Chrisco Hampers Australia Limited (Chrisco) has provided a court-enforceable undertaking to the ACCC in which it acknowledges that a term in its lay-by agreements for Christmas hampers and other items, known as a “HeadStart Plan”, may be an unfair contract term. Chrisco also admitted that it likely made false or misleading representations to consumers in its promotions about the plan.
The HeadStart Plan term allowed Chrisco to continue to take payments from consumers after they had fully paid for their existing lay-by order, unless consumers expressly opted out.
Chrisco has undertaken to increase the transparency of the HeadStart Plan term by requiring consumers to opt in to a HeadStart Plan and to confirm their participation from year to year.
“Ensuring that consumers must opt-in to the HeadStart lay-by plan makes it much clearer to them that they are signing up to a plan, whereas in the past they had to ‘opt-out’ of the plan by ticking a box when they placed an order with Chrisco,” ACCC Commissioner Sarah Court said.
Chrisco has also agreed to update its terms and conditions to ensure that the effect and operation of the HeadStart Plan is clearly and prominently explained to consumers, including clarifying refund rights in relation to any orders Chrisco placed on behalf of a customer under a HeadStart Plan.
“We believe that the changes Chrisco has undertaken to make will increase the transparency of its terms and conditions, and will give consumers the ability to choose whether they want to participate in the HeadStart Plan each year,” Ms Court said.
“All businesses must ensure they clearly explain to customers what plans or services they are signing up to, and how they operate.”
The ACCC was also concerned about Chrisco’s promotional emails and text messages sent to many thousands of consumers between 28 August 2018 and 24 April 2019, which offered them a credit to be redeemed by clicking on an image.
After consumers clicked on the image, Chrisco signed them up to the HeadStart Plan without seeking their consent or requiring further steps, and requested payment or debited their accounts. More than 20,000 consumers were signed up to the HeadStart Plan through this promotion.
Chrisco has admitted that, in relation to these promotional emails and text messages, it likely made false or misleading representations to consumers in contravention of the Australian Consumer Law.
“It is unacceptable that consumers were signed up to a HeadStart Plan and deductions were made from their bank accounts simply because they clicked on a promotional image in an email or text message.”
Chrisco has undertaken that all of its promotions will require consumers to confirm their agreement to create a HeadStart Plan via multiple steps.
Chrisco has also agreed to implement a comprehensive consumer compliance program for three years.
A copy of the undertaking can be found at Chrisco Hampers Australia Limited.
Note
Under the Australian Consumer Law, it is not illegal for businesses to include or rely on an unfair contract term against consumers. Although courts can declare unfair terms to be void and consequently unenforceable, they cannot impose penalties on companies using these unfair terms.
The ACCC continues to advocate for a change to the Australian Consumer Law to make it illegal for businesses to include or rely on an unfair contract term against consumers, and for the Courts to have the power to impose penalties where businesses use unfair contract terms.
Background
Chrisco is a company registered in New Zealand. It sells a range of Christmas hampers and other gift items, predominately via lay-by agreement, to Australian consumers. It does not operate retail stores, but every year sells hundreds of thousands of hampers and other goods via its catalogue and website.
In December 2014, the ACCC filed proceedings in the Federal Court against Chrisco in relation to Chrisco’s 2014 Christmas hamper lay-by agreements.
On 10 November 2015, the Federal Court found the 2014 HeadStart Plan term was an unfair contract term.
In March 2016, the Federal Court ordered Chrisco to pay a pecuniary penalty of $200,000 for making a false or misleading representation that customers could not cancel a lay-by agreement after making their final payment.
