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• Did you know targeting people experiencing vulnerability can lead to significant penalties?
• Do you know the rules about when unsolicited calls and visits are allowed?
• Did you know you can’t request payment for products or services supplied to someone who hasn’t asked to buy or receive them?

Certain behaviours, conduct and techniques used for selling products and services are against the law as they are unfair to consumers and other business. You must avoid these unfair business behaviours and make sure you are fair and honest.

Learn more about unfair business practices.

Harassment and coercion

It’s against the law for businesses to use physical force, coercion or undue harassment against customers or another business.

Undue harassment means repetitive, unnecessary or excessive contact or communication with a person to the point they feel intimidated, tired or demoralised.

Coercion involves force, whether actual or threatened, that restricts another person’s choice or freedom to act. Unlike harassment, coercion doesn’t have to involve repetitive behaviour.

You cannot use physical force, coercion and undue harassment when selling products or services or collecting debts.

Learn more about pressuring and harassing consumers.

Pyramid schemes

Pyramid schemes make money by recruiting people rather than by selling actual products or services. A scheme can still be a pyramid scheme if the sale of a product or service is involved.

In a pyramid scheme:

• people must pay to join (a participation payment)
• people are promised payment for recruiting others to the scheme (a recruitment payment)
• only a small number of people at the top of a pyramid scheme are likely to receive any real financial benefits from it.

It’s against the law to participate in or to persuade someone to participate in a pyramid scheme. 

Learn more about pyramid schemes.

Referral selling

Businesses often try to increase their sales by encouraging customers to refer their friends. Whether these referral offers are legal depends on the situation.

Referral selling is where a business persuades a customer to buy products or services by promising them benefits such as a rebate or commission if they help the business supply to other customers. If the incentive is paid regardless of whether the sale to other customers is made or not, this would not be referral selling under the law. However, it would be illegal if the incentive depends on sales to other customers.

Learn more about referral selling.

Unconscionable conduct

Unconscionable conduct is behaviour so harsh that it goes against good conscience. Businesses must not act unconscionably to consumers under the law.

To avoid engaging in unconscionable conduct with your customers:

• consider the characteristics and vulnerabilities of your customers
• don’t exploit customers when negotiating the terms of an agreement or contract
• make sure your contracts are clear, thorough and easy to understand
• if things go wrong, be open to resolving complaints.

Businesses dealing with other businesses can also be impacted by behaviours such as unconscionable conduct.

Unfair contract terms

Under consumer law, it is against the law for a business to propose, include, rely on, or enforce an unfair contract term in a standard form contract with their customers.

A standard form contract is a pre-written contract for all customers, and the customer can’t change any, or the majority, of the terms of the contract.

To be unfair under consumer law, a term of a small business contract must:

• cause a significant imbalance in the parties’ rights and obligations under the contract
• not be reasonably necessary to protect the legitimate interests of the party advantaged by the term, and
• cause detriment (financial or otherwise) to a party if it were applied or relied upon.

When deciding whether a term is unfair, the court must also consider the transparency of the term within the contract, and the contract as a whole. The law also sets out several examples of terms that may be unfair.

If a court decides that a term is unfair, it will be void. This means it will no longer apply to those involved in the contract. Substantial penalties also apply.

Businesses dealing with other businesses can also be impacted by behaviours such as unfair contract terms.

Supplying unrequested products or services

'Unsolicited supplies’ are products or services supplied to someone who has not requested them. It is against the law to request payment for unsolicited products or services unless you reasonably believe you have a right to be paid.

You must also not issue an invoice that states an amount to be paid for unsolicited products or services unless you reasonably believe you have a right to be paid or the invoice includes a prominent warning including the text ‘This is not a bill. You are not required to pay money’.

This means that a person who receives unsolicited products or services doesn’t have to pay for them. They are also not responsible for any loss or damage resulting from a supply of unsolicited services, and are not responsible for any loss or damage to unsolicited products, except during any recovery period.

A business that has supplied an unsolicited product has 3 months to recover (the recovery period). Otherwise, it becomes the customer’s property with no obligation to pay. This recovery period is reduced to one month if the customer writes to the business setting out:

• their name and address
• that the product is unsolicited and they don’t want it
• where the business can collect the product.

The consumer can’t unreasonably refuse to allow the supplier to collect the products in the recovery period. The consumer may also have to pay compensation if they deliberately damage the products during these timeframes.

Learn more about supplying unrequested products or services.

Telemarketing and door-to door sales

There are rules for when a salesperson can approach a person over the phone or at their door without the customer having invited the contact. These rules also apply to salespeople approaching customers uninvited in public. These sales methods are called unsolicited consumer agreements.

An unsolicited consumer agreement takes place when:

• it’s for the supply of products or services to a customer
• it results from negotiations by phone or at a location other than the seller’s business or trade premises
• a seller or sales agent calls or approaches a customer uninvited
• the total value of the products or services is more than $100 or can’t be determined when the agreement is made.

If your business uses these sales methods, you need to be aware of your additional obligations under the law when you approach your customers, including:

• permitted hours for telemarketing and making uninvited house visits
• disclosure requirements before making a sales pitch
• customers’ cooling-off rights
• information requirements for the sales agreement.

Learn more about door-to-door and telemarketing sales.