC Chairman Rod Sims said.

“This is a win for the rights of consumers to be protected in their homes against unlawful door-to-door selling.”

“The ACCC has previously put energy retailers on notice that it is closely watching their use of door-to-door selling practices and the conduct of their door-to-door salespeople.”

Neighbourhood Energy, a Victorian-based electricity retailer and a wholly owned subsidiary of Alinta Holdings, was ordered by consent to pay a penalty of $850,000. Australian Green Credits, the former door-to-door marketing contractor for Neighbourhood Energy, was ordered by consent to pay $150,000, and both parties contributed towards the ACCC’s costs.

The Court declared that door-to-door salespeople engaged by Australian Green Credits to sell electricity on behalf of Neighbourhood Energy failed to leave the homes of two consumers upon request, in breach of the ACL. In both instances, the initial request was made by a notice that stated ‘do not knock’ and indicated that unsolicited door-to-door selling was unwelcome at that home.

The Court also declared that Neighbourhood Energy and Australian Green Credits engaged in misleading and deceptive conduct.
Salespeople representing Neighbourhood Energy made misleading and deceptive statements to consumers, including that the salesperson was not there to sell anything, and that the consumer had been ‘zoned incorrectly’ and was being wrongly billed by their supplier.

The Court further declared that Neighbourhood Energy and Australian Green Credits breached the ACL because the salespeople did not clearly advise consumers, at all or before starting to negotiate:

  • that the salesperson’s purpose in calling on the consumer was to seek the consumer’s agreement for the supply of electricity
  • that the salesperson would be obliged to leave immediately upon request, and
  • the name of Australian Green Credits as the marketing company, and the address of the Neighbourhood Energy as the supplier of the services being offered.

The Court also granted the ACCC other remedies to protect consumers from unlawful sales practices and to inform them of their rights. These include injunctions restraining Neighbourhood Energy and Australian Green Credits from engaging in similar conduct in future, corrective advertising and compliance programs.

The ACCC’s action against Neighbourhood Energy and Australian Green Credits is part of a broader ACCC interest in the conduct of energy retailers in their door-to-door sales activities. It follows a joint letter from the ACCC and the Australian Energy Regulator in 2011 in which it reminded retailers of their obligations and placed them on notice of the ACCC’s focus. In addition to proceedings still before the Court against another retailer, the ACCC continues to investigate a number of other retailers in relation to door-to-door sales activity.

The court orders come shortly after the launch of the ACCC’s guide for consumers. The Knock! Knock! Who’s There? guide gives consumers information about  their rights, including asking a sales person to leave, which they must do, 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.