The Federal Court has found that Chrisco Hampers Australia Ltd (Chrisco) breached the Australian Consumer Law (ACL) in relation to its sale of hampers to consumers by layby agreement.

In proceedings brought by the Australian Competition and Consumer Commission (ACCC), the court found Chrisco included an unfair contract term in its 2014 layby agreements relating to its “HeadStart Plan”, which allowed Chrisco to continue to take payments by direct debit after the consumer had fully paid for their layby order. Consumers were required to ‘opt out’ in order to avoid having further payments automatically deducted by Chrisco after their layby had been paid for.

It was also alleged that Chrisco’s conduct contravened the layby termination charge provision in the ACL, which requires suppliers to ensure layby termination charges are not more than their reasonable costs. The court held that the ACCC had not proved this alleged contravention.

The matter is now to be set down for a penalty hearing on a date to be fixed. The ACCC is seeking pecuniary penalties, declarations, injunctions and costs.

In concluding that the HeadStart term was unfair, Justice Edelman considered the contract as a whole, including the transparency of the term, and concluded that the term caused a significant imbalance in the rights and obligations between Chrisco and its customers.

The court also found that between January 2011 and December 2013, Chrisco made a false or misleading representation to consumers that they could not cancel their layby agreement after making their final payment, when the ACL provides that consumers have the right to terminate a layby agreement at any time before delivery of the goods.

Chrisco promotes its products, including Christmas hampers, in a number of ways including television, the internet, and printed catalogues. Chrisco supplies goods to consumers in most areas of Australia, including regional areas and remote Indigenous communities.

“The court’s findings send a strong message to traders that they must comply with all of their obligations under the Australian Consumer Law, including the unfair contract terms laws that are in place to protect consumers from unfair terms in standard form consumer contracts,” said ACCC commissioner, Sarah Court.

“Purchasing goods by way of a layby agreement is a convenient way to shop for many Australian consumers, particularly in the lead up to Christmas.”

“Businesses that use layby as a method of sale need to ensure that they are meeting their ACL obligations to their customers,” Court said.

The ACCC became aware of the alleged conduct following discussions with the Indigenous Consumer Assistance Network (ICAN) as part of the ACCC’s Indigenous consumer protection and outreach work.

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