MCCA Direct Marketing Model Code of Practice

Part 2: Fair trading requirements

Marketing claims

13. A distance seller shall not make false or misleading claims about an offer delivered through direct marketing whether by words, omission, illustration or any other means. Prohibited are, among other things:

1. making false or misleading comparisons about price or quality;
2. quoting scientific or technical data in support of a claim unless the data can be readily substantiated;
3. using false or misleading testimonials;
4. advertising courses of instruction and implying the promise of employment or remuneration where this cannot be guaranteed;
5. promising outcomes where those outcomes have no safe scientific, medical or performance bases;
6. overstating physical security risks; and
7. describing goods or samples as ‘free’ unless the goods or samples are supplied at no cost or no extra cost to the consumer other than actual postage/carriage when specified.

14. Where the purpose of the direct marketing is to sell a good or service distance sellers shall not represent that they are undertaking market research.

Unfair conduct

15. A distance seller must not engage in conduct which is unfair or ‘unconsionable’. For example, a consumer’s poor spoken or written English, or an obvious inability to understand the offer must not be exploited.

Information prior to the formation of the contract

16. Prior to the formation of the contract the consumer must be given clear, unambiguous and easily accessible information, in any way appropriate to the means of communication and the reasonably anticipated audience, covering at least:

1. the name of the relevant distance seller and a street address at which it can be contacted — a post office, newspaper or magazine box number, facsimile or telephone number, or an electronic mail address will not suffice as a street address;
2. any relevant statutory registration or licence numbers, including the Australian Business Number and/or the Australian Company Number;
3. the total price of the goods or services, including any delivery charge and any other fee or charge for which the consumer would be liable under the contract unless otherwise authorised by the consumer. This should indicate the applicable currency;⁵
4. contact details, an easy method of identifying the membership of and accessing the relevant codes of practice of any relevant self-regulatory scheme, business association, dispute resolution organisation or other certification body;
5. the delivery arrangements;
6. the period, if any, for which the contract solicitation remains valid and any conditions about contract renewal or extension; and
7. all material restrictions, limitations or conditions to purchase. In particular, consumers should be provided with:
   • a clear and complete text of the transaction’s terms and conditions;
   • details about any cooling-off period or right of withdrawal;
   • details of any explicit warranty provisions; and
   • details of any after sales service.

Information at the time of delivery

1. No later than at the time of delivery, or in cases where delivery is to be effected in stages, the time of the first delivery, the consumer shall receive at least the following information in writing, in a clear and unambiguous style and in the same language as was used in the contract solicitation:
   1. the name and contact details, including at least the street address, of the distance seller where consumers can make inquiries or complaints, or can return goods or cancel contracts;
   2. payment arrangements, including any credit terms, or terms for payment by instalments;
   3. all restrictions, limitations, or conditions to purchase;
   4. any safety or care warnings required by any applicable law to accompany the goods or services and, where necessary, instructions for proper use; and
   5. refund, cancellation, and exchange rights and procedures.
2. In the case of services that, by their nature, can be delivered extremely quickly to the consumer, the information should be sent to the consumer within three days of the services commencing.⁶

Incentives

18. The terms and conditions under which all rewards, prizes or gifts are offered, including the drawing:

1. must be clearly stated, including whether distribution is conditional upon order or purchase of other goods or services; and
2. must comply with the relevant laws of any jurisdiction in which they are offered.

19. A reward, prize or gift shall not be described as ‘free’ if the good or service to be purchased is increased in price or decreased in quality as a result of the premium offer.

20. Rewards, prizes or gifts should be forwarded within such period as may be stated in the promotion, or within 30 days if no time period is stated, and should be forwarded even if the distance seller becomes unable to supply the advertised product or service.

21. Contests or lotteries shall not be used unless:

1. the rules governing the contest or lottery, including any conditions associated with receiving the prize, are clearly disclosed at the point of entry;
2. all advertised prizes are awarded as described in the rules for the contest or lottery;
3. the judging takes place promptly, and fairly, and is certified by an independent auditor; and
4. the results of the contest or lottery are readily available to participating consumers who wish to receive them.

Pyramid sales

22. No distance seller shall operate or be involved in any kind of ‘pyramid selling’ or ‘referral selling’ scheme as defined in Div 1AAA of Part V and section 57 of the Trade Practices Act 1974.

Minors

23. Distance sellers shall have appropriate procedures in place to minimise the sale of restricted goods or services to minors.

24. For the purposes of clause 23, the definition of 'minor' in any restricting legislation is to apply.

Delivery

25. Unless the promotional material specifically warns of limited stocks, the distance seller shall not offer particular goods or services for sale until sufficient stock is available, or reasonably expected to be available, to meet the reasonably foreseeable demand.

26. The distance seller shall deliver all orders placed as the result of a contract solicitation within such time period as is clearly stated in the promotion. In the absence of any stated period, delivery is generally to be effected within 30 days of the receipt of the order.

27. When, for whatever cause, an order cannot be delivered within the time period stipulated in the offer, or 30 days where no period is so specified, an acknowledgment of the order shall be sent to the consumer. This acknowledgment shall state the date at which the order is expected to be delivered and the reason for the delay. The distance seller shall also offer the consumer the option of cancelling the transaction and receiving a full refund of any money paid.

28. If, when the revised expected date of delivery arrives, the distance seller is still unable to supply the goods or services, the distance seller shall either:

1. advise the consumer that it is unable to fulfil the order and refund the consumer any money paid; or
2. send a further communication to the consumer (enclosing a reply paid postcard or reply paid permit address if the communication is done by mail) stating a new revised expected date of delivery and offering to cancel the proposed transaction and to refund any money paid.

29. If the new revised anticipated date arrives and the distance seller is still unable to deliver the goods or supply the service, the procedure set out in clause 28 shall be repeated until such time as the goods are delivered, or until the transaction is cancelled and any monies refunded.

30. Any commitment by a consumer to receive a continuing series of goods or services shall be subject to the following conditions:

1. the option to cancel this continuing series of goods or services shall be available to both parties at all times with reasonable notice (subject to the discharge of any outstanding commitment); and
2. the distance seller shall refund any money it has received at the time of cancellation for goods, services or postage which have not been provided.

Payment

31. Prepayment for goods or services may not be presented for payment to a financial institution until the distance seller has possession of the goods, or the first instalment of the goods, or immediate access to the services or to the first instalment of the services, and there is no impediment to the distance seller fulfilling the order.

Right of cancellation

32. For any contract initiated through distance selling, consumers shall have a period of not less than seven working days in which they may cancel the contract.

33. Where a period for cancellation longer than seven working days may apply because of the application of State, Territory or Australian Government legislation or because of another code, that longer period shall apply.

34. In the exercise of this right, the period of not less than seven working days shall begin:

1. for goods, from the deemed or actual date of receipt of the goods by the consumer. The consumer will be deemed to have received the goods three days after they were dispatched unless the consumer can prove that they were received on a later date or the distance seller can prove they were delivered at an earlier date;
2. in the case of periodic distribution of goods that are not complete until the final instalment is distributed, on receipt of the final instalment;
3. in the case of periodic distribution of distinct goods, on receipt of the first instalment; or
4. for services, without prejudice to clause 37, from the time the contract to supply the services is made.

35. A contract initiated through distance selling may also be cancelled at any time before the goods or services are dispatched to the consumer.

36. Cancellation of the contract occurs when the consumer initiates either the return of the goods in their original condition, or the advice of the cancellation of the contract for services. A good remains in its original condition even if the packaging has been removed or tampered with.⁷

37. Clause 32 shall not apply to:

1. any portion of a contract for services performed before the cancellation of the contract under clause 32. In the case of indivisible services which have commenced (eg a service of technical advice), then clause 32 does not apply at all;
2. transactions concerning securities and other products or services the price of which is dependent on financial market fluctuations which cannot be controlled by the distance seller;
3. made-to-measure products or clearly personalised products;
4. products which can be immediately copied, including books, magazines, computer software, cassettes, videos and compact discs that are supplied with a wrapping or seal, unless the product’s immediate wrapping or seal is unbroken;
5. personal health or hygiene products where any wrappings or seals have been broken or tampered with; and
6. products which by reason of their nature cannot be returned or are liable to deteriorate rapidly.

38. The distance seller shall refund any monies already paid by the consumer within seven days of the distance seller receiving returned goods or notice of cancellation of the contract.

Unordered goods and services

39. Distance sellers shall not claim payment for unordered goods or services unless they have reasonable cause to believe that they are entitled to claim payment for the goods or services supplied.

40. Consumers who have been supplied unordered goods or services shall not have to pay for those goods or services.

41. Subject to clause 43, consumers who have been supplied unordered goods shall become the owner of the goods after:

1. one month of advising the distance seller that the goods were not ordered and of an address where the goods can be collected; or
2. three months of receiving the goods;

whichever is the sooner, unless the distance seller takes possession of the goods before this time has expired.

42. During the time period referred to in clause 41, the distance seller may contact the consumer to make reasonable arrangements for taking possession of the goods.

43. Distance sellers are entitled to take possession of goods in circumstances where the consumer to whom they were delivered knew, or should have known, that the goods were not intended for them. This right to take possession of the goods must be exercised within a reasonable time period, and after making reasonable arrangements with the consumer.

Substitute goods or services

44. A distance seller that cannot supply exactly the same good or service as specified by a consumer shall not supply a substitute good or service of similar kind, quality and price unless the distance seller has made a prior agreement with the consumer. If prior agreement is impossible and the good or service specified by the consumer cannot be supplied, the possibility of this occurring must be clearly flagged in the promotional material, advertisement or telemarketing call.

45. If the distance seller supplies a substitute good or service, it must clearly inform the consumer of their right to return the good or cancel the service if they are dissatisfied with the substitution, and of the time frame for doing so. The time frame for returning the good or cancelling the service shall be no less than that provided in clauses 32 and 33.

46. Where the substitute goods or services are of a type referred to in clause 47, and the distance seller intends to apply clause 47, then the distance seller shall not supply a substitute good or service of a similar kind, quality and price unless the distance seller had made a specific prior arrangement with the consumer and clearly informed the consumer of the fact that return/cancellation rights will not apply to the substitute product.

47. The right of return provided by clause 45 shall not apply to:

1. services, if performance has begun before the end of the period of seven working days;
2. transactions concerning securities and other products or services the price of which is dependent on financial market fluctuations which cannot be controlled by the distance seller;
3. made-to-measure products or clearly personalised products;
4. products which can be immediately copied, including books, magazines, computer software, cassettes, videos and compact discs that are supplied with a wrapping or seal, unless the product’s immediate wrapping or seal is unbroken;
5. personal health or hygiene products where any wrappings or seals have been tampered with; and
6. products which by reason of their nature cannot be returned or are liable to deteriorate rapidly.

Cost of returning goods

48. Where a consumer exercises his or her right to cancel the contract under clause 32, the consumer shall bear the cost of returning any goods.

49. Where a consumer exercises his or her right to return goods because of a breach of a statutory warranty, the distance seller shall bear the cost of returning the goods.

50. Where the distance seller supplies a substitute good or service and a consumer exercises his or her right to cancel the contract under clause 45, the distance seller shall bear the cost of returning any goods.

⁵ Where a fee or charge is not able to be specified at the time of ordering, the consumer will be advised of this before the order is accepted. An example of this might be when the weight of goods ordered does not allow the seller to advise the consumer immediately of the exact cost of postage.

⁶ This is to cover services that can be provided almost instantaneously, e.g. certain changes to telephony services, where a charging plan may be changed or implemented while the consumer is speaking to the operator. In these circumstances, the seller may provide the detailed written information as soon as possible and in any event within three days.

⁷ Note that the door to door trading legislation provides that cancellation of the contract occurs when the consumer sends the prescribed notice to the trader. The consumer is required to return the goods only if the trader demands them.

Next: Part 3: Privacy Requirements
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