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Client update: Telemarketing – January 2004

New telemarketing rules in Victoria

In brief: Senior Associate Ken Shiu looks at the new compliance obligations for telemarketers operating call campaigns targeting Victorian consumers.

Changes to the Victorian Fair Trading Act 1999 under the recent Fair Trading Act (Further Amendment) Act 2003 will introduce specific compliance obligations for telemarketers running call campaigns targeting Victorian consumers. Telemarketers may need to adjust their activities and contracts to comply with prescribed calling hours, cooling off periods and cancellation rights for consumers.

The new amendments correspond with earlier changes to the Fair Trading Act 1999 (the Act) in 2003 which introduced similar regulations governing door-to-door selling activities.

The amending legislation was assented on 9 December 2003. The key provisions governing telephone marketing will become effective on a date to be proclaimed (or 31 December 2004 at the latest). 

Telemarketing agreements

The new Division 2A of the Act will apply to most telesales activities (or 'telephone marketing agreements', as they are described by the Act) that involve:

  • the sale of goods or services 'of a kind ordinarily used for personal, household or domestic use' worth more than $50 in value;
  • sale contract negotiations primarily conducted by telephone; and
  • the telephone call that initiated negotiations was made by or on behalf of the supplier.

Under the new amendments, telemarketers will need to ensure that:

  • They, or any persons acting on their behalf must cease telemarketing if requested by a prospective purchaser and refrain from contacting that person for 30 days for the purposes of trying to sell the supplier's goods or services. (s67B);
  • Calls to prospective purchasers are made between 9am to 8pm on weekdays, 9am to 5pm on weekends and not at all on public holidays. (s67C);
  • A prospective purchaser must have given their 'explicit informed consent' when entering into any telephone marketing agreement, otherwise the agreement is void. (s67D);
  • Records of explicit informed consent are retained for 12 months and made available for inspection by Consumer Affairs Victoria. (s67D);
  • Purchasers must be informed, during the telephone conversation and before concluding any agreement, of their applicable cancellation rights during any cooling-off period under the telephone marketing agreement. (s67D);
  • Their contract terms grant customers a 10-day cooling-off period; and
  • Within five days, or any longer agreed period after the telephone marketing agreement call, the supplier must send to the purchaser a hard copy of the terms of the agreement and a prescribed notice detailing the cooling-off period and the purchaser's right of cancellation. (s67E).

Certain telesales arrangements are specifically excluded from the Act's new provisions governing telephone marketing agreements, including any credit or mortgage agreements and utilities supply such as water, sewerage or fixed line telephone contracts, except where the utility service is being transferred to another provider (s67A(5). Retail electricity and gas contracts are also specifically excluded from the Act.

Breaches of the Act can incur penalties of $120,000 for companies and $60,000 for individuals.

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eCommerce considerations

While the Act will now specifically regulate the telephone sales contracting process, sales and marketing businesses will need to remember that the Act's requirements are equally applicable to other forms of non-contact sales to Victorian consumers, including sales through a website.

Where a company markets and sells goods or services over the Internet that are of a kind ordinarily used for personal, household or domestic use, the company will need to comply with the Act's general compliance provisions dealing with non-contact sales agreements. In particular, if the terms and conditions of an Internet sale allows the consumer to cancel the supply of goods or services, an automatic minimum 10-day cancellation period from the date the goods are received (or for services, the date of the agreement) is deemed to apply under the Act for the benefit of the consumer.

Conclusion

The new legislation implements the recommendations of the report of the Fair Trading Act review reference panel in June 2003. The new amendments will regulate telesales on the same basis as door-to-door sales. Businesses involved in telemarketing activities will need to review their consumer agreements, scripts and customer-handling procedures to ensure that they are positioned to comply with the new regulations once they come into force later this year.

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