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Client update: Telemarketing – August 2004

New telemarketing rules apply from 30 August

In brief: Specific compliance obligations on telemarketing activities in Victoria and NSW come into force from 30 August, reports Senior Associate Ken Shiu. 

Background

The implementation of the Fair Trading (Further Amendment) Act 2003 (Vic) will change parts of the Victorian Fair Trading Act 1999 and impose new specific compliance obligations on telemarketing activities in Victoria (see AAR's Client update: Telemarketing, January 2004).

The commencement date for compliance with the new legislation has been set as 30 August 2004, and the Victorian Government has made minor modifications to harmonise applicable contract thresholds with those in the NSW telemarketing laws. The NSW Fair Trading Act 1987 was itself amended in August 2003 through the Fair Trading Amendment Act 2003 (NSW) to address telemarketing in the form of general direct commerce provisions. These amendments also come into force from 30 August.

Companies engaging in non-exempt telemarketing activities in NSW and Victoria will therefore need to comply with each state's respective new telemarketing laws from 30 August 2004.

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Summary

A brief summary of the operation of some of the new provisions relating to telemarketing sales contracts are set out in the following table:

Requirement NSW Victoria
Scope of the new law Uninvited direct commerce contract for goods or services that exceed $100. Uninvited telephone marketing agreement for goods or services that exceed $100.
Permitted call times 9am to 8pm on any day. Weekdays: 9am to 8pm.
Weekends: 9am to 5pm.
No calls on public holidays.
Disclosure Consumers must be informed of their cancellation rights during a telesales call and in writing before concluding any contract. Consumers must be informed of their cancellation rights during a telesales call and be provided with a hard copy of the contract and a prescribed notice form detailing cancellation rights within five days (or a later agreed date) after the telemarketing call.
Contract cooling-off periods (right to cancel) Five business days from the day the written notice of cancellation rights is given to the consumer. 10 days from the date of receipt of the written agreement and prescribed notice of cancellation rights.
No contact Supplier (or contracted telemarketer) to cease contact when requested and may not further contact that consumer for 30 days if advised by the consumer. Supplier (or contracted telemarketer) to cease contact when requested and may not further contact that consumer for 30 days if advised by the consumer.
Prohibited terms
  • Any exclusion, modification or restriction of a consumer's rights under Division 3 of the Fair Trading Act.
  • Any term providing that the contract is governed by any law other than NSW law.
 Any exclusion, modification or restriction of a consumer's rights under Part 4 of the Fair Trading Act or cancellation right during the cooling-off period.
Exempt sales contracts
  • Electricity and gas.
  • Fundraising appeals.
  • Supply of a financial product or managed investment scheme under the Corporations Act.
  • Supply of the same goods and services under an existing contract.
  • Consumer credit contract (partial exemption).
  • Classified advertising (partial exemption).
  • Electricity and gas.
  • Credit contract.
  • Guarantee contract.
  • Mortgage.
  • Water, sewerage or telephone services, unless the agreement involves the transfer to a new supplier.
  • Supply of a financial product or managed investment scheme under the Corporations Act.
  • Supply of the same goods and services under an existing contract.
  • Classified advertising (partial exemption).
Penalties for breach $11,000  Depending on which section of the Act is breached:
  • Companies: $12,270 or $24,540.
  • Individuals: $6,135 or $12,270.

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Conclusion

As we foreshadowed in the earlier Client update, companies promoting non-exempt sales contracts using outbound telemarketing operations or campaigns in NSW and Victoria will need to check their consumer agreements, call scripts and campaign management to ensure that they comply with the new laws by the 30 August 2004 commencement date.

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For further information, please contact:

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