Court finds Chrisco lay-by contracts ‘unfair’

CHRISCO has been found guilty of being a Christmas grinch by the Federal Court this week for including ‘unfair’ terms in its lay-by contracts.

Publicity pic of a family glancing at a large christmas hamper used to promote the 2009 Chrisco Hamper Catalogue.

CHRISTMAS hamper company Chrisco has been found guilty of being a Christmas grinch.

The Federal Court ruled this week that Chrisco breached Australian Consumer Law by including an unfair contract term in its lay-by agreement.

The court ruled the term, contained in the company’s 2014 ‘HeadStart Plan’ contracts, allowed Chrisco to continue to take payments by direct debit after a customer had fully paid for their order.

Consumers were required to opt-out in order to avoid having further payments deducted for the following year’s hamper, even before the consumer had agreed to purchase it.

The Australian Competition and Consumer Commission instituted the proceedings last December following a tip-off from the indigenous Consumer Assistance Network, as part of the ACCC’s indigenous protection and outreach work.

In his ruling, 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 lay-by agreement after making their final payment.

Under the ACL, consumers have the right to terminate a lay-by agreement at any time before delivery of the goods.

“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,” ACCC Commissioner Sarah Court said.

“Purchasing goods by way of a lay-by agreement is a convenient way to shop for many Australian consumers, particularly in the lead up to Christmas. Businesses that use lay-by as a method of sale need to ensure that they are meeting their ACL obligations to their customers.”

The ACCC failed to demonstrate that Chrisco’s conduct contravened the lay-by termination charge provision in the ACL, which requires suppliers to ensure lay-by termination charges are not more than their reasonable costs.

In a statement, a Chrisco spokeswoman said the company was “proud of the role that we play in helping our customers remove the stress and worry of big bills and debt so they can enjoy a magical Christmas”.

“The only contravention of the Australian Consumer Law that the Court found related to a Cancellation Policy published by Chrisco in the past. It stated that customers could not cancel their order with Chrisco after making their final payment, when in fact customers could cancel their order any time before delivery,” she said.

“When the ACCC brought the matter to Chrisco’s attention in November 2013, Chrisco conceded that this statement had been included in error, and promptly corrected the wording of its Cancellation Policy.”

She said the court also found that a term related to the HeadStart Plan in Chrisco’s 2014 Christmas hamper agreement was “unfair” within the meaning of section 24 of the ACL, but that is “not properly described as a breach of the legislation”.

“Importantly, customers can opt out of the HeadStart term,” she said. “Section 24 of the ACL does not attract any penalties. Meanwhile, the HeadStart term in Chrisco’s 2015/16 agreements has been substantially reworded to make it clearer for customers.”

The matter has been set down for a penalty hearing on a date to be fixed.

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