Uninvited direct sales

What is an uninvited direct sale?

An uninvited direct sale is one where the trader approaches you uninvited either at home, your workplace or over the phone and offers you goods or services.

It includes situations where:

• you’ve given your contact details to a trader for another purpose and they then try to sell you goods or services. For example, you’ve entered a competition or responded to a survey.
• you’re an existing customer of the trader and they then try to sell you a different product or service. For example, the company that provides your landline tries to sell you a mobile phone.

The Fair Trading Act applies to all uninvited direct sales where the price payable is more than $100, or where the price is uncertain at the time of supply.

Sales agreement

Every agreement for an uninvited direct sale must be in writing and expressed in plain language. You must be given a copy of the agreement either at the time you sign, or if the agreement is made over the phone within 5 working days.

The agreement must:

• clearly describe the goods or services being supplied
• show the total price payable and any other consideration to be given (or how this is calculated if it’s uncertain at the time you sign)
• inform you of your right to cancel
• list the trader’s name, street address, phone number and email, and your name and street address
• show the date it was signed.

If the trader fails to give you this information, the agreement can’t be enforced (except if the failure is minor and has not materially disadvantaged you).

Cancellation rights

If you buy goods from a trader selling door-to-door or by telemarketing, you have a cooling-off period of 5 working days to cancel the sale if you change your mind.

For example, if a company cold calls you offering a new electricity deal, you have the right to cancel if you sign up over the phone but then decide to opt out.

Before you enter into the agreement, the trader must tell you orally about the cooling-off period and how you can cancel. A summary of your cancellation rights must also appear on the front page of the sales agreement.

The trader can’t enforce the agreement within the 5-day cooling-off period. This means they can’t demand payment during this time. If they’ve supplied services, they’re not entitled to be paid for them.

You can give notice to cancel either orally or in writing.

If you cancel, the trader must immediately refund all the money you’ve paid. You have to allow the trader 10 working days to collect any goods that have been supplied. Collection has to be at a reasonable time. But you can’t unreasonably refuse the trader’s request. The trader is not entitled to collect the goods unless they’ve refunded all the money you’ve paid.

You must take reasonable care of the goods while they’re in your possession until the end of the 10 working-day period. If you lose or damage the goods, you may have to pay compensation to the trader. However, you won’t be liable for any loss or damage from using the goods normally, or because of circumstances outside your control.

The trader may have to compensate you if they’ve provided services during the cooling-off period and they’ve altered or damaged your property.

Taking it further

If you are in dispute with a trader you can take your case to a Disputes Tribunal.

Traders also risk being prosecuted by the Commerce Commission for failing to comply with the requirements for uninvited direct sales. Penalties for breaches are $10,000 for an individual and $30,000 for a company.

The commission also has the option of issuing an infringement notice. The maximum infringement notice fine is $2000.