Federal Court declares Lux conduct unconscionable

The Full Federal Court on Thursday handed down its decision in relation to Australian Competition and Consumer Commission’s appeal against the judgment in ACCC v Lux Distributors Pty Ltd.

The Full Federal Court set aside the judgment of Justice Jessup and made declarations that Lux had engaged in unconscionable conduct in relation to the sale of vacuum cleaners to three elderly consumers in their homes.

“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 Australian Consumer Law (ACL),” ACCC Chairman Rod Sims said.

“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 Full Federal Court said that the consumer protection laws of the states and Commonwealth reinforce the recognised societal 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”.

The ACCC alleged that between 2009 and 2011, Lux engaged in unconscionable conduct in relation to the sale of vacuum cleaners to elderly consumers in contravention of section 51AB of the Trade Practices Act 1974 and section 21 of
the ACL.

The ACCC alleged that a Lux sales representative called upon five elderly women in their homes under the premise of a free vacuum cleaner maintenance check, and that each of the women was then subjected to unfair and pressuring sales tactics to induce them into purchasing a vacuum cleaner for a price of up to $2280. The ACCC’s appeal to the Full Federal Court related to three of these consumers.

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

“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 regarding submissions on relief, including pecuniary penalties.