Sucked in? Federal Court finds no unconscionable conduct

Published On 19/02/2013 | By Samantha Barrett | Consumer protection, Litigation

When a sales representative arrives on the door stop of your 90 year old grandmother’s home under the premise of conducting a vacuum cleaner maintenance check which results in selling her a vacuum cleaner worth up to $2,280, you may think the company has to answer to the ACCC for unconscionable conduct.

You may be wrong.

Five elderly women were sold Lux vacuum cleaners between 2009 and 2011 after agreeing to a free maintenance check of their existing vacuum cleaners.  The ACCC brought an action against Lux Distributors Pty Ltd alleging that Lux had breached the unconscionable conduct provisions under section 51AB of the Trade Practices Act 1974 and section 21 of the Australian Consumer Law (the full decision can be found here).

On 8 February 2013, Justice Jessup of the Federal Court rejected each of these claims and found that the elderly consumers had indeed not been ‘sucked in’ and that Lux, primarily by the conduct of their representatives, did not engage in unconscionable conduct.

On the evidence presented, it was found that there was not an equivalent vacuum cleaner on the market given the relevant power and weight of the Lux vacuum cleaner.  Additionally Justice Jessup found there was no inequality in the bargaining position of the two parties.  Even given the age of the consumers his Honour found that the consumers were mostly in charge of making their own decisions and the discount each representative applied to each sale was indicative of equal bargaining power.

Although his Honour conceded that the representatives did not have any mechanical or technical knowledge of vacuum cleaners, they had more knowledge than the ‘average householder’ in respect of the internal working of a vacuum cleaner and were therefore qualified to carry out such maintenance checks.

Emphasis was placed on the fact that in each contract for sale, in close proximity to where the customer signed a cooling off period applied and payment was often not accepted until after the expiry of this period.

His Honour found that the actions of the representatives were, “benign against the moral tainting standard of conduct required” to be considered unconscionable conduct and the sales techniques employed by the representatives were not tactics at all but, “irritations” felt by making a purchase that was later regrettable.

ACCC Chairman Rod Sims said they were considering the judgment.

Photo credit: Vincent_AF / Foter.com / CC BY-SA

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About The Author

is a solicitor in the Melbourne office at King & Wood Mallesons.

3 Responses to Sucked in? Federal Court finds no unconscionable conduct

  1. Jane Furnell says:

    Wonderful article ..very informative and ellightening. We may all come up against similar situations at some time in the future..ethics and legal standings are often times very different.

  2. Samantha Barrett says:

    The ACCC has today announced that they will be appealing Justice Jessup’s recent decision in the Full Court dismissing the ACCC’s allegations that Lux engaged in unconscionable conduct in relation to the sale of vacuum cleaners to five elderly consumers.

    The appeal to the Full Court of the Federal Court relates to conduct by Lux involving three of the five consumers. The appeal is based on the grounds the trial judge erred in fact and law by finding that the conduct of Lux in relation to these three consumers was not, in all the circumstances unconscionable.

    As part of the appeal the ACCC is alleging:

    • the primary purpose of the visit by the Lux representative was to sell a vacuum cleaner, which was not disclosed to the consumers;
    • each of the three consumers were alone and elderly at the time they were visited by the Lux representative;
    • the Lux representative was not equipped to carry out the maintenance check, and the test that was carried out was designed to demonstrate the inferiority of their existing vacuum cleaner and to sell a current model Lux vacuum cleaner;
    • the Lux representative remained in the homes of the consumers for at least one and a half hours;
    • during the time they were in the homes of the consumers the Lux representative breached legislative obligations placed on them when transacting with consumers in their homes; and
    • none of the consumers were aware of the ten day cooling off period.

    ACCC Chairman Rod Sims said, “unconscionable conduct is an area of priority for the ACCC, particularly where it affects vulnerable consumers”.

    A callover date has been set for 16 April 2013.

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