FAIR TRADING (TELEMARKETING) AMENDMENT BILL

Introduction and First Reading

The Hon. J.M. RANKINE (Wright—Minister for State/Local Government Relations, Minister for the Status of Women, Minister for Volunteers, Minister for Consumer Affairs, Minister Assisting in Early Childhood Development) (11:03): Obtained leave and introduced a bill for an act to amend the Fair Trading Act 1987. Read a first time.

Second Reading

The Hon. J.M. RANKINE (Wright—Minister for State/Local Government Relations, Minister for the Status of Women, Minister for Volunteers, Minister for Consumer Affairs, Minister Assisting in Early Childhood Development) (11:03): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation inserted in Hansard without my reading it.

Leave granted.

This Bill will amend the Fair Trading Act 1987 to provide for a cooling off period on contracts for goods and services that result from a trader making unsolicited contact with a consumer by telephone.

Due to an increase in the availability of personal information in electronic form and the attraction to business of reduced trading costs, telemarketing activity has significantly increased over the past decade.

The burgeoning telemarketing industry has led to an increase in consumer complaints about telemarketing practices. Consumers consider telemarketing calls as unwanted and inconvenient, particularly when they involve high pressure sales tactics.

The concern with telemarketing amongst the general community is reflected in the popularity of the Commonwealth Do Not Call Register, which now allows people to list their telephone number on the register and thereby opt out of receiving telemarketing calls.

Within one month of coming into operation on 3 May 2007, over 1,000,000 individual telephone numbers had been included on the register. It is now generally unlawful to make calls to those listed numbers. The Commonwealth legislation also regulates permitted calling hours by telemarketers, the disclosure of information by callers and the grounds for the termination of a call. It does not, however, provide for a cooling off period on unsolicited telemarketing contracts.

Before the development of the Do Not Call Register, NSW and Victoria had legislated to specifically control telemarketing activity. In both States the telemarketing legislation goes further than the Commonwealth legislation in that it allows for a cooling off period for contracts made as a result of unsolicited telemarketing calls.

The NSW and Victorian cooling off legislation is analogous to door to door sales provisions which still exist in most Australian jurisdictions. These door to door sales provisions were originally implemented as uniform legislation in all jurisdictions, and in South Australia they were incorporated into the South Australian Fair Trading Act upon its commencement in 1987.

Those provisions were introduced to protect consumers against the risk of agreeing to contracts that were not in their best interests. This possibility existed given the high pressure sales tactics used by door to door traders and the consumer’s lack of opportunity to compare competing products. Such tactics may also be employed by telemarketers.

This Bill therefore extends the operation of the current door to door provisions of the Fair Trading Act to also regulate telemarketing activity in the same manner. In practice, this ensures that vulnerable consumers, who may feel pressured to agree to be bound by a contract over the phone will be provided with a cooling off period within which they may determine whether to proceed with the contract. The Bill goes further and provides that only certain types of contract specified by regulation will be able to be entered into orally over the telephone. Failure to comply will lead not only to offences on the part of the supplier and the dealer but also to the consumer being able to rescind the contract up to 6 months after the date of the contract.

As it is likely that those who are not included on the Commonwealth Do Not Call register will be those most at risk—people who are unaware of their rights, who are at some disadvantage, who have limited life skills, and, more than likely, those who have little money to spare—the Bill ensures increased consumer protection for those most vulnerable to consenting to contractual obligations for unwanted goods or services.

As is already the case in NSW and Victoria, the passing of this Bill will ensure that South Australian consumers are better protected against high pressure telemarketing sales tactics.

I commend the Bill to Members.

Explanation of Clauses

Part 1—Preliminary

1—Short title

2—Commencement

3—Amendment provisions

These clauses are formal.

Part 2—Amendment of Fair Trading Act 1987

4—Substitution of heading to Part 3

It is proposed to extend Part 3 to cover telemarketing as well as traditional door to door trading and the heading is altered accordingly.

5—Amendment of section 13—Interpretation

A new definition of contract summary is inserted. If a contract to which the Part applies is made by telephone, a contract summary is required to be forwarded to the consumer.

The definition of cooling off period is substituted. The cooling off period for a contract made by telephone is to be 10 days commencing on and including the day on which the contract summary is given to the consumer.

The remaining alterations to definitions flow from the extension of the Part to cover telemarketing as well as traditional door to door trading.

6—Amendment of section 14—Application

Subsection (1) governing application of the Part is altered so that the Part will apply where negotiations leading to the formation of the contract take place in a telephone call between the consumer and the dealer while the consumer is in South Australia at a place other than trade premises of the supplier. The requirement that the dealer's approach must be otherwise than at the unsolicited invitation of the consumer is to be applied to telemarketing in the same way as it applies to door to door trading.

The remaining amendments address an existing structural problem with subsection (2) and do not substantively amend the provision.

7—Amendment of section 17—Requirements in relation to prescribed contracts

New paragraph (1)(ca) is inserted to make it clear that if a supplier wants to limit the period for which a contract offer remains open (ie the period within which a contract to be entered into in writing must be signed by the consumer and returned to the supplier) a statement to that effect specifying the period must be included in the contract.

Paragraph (1)(d) is amended to clarify the manner in which a duplicate of a written contract is to be provided to the consumer by the supplier.

Under new subsection (1a) the regulations may allow prescribed contracts of a specified class to be entered into orally over the telephone. The subsection sets out the requirements to be met in relation to such contracts.

The requirements are as follows:

before the contract is entered into, the consumer must be informed orally of the following matters:

1. that the contract is subject to a cooling off period of 10 days commencing on and including the day on which the consumer is given a written contract summary;

2. the total consideration to be paid or provided by the consumer or, if the total consideration is not ascertainable at the time the contract is made, the manner in which it is to be calculated;

3. if the contract provides for the carrying out of work of a prescribed nature—detailed particulars of the work (including any such particulars required by the regulations);

4. any other particulars required by the regulations;

as soon as reasonably practicable after the contract is entered into, a written contract summary must be given to the consumer in accordance with the following requirements:

1. the contract summary must specify the day on which the contract was entered into orally;

2. the contract summary must set out in full all the contractual terms, including—

1. the total consideration to be paid or provided by the consumer or, if the total consideration is not ascertainable at the time the contract is made, the manner in which it is to be calculated; and

2. if the contract provides for the carrying out of work of a prescribed nature—detailed particulars of the work (including any such particulars required by the regulations);

the contractual terms must be printed or typewritten (apart from any insertions or amendments to the printed or typewritten form, which may be handwritten);

if the dealer is not the supplier, the contract summary must set out the full name and address of the dealer and identify that person as the dealer;

the contract summary must contain conspicuously at the top and bottom of the document the statement 'THE CONTRACT IS SUBJECT TO A COOLING OFF PERIOD OF TEN DAYS' printed in upper case in type not smaller than 18 point;

the contract summary must be accompanied by—

1. a notice, in the prescribed form, explaining the right of the consumer to rescind the contract; and

2. a notice, in the prescribed form, that may be used by the consumer to rescind the contract;

the notices must—

1. be printed or typewritten (apart from any insertion, which may be handwritten); and

2. set out the full name and address of the supplier and identify that person as the supplier; and

3. be separate from, and not attached to, any other document;

the printing or typewriting of the contract summary, the statement and the notices, must be readily legible and conform with the requirements of the regulations;

any handwriting (apart from a signature or initial) in the contract summary or a notice must be readily legible.

8—Substitution of heading to Part 3 Division 3

While sections 19 and 20 of the Act apply exclusively to traditional door to door trading, section 21 will apply to both door to door trading and telemarketing and the heading to the Division is altered accordingly.

9—Amendment of section 23—Exercise of right of rescission

Section 23 governs how a notice of rescission of a contract may be served by the consumer on the supplier. The amendment expands the methods of service to include facsimile transmission and e mail to a number or address provided by the trader on a notice given to the consumer under the Part. Notice of rescission by fax or email is taken to have been given to the supplier at the time of transmission.

Debate adjourned on motion of Mr Williams.