Slingshot and Orcon customers refunded almost $480,000 after Fair Trading Act breach

The High Court found Slingshot and Orcon didn't properly inform customers about cancellation fees for fixed-term contracts when making sales over the phone. The Commission’s investigation found that the fixed-term contracts included a clause stating that if customers cancelled their contracts early, a termination fee “may apply”, but the fee amount was never disclosed.

The High Court found that the cost of the early termination fee should have been disclosed under the Fair Trading Act. The companies involved have since entered into a settlement agreement with the Commission, agreeing to refund affected customers the fees they paid.

In total, 4277 customers had early termination fees applied to their accounts between June 2014 and June 2020, and 2636 of those customers paid the fees, amounting to $473,688 in total.

Customers who are entitled to a refund can expect to be contacted in the next six months.

Commerce Commission Chief Executive, Vanessa Horne, said, “Under the Fair Trading Act, businesses making uninvited direct sales must clearly disclose the total price to be paid and any other consideration in a written copy of the agreement. The agreement must be provided to customers within five working days of the sale.”

What is an uninvited direct sale?

Uninvited direct sales are contracts that result from a business approaching a consumer to sell goods or services costing more than $100, where the approach is made via an uninvited phone call or visit to the consumer’s home or workplace.

Uninvited direct sales are subject to specific rules under the Fair Trading Act. Businesses must tell consumers, when negotiating the sale, specific information that they are required to disclose by the Act and how they will disclose it. There are also rules about consumers cancelling during the compulsory cooling off period, and when contracts formed this way can be enforced.

“These obligations are in place to ensure consumers receive clear and accurate information about the total cost of their services, so they can make an informed decision about what they are signing up to," Horne said.

If you’re sick of uninvited sales pitches on your doorstep, get one of our “Do Not Knock” stickers to warn door-sellers not to knock. Any door-to-door seller that ignores a “Do Not Knock” sticker faces a fine of up to $40,000.