Media Release

15 May 2012

Consumer Law Reform Complicating Everyday Transactions

The Motor Trade Association (MTA) is concerned that some of the conditions being proposed under the Consumer Law Reform Bill are heavy-handed and may make conditions for consumers more complicated instead of easier.

The Bill passed its first reading on 9 February 2012, with Parliament's Commerce Committee hearing submissions during May.

Spokesperson Ian Stronach says “Some of what’s being proposed in parts of the Bill around ‘uninvited direct sales’ looks like it’s missing the mark and could include transactions that it shouldn’t. For example, ‘uninvited direct sales’ which are intended to cover activities such as ‘door-to-door’ type selling has been significantly extended. It now covers any sales of more than $100 made from a location that is away from the seller’s primary place of business, and whenever the seller uses a phone to contact the customer to make a sale. This could end up covering far more transactions, make them more complicated and involve a much wider range of consumers than was probably intended.”

From an automotive industry perspective, the Bill in its current form means that even something as commonplace as a warrant of fitness (WoF) transaction could be covered under the scope of an ‘uninvited direct sale’.

In the course of carrying out a WoF inspection, it is quite common for a repairer to ring the customer to say they have found an issue with the vehicle and then give a quote for repair. Under the proposed reform, once the customer gives their approval to proceed with the repair, that repair then becomes an ‘uninvited direct sale’. The implications of this are significant, and outside the scope of what a normal business operator or consumer might expect.

Also being proposed as part of ‘uninvited direct sales’, is that the repairer must provide the consumer with a written ‘direct sale agreement’ within five working days of the work being agreed; a practical impossibility in most cases. In addition, within the five day cool down period that starts after the customer has received their copy of the written ‘direct sale agreement’, the customer can ask for their money back. Changing a vehicle back to its original condition will be very difficult in most cases, but if requested, a full refund must be given. So, in this example, in total, the buyer effectively has a 10-day cooling down period.

Stronach says “This is both illogical and unreasonable given they probably want their vehicle back the same day. And, there is no right for either party to contract out of these provisions.”

While it is not likely that many customers would exercise their right to get their money back or their goods reinstated back to original condition on everyday transactions, MTA is concerned that the ability to do so is being considered. The intent of the Bill should be to provide coverage for consumers, which is both practical and effective, and MTA will be encouraging the Commerce Select Committee to make changes that reflect this.

ENDS

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