Federal Court finds Chrisco hampers lay-by terms breached consumer law
It was ruled that Chrisco breached Australian Consumer Law (ACL) as its “HeadStart Plan” for lay-by directly-debited payment even after consumers had fully paid for their purchase. Consumers had to ‘opt out’ for Chrisco to stop taking money from their accounts.
Presiding judge, Justice Edelman of the Federal Court said Chrisco’s HeadStart term regarding payment for its Christmas products caused significant imbalance in the rights and obligations between Chrisco and its customers.
The Court also found that between January 2011 and December 2013, Chrisco made a false or misleading representation to consumers that they could not cancel their lay-by agreement after making their final payment. ACL stipulates that consumers have the right to terminate a lay-by agreement any time before goods are delivered.
The matter appeared before the court after the Indigenous Consumer Assistance Network (ICAN) alerted the Australian Competition and Consumer Commission (ACCC) to the issue. Chrisco’s hampers are delivered to most areas of Australia, including to regional areas and remote indigenous communities.
“The Court’s findings send a strong message to traders that they must comply with all of their obligations under the Australian Consumer Law, including the unfair contract terms laws that are in place to protect consumers from unfair terms in standard form consumer contracts,” ACCC Commissioner Sarah Court said.
“Purchasing goods by way of a lay-by agreement is a convenient way to shop for many Australian consumers, particularly in the lead up to Christmas.”
“Businesses that use lay-by as a method of sale need to ensure that they are meeting their ACL obligations to their customers,” Ms Court said.
The ACCC also alleged that Chrisco had contravened the lay-by termination charge provision in the ACL which requires suppliers to ensure lay-by termination charges are not more than their reasonable cost. The ACCC was however not able to prove that this occurred.
Chrisco responded to the Federal Court judgement saying,
“The only contravention of the Australian Consumer Law (ACL) that the Court found related to a Cancellation Policy published by Chrisco in the past. It stated that customers could not cancel their order with Chrisco after making their final payment, when in fact customers could cancel their order any time before delivery. When the ACCC brought the matter to Chrisco’s attention in November 2013, Chrisco conceded that this statement had been included in error, and promptly corrected the wording of its Cancellation Policy,” the Chrisco statement said.
“The Court also found that a term related to the HeadStart Plan in Chrisco’s 2014 Christmas Hamper agreement was “unfair” within the meaning of section 24 of the ACL, however, that is not properly described as a breach of the legislation. Importantly, customers can opt out of the HeadStart term. Section 24 of the ACL does not attract any penalties. Meanwhile, the HeadStart term in Chrisco’s 2015/16 agreements has been substantially reworded to make it clearer for customers,” Chrisco said.
The court hearing to determine the penalty for infringing the consumer law will take place at a later date.