Parliament has abolished the Door to Door Sales Act and replaced it with new provisions in the Fair Trading Act covering door to door and telemarketing sales.
The new provisions cover uninvited direct sales where a supplier approaches a consumer uninvited in their home or workplace or by phone to try and sell them products or services and an agreement is entered into for those products or services costing at least $100 (or where the price is uncertain). These changes come into effect on 17 June 2014.
What is the purpose of the change?
The Door to Door Sales Act was enacted nearly 50 years ago and did not properly deal with modern sales practices. Telemarketers are now clearly covered by the new provisions and fines for breaching the requirements are significantly higher to encourage compliance.
Rules for door to door and telemarketing
Before the consumer signs the agreement, the salesperson must verbally advise the consumer of their right to cancel the agreement and how they can exercise that right.
The agreement must be written in plain language and contain specified information including:
- A clear description of the products or services; and
- A summary of the consumer's right of cancellation; and
- The supplier's name and contact details; and
- The consumer's name and address; and
- The total price payable for the products or services or the method for calculating the price if it is not ascertainable at that time; and
- The date of the agreement.
The salesperson must give the consumer a copy of the agreement when it is entered into or within five working days if the agreement is made over the phone.
If the products or services are sold on credit and interest charges or credit fees may apply or a security interest is taken over the products, the disclosure and cancellation requirements under the Credit Contracts and Consumer Finance Act will apply instead.
The consumer can cancel the agreement within five working days after receiving a copy of the agreement or at any time if the supplier has not complied with the disclosure requirements.
If the consumer cancels the agreement, the supplier must:
- Repay any money already paid by the consumer under the agreement;
- Arrange to collect (or ask the consumer to return) any products already supplied, at the supplier's expense;
- If services supplied have altered or damaged the consumer's property, reinstate the property if required by the consumer.
The supplier is not entitled to payment for services already supplied prior to cancellation.
The supplier cannot enforce the agreement and require the consumer to meet their payment obligations until the cancellation period has expired and provided the consumer has not given notice to cancel within that period.
After the cancellation period has expired the agreement can only be enforced if the supplier has complied with the disclosure requirements.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.