Property spruikers must offer a cooling off period
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Consumer Protection has sent out a warning to promoters of some property investment schemes who hold “free” public seminars that they must provide information about cooling off periods to attendees.
Australian Consumer Law regulators are examining the practices of a number of promoters and WA’s Commissioner for Consumer Protection Anne Driscoll said a common theme had emerged.
“In many cases, consumers respond to advertisements and attend these “free” seminars with the understanding that they are getting information or advice to help them invest in the property market. They do not expect a high pressure sales environment where they are expected to buy a training package or other sales material but typically that is the case,” she said.
“The ten business day cooling off period, which is mandatory for unsolicited sales under the Australian Consumer Law (ACL), applies if the consumer is sold a product or service during the seminar, which was not the promoted purpose of the seminar. I have issued a letter to property spruikers in WA to remind them of their legal obligations.”
Unsolicited consumer agreements include those made at a place other than the business premises of the trader. As these seminars are usually held at temporary public venues, such as hotels or hired conference room facilities, they are covered by the ACL.
“Even though a consumer may voluntarily attend these seminars to obtain free information, they may not have anticipated entering into a sales contract. Our view is that the cooling off period will apply, unless the promotional material clearly states that education or other services will be sold at the seminars,” the Commissioner said.
“I remind promoters of these “free” property investment seminars that they have obligations under the ACL. If a consumer responds to an advertisement to attend, unaware of educational services being on sale, and then faces high-pressure sales tactics to sign up for a series of expensive training courses, they are entitled to a ten day cooling off period during which they can cancel the contract.
“The consumer must be informed in writing of their right to terminate the signed contract under the ACL. Failure to do so will render the promoter liable for penalties of up to $50,000 for a corporation and up to $10,000 for an individual.
“I also remind these promoters that it is a fundamental requirement of the ACL that only true and accurate information is given during the presentations at these seminars. ACL regulators will be monitoring content for any false or misleading representations and will expect any claims made to be verifiable. Breaches of the ACL in this regard can lead to fines of up to $1.1 million for a corporation and up to $220,000 for an individual.”
If, in conjunction with the sale of goods, services or real estate, the promoters also engage in credit or financial services including financial advice in relation to self-managed super funds (SMSF), they may need to comply with the National Consumer Credit Protection Act 2009 and the Corporations Act 2001. Those Acts are administered by the Australian Securities and Investments Commission.
Further information on the Australian Consumer Law is available at www.consumerlaw.gov.au. Enquiries can be made at Consumer Protection WA by email firstname.lastname@example.org or by calling 1300 30 40 54.
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(Consumer Protection is a division of the Department of Commerce)
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