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DEALING WITH DOOR-TO-DOOR SALESPEOPLE AND TELEMARKETERS: KNOW YOUR RIGHTS.

In June this year changes were made to the Fair Trading Act 1986 (as a result of the Door to Door Sales Act 1967 being repealed) to include protections for consumers in the context of uninvited direct sales such as door-to-door and (the more common) telemarket sales.

What is an "uninvited direct sale"?

An "uninvited" direct sale is when:

  • a business, or their agent, approaches a customer (someone who is buying from a retailer) uninvited at their home, workplace, or over the telephone, to try and sell goods or services

           and

  • an agreement is entered into for goods or services costing $100 or more (or a price that is uncertain at the time of supply).

The provisions contemplate this will include situations where the agreement for the supply of goods or services is made as a result of negotiations which take place as described above. Therefore, even if a sale is not entered into at the time of the contact, but takes place at a later date, it is likely to be caught by these changes.

The Commerce Commission has stated that an uninvited direct sale will include where:

  • a customer provides their contact details to a business for another purpose (such as a competition entry) and the business then contacts them to sell goods or services. 
  • a customer responds to an unsuccessful attempt by a business to contact them (such as by returning a missed call or responding to a calling card). 
  • a customer enters into negotiations with a business at the time they receive an unsolicited quote or estimate.

Electronic message marketing, such as email or text, is not covered by these provisions.

What do you need to know?

The new provisions set out the information which customers must be provided with by a seller where an uninvited direct sale has been made, as follows:

  • The customer must be provided with a written agreement which clearly includes details of the good or service, details of the seller and a summary of the right of the customer to cancel the sale.
  • At the time of the sale the customer must be told (verbally or in writing) of their right to cancel the sale (within 5 working days of receiving a written agreement).
  • Where the customer cancels the agreement the seller must immediately repay all money already paid by the customer and the customer must return the goods (at the cost of the seller).
  • Where services are provided before the agreement was cancelled, the supplier is not entitled to any compensation and if the services have resulted in the alteration to the customer's property, the seller is liable to return the property to the condition it was in before the services were provided.
  • A renewal of a product purchase or service will not be an uninvited direct sale, provided that it meets certain criteria.

What are the penalties?

Businesses can be fined up to $30,000 and individuals up to $10,000 for breach of these provisions. The Commerce Commission can fine businesses who fail to comply with the uninvited direct sale disclosure requirements up to $2,000, without a Court process.

Our view

The potential for a wide range of sales to be caught by these provisions is significant and in the context of services having been provided (where a seller is by the nature of the sale unable to resell the service) potentially costly, particularly if a customer's property needs to be reinstated.

Written by Mark O'Donnell at 09:00

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