Door to door sales firm fined $750,000 for misleading claims

Titan Marketing Pty Ltd (Titan) has been ordered by consent to pay total penalties of $750,000 for engaging in unconscionable conduct, making false and misleading representations, breaches of the unsolicited consumer agreement provisions of the Australian Consumer Law and failing to specify a single price for goods, in proceedings brought in the Federal court by the Australian Competition and Consumer Commission (ACCC).

The Court also declared by consent that Titan’s director, Mr Paul Giovanni Okumu, was knowingly concerned in the systemic unconscionable conduct engaged in by Titan and ordered him to pay a penalty of $50,000.  An order was also made by consent disqualifying Mr Okumu from managing corporations for a period of five years.Titan sold first aid kits and water filters by door to door sales, including to consumers in Indigenous communities of Far North Queensland and the Northern Territory.  From 2011 Titan entered into over 7,900 unsolicited consumer agreements.

The Federal Court declared the system of sales employed by Titan was unconscionable, in breach of the ACL. The sales system included Titan’s door to door representatives:

  • making misrepresentations to consumers about the value of the first aid kits;
  • making misrepresentations to consumers that Titan’s sales representatives were associated with a community group or charity;
  • not taking reasonable steps to ascertain whether the consumer was capable of understanding the agreement documents, including how much the goods would cost, and how the consumer was to pay for the goods; and
  • intentionally not informing the consumer about their cooling off rights.

The court also declared that Titan had engaged in unconscionable conduct by using undue influence and unfair sales tactics to enter into unsolicited consumer agreements with two individual consumers in Indigenous communities. Both consumers had limited ability to read or write English or to understand the nature of the agreements they were entering into.  One of these consumers was a long term resident in a care facility.

“Issues affecting Indigenous consumers are a priority area for the ACCC. After becoming aware of allegations of unconscionable conduct by Titan affecting a number of vulnerable and disadvantaged consumers in Indigenous communities, the ACCC obtained orders on an interim basis, by consent, restricting Titan from entering communities that required permission for entry,” ACCC Commissioner Sarah Court said.

“The substantial penalties imposed against both Titan and Mr Okumu, as well as the five year disqualification order against Mr Okumu, reflect the egregious nature of the conduct involved in this case, against particularly vulnerable consumers”.

The Court also ordered injunctions against Titan and Mr Okumu, which include being conditionally restrained for five years from entering Indigenous communities that require permission from Elders or Administrators to enter to sell any goods.

In addition, a community service order was made that Titan deliver remaining first aid kits in its possession to Indigenous Community Health Care Centres in two Indigenous communities particularly affected by Titan’s conduct.

Titan was also ordered to pay costs of $100,000, and Mr Okumu was ordered to pay costs of $20,000.

Titan’s conduct was identified by the ACCC with the assistance of the Indigenous Consumer Assistance Network (ICAN) and following a visit to a remote Indigenous community.

Know Your Rights – Door to door sales video

Photo Credit: Tom & Katrien (cc)