Unconscionable conduct is a statement or action so unreasonable it defies good conscience. Section 21 of the Australian Consumer Law (ACL) prohibits unconscionable behavior in connection with the supply of goods or services, or the acquisition of goods or services, in business transactions. Examples of unconscionable conduct, depending on the circumstances, include:
- not properly explaining the conditions of a contract to a person they know doesn’t speak English or has a learning disability
- not allowing sufficient time to read an agreement, ask questions or get advice
using a friend or relative of the customer to influence the customer’s decision
- encouraging a person to sign a blank or one-sided contract.
There is a list of factors which courts may take into account (but are not limited to) contained in section 22 of the ACL.
The maximum civil penalties are $220,000 for individuals and $1.1 million for a body corporate.
Case study : ACCC v Craftmatic
Between August 2005 and at least May 2008, Craftmatic used misleading and unfair tactics to convince elderly people to agree to a home presentation by one of Craftmatic’s sales representatives. Once at the consumer’s home, an elaborate and well rehearsed sales process was used to persuade the consumer to buy a Craftmatic bed, in some cases costing more than $10,000. While some consumers were happy to buy a bed, others who indicated that they either did not want, or could not afford to buy a bed were subjected to a barrage of unfair sales techniques in an attempt to change their mind.
The ACCC took action in the Federal Court which declared, by consent, that Craftmatic’s method of promotion and sale consisted of steps designed, scripted and conducted to unduly influence potential customers and to create and take advantage of an unequal bargaining position.
The Federal Court ordered injunctions for a period of seven years restraining Craftmatic from a wide range of conduct that was found to be misleading and unconscionable. It also required Craftmatic to give each consumer who bought a bed within the relevant period an opportunity to make a complaint to Craftmatic, the details and outcomes of which had to be reported back to the ACCC. It also required the company to provide all prospective customers with extra details about their rights.