ACCC Franchise Information
What you need to know about: Competition Issues in Franchising Supplier Arrangements
12 November 2013
Many franchisees and franchisors often ask what the rules around supply arrangements are with some common issues including rebates, approved supplier schemes, and quality standards. The ACCC has recently published a new guide What you need to know about: Competition Issues in Franchising Supplier Arrangments to help franchisors and franchisees understand the ACCC's role in reviewing supplier arrangements.
The guide will provide clarity to franchisors and franchisees about what types of arrangements are likely to raise concerns under the Competition and Consumer Act 2010 (CCA).
ACCC takes action against Origin Energy and Salesforce for door-to-door selling
The Australian Competition and Consumer Commission has filed proceedings in the Federal Court against Origin Energy Retail and Origin Energy Electricity (Origin Energy), and marketing company SalesForce, in relation to their door-to-door sales practices.
“These are the fifth proceedings the ACCC has taken involving the marketing activities carried out by energy retailers at the door of consumers’ homes,” ACCC Chairman Rod Sims said.
“The ACCC alleges that SalesForce sales representatives acting on behalf of Origin Energy made numerous false and/or misleading statements to consumers and breached the Unsolicited Consumer Agreement (UCA) provisions of the Australian Consumer Law.”
“The allegations also involve several instances of unconscionable conduct as well as instances of alleged undue harassment and/or coercion by sales representatives, which the ACCC considers to be particularly serious,” Mr Sims said.
The allegations involve visits by sales representatives to the homes of thirteen different consumers across New South Wales, Victoria, Queensland and South Australia between September 2011 and December 2012.
The alleged conduct includes sales representatives making false or misleading representations:
that there was a government requirement for the consumer to change providers to Origin;
that the consumer had been overcharged by their current electricity provider; and/or
that Origin had approval from, or was affiliated with, the Electricity Trust of South Australia
The UCA provisions were specifically designed to protect consumers from unscrupulous conduct in door-to-door transactions. The alleged breaches of the UCA provisions include that the sales representatives:
- failed to inform the customer of their right to cancel the contract within the 10-day cooling off period;
- called on the consumer outside permitted hours;
- failed to clearly advise the consumers that their purpose was to seek the consumer's agreement to a supply of retail electricity and/or gas by Origin Energy
- failed to leave the consumer's premises on request.
“The ACCC is also alleging that the sales representatives engaged in unconscionable conduct, which involved particularly vulnerable consumers who were unable to understand the agreement. It is alleged that the sales representatives in these instances employed undue pressure and/or unfair tactics in their dealings with these vulnerable consumers,” Mr Sims said.
Further, the ACCC is alleging that the sales representatives harassed and/or coerced some consumers. This includes allegations that sales representatives persistently negotiated with and pressured consumers, despite the consumer repeatedly indicating that they were not interested, as well as allegations that sales representatives coached consumers to consent to sign up with Origin during a verification call.
The ACCC is seeking pecuniary penalties, declarations, injunctions, an order for corrective notices, an order for Origin Energy and SalesForce to establish and implement compliance programs, and costs.
The ACCC’s guide for consumers Knock! Knock! Who's There? provides information about consumer rights in relation to door-to-door marketing.
In September 2012, the Federal Court ordered Neighbourhood Energy and its former marketing company Australian Green Credits Pty Ltd to pay total penalties of $1 million by consent for illegal door-to-door marketing practices.
In May 2013, AGL Sales Pty Ltd and AGL South Australia Pty Ltd were ordered to pay a total of $1.55 million by consent for false and misleading representations and breaches of the UCA provisions. Marketing company CPM Australia Pty Ltd was also ordered to pay $200,000 for its role in the conduct.
In March 2013, the ACCC instituted proceedings against EnergyAustralia Pty Ltd (formerly TRUenergy Pty Ltd) and four marketing and sales companies engaged by EnergyAustralia in relation to alleged false and misleading conduct and breaches of the UCA provisions. These proceedings are continuing.
In September 2013, the ACCC instituted proceedings against Australian Power & Gas Company in relation to alleged false and misleading conduct, breaches of the UCA provisions and one instance of unconscionable conduct. These proceedings are continuing.
The infringement notices are available on the infringements register.
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You will also find publications regarding franchising and small business on their website.
We have listed some helpful links below.
'Running your business'
- The best site for ACCC information for small businesses.
Franchising complaints, investigations and outcomes
Small Business Easy Access Point
ACCC's publications on franchising:
'Franchisee Start-up checklist' which provides potential franchisees with TPA information to consider when looking at a prospective business opportunity.
Being smart about your new franchise: checklist before signing a lease agreement
Franchisee start–up checklist
SCAMwatch provides businesses and consumers with practical advice and tools to avoid scams. Make sure you stay safe.
Missed call scams start by ringing your phone and hanging up so quickly that you can’t answer the call in time. Your phone registers a missed call and you probably won’t recognise the number. People will often then call the number back to find out who it is. Apart from being a nuisance, the missed call can lead to a scam in two ways:
- The number you call back may be redirected to a premium rate service (a number that starts with 190) without your knowledge, which means you will be charged a lot of money per minute.
- The number may tell you that you have won a prize of some sort and give you another number to call to ‘claim’ your prize, but they may not tell you how much the call will cost. This second number may be a premium rate number, again charging you a lot of money to get your ‘prize’. Your prize may be nothing more than a ring tone subscription—which can also be a scam!
Text message scams work by sending you a text message from a number you may not recognise, but the content of the message could sound like it’s from a friend—for instance ‘Hi, it’s John. I’m back! When do you want to catch up?’ or ‘Hey big fella, happy birthday!’.
Another common tactic is for a text message to sound like someone flirting with you. Many people reply asking who it is and end up engaging in a lengthy SMS exchange with the scammer. Only later do they find out that they have been charged a high rate both for messages they sent (sometimes there are also charges for messages received as well).
For full details on Missed Call scams and to ensure you're staying safe, have a look at the ACCC's Scamwatch site here.