Australian Consumer Law – Watch Out!

(Posted with permission from Paul Dobson)

The Tasmanian office of Consumer Affairs and Fair Trading, recently wrote this in regards to an ad for a property being sold with and Instalment Contract:

‘The Office of Consumer Affairs and Fair Trading in Hobart has received a complaint relating to the advertising of a property at [address removed], Tasmania on the website of [removed].com.au on [date removed], 2012. In the advert reference is made to “owning the property for $xxx per week. There is no reference to a single price which is an offence under section 48 and 166 of the Australian Consumer Law. In the event of a conviction for the breach of this section of the Act substantial financial penalties can be imposed. Please provide your response to the complaint that this office has received.’

The reference to the Australian Consumer Law is actually a reference to the Competition and Consumer Act 2010, an Act that replaced all the State based, Trade Practices Acts.

The best description of Section 48 (and 166) I’ve found is in the ACCC’s, ‘The Australian Consumer Law – A guide to provisions.’ It goes:

‘Section 48 of the ACL prohibits a person from representing a component of a price when making a representation about the price of a good or service, without also prominently specifying the single figure price a person must pay to obtain the good or service, to the extent that a single figure price is quantifiable at the time of making a representation.’

How does this effect our vendor finance advertising?

Check with your solicitor but these two sections of the Australian Consumer Law indicate:

• You can still place an ad with no price information
• If you include a regular payment amount in your ad you must nominate the sale price.

However the NCCP rules regarding Comparison Rates also need to be considered. In short these considerations can be summarised as follows:

• If you insert your interest rate or regular payment amount into an ad, you must insert all the prescribed Comparison Rate information.

An example of a format I believe will work for both the Australian Consumer Law and the Comparison Rate rules is:

‘4 bed, 2 bath, double garage, brick & tile home with a great backyard. Seller will finance with Low weekly payment.’

This text would allow you to either have no price information or full price information and not have to insert Comparison Rate information.

Click here to download Section 48 of the Australian Consumer Law
and click here to download Section 166.

Cheers,

Paul
Rob Hardy and Paul & Karen Dobson – Vendor Finance Institute – Ph: 0447 973 235

Copyright Vendor Finance Institute Pty Ltd – ACN 143 453 525 – May 2012

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