Need to know
- The Consumer Action Law Centre recently lodged its first designated complaint with the ACCC, aiming to put a stop to unsolicited solar sales
- Consumers currently have very few protections against third-party lead generation and the door knockers that follow
- Consumer Affairs Victoria won a legal case in 2021 against Vic Solar, which used third-party lead generators to send door knockers to people's homes
In July last year the federal government announced a new way for consumer rights groups to bring systemic issues to the attention of the Australian Competition and Consumer Commission (ACCC).
Certain groups, including CHOICE, were given the power to lodge a 'designated complaint'. The ACCC then has to respond within 90 days, a rule that only applies in such situations.
The idea is that consumer rights groups have a special role to play in bringing forth evidence of systemic wrongdoing in the consumer marketplace. Ideally, these fast-tracked tip-offs will speed up regulatory intervention.
Unsolicited solar sales in the firing line
In early April this year, the Melbourne-based Consumer Action Law Centre (Consumer Action) lodged its first designated complaint – also known as a 'super complaint' – with the ACCC. The subject would likely be familiar to many households in Victoria and beyond: door-to-door salespeople, frequently hawking solar panels.
They often show up after someone in the house has entered their details on a related website, expressing a general interest in what's on offer. This is called third-party lead generation, a practice often relied on by unscrupulous sales-driven businesses.
It's an ongoing systemic issue that impacts thousands of Australians and causes real harm, especially to those living in vulnerable circumstances
Consumer Action CEO Stephanie Tonkin
"Then they quickly find themselves spammed with cold calls or subject to an in-home sales pitch," says Consumer Action CEO Stephanie Tonkin.
At the moment, consumers have very few protections against people showing up at their homes to sell them things. Older Australians who may have grown up in a more trusting consumer environment and are isolated and left to fend for themselves are particularly vulnerable to these hard-sell tactics.
"In the past it was encyclopedias and educational software," Tonkin says. "Today, we are hearing about the unsolicited door-to-door selling and telemarketing of many items, most notably solar panels. It's an ongoing systemic issue that impacts thousands of Australians and causes real harm, especially to those living in vulnerable circumstances."
Unconscionable business model
In 2021, Consumer Affairs Victoria (CAV) won a legal case against a business called Vic Solar, which used third-party lead generators to unleash door knockers on people's homes.
The company advertised a suspiciously affordable 'community bulk-buy' of solar PV systems that turned out to be too good to be true. It also failed to advise customers about contractual cooling-off periods (during which you can cancel a sale) before starting installations.
Around 4300 customers signed up over three years after a Vic Solar salesperson knocked on their door. The business sold about $21 million worth of solar PV systems in the process.
Businesses cannot avoid responsibility for dodgy sales practices by using lead generators
Consumer Affairs Victoria director Nicole Rich
The court ruled that Vic Solar's entire business model was founded on unconscionable conduct and that the unsolicited consumer agreements customers entered into were unlawful.
Vic Solar was ordered to pay a $3 million penalty, and its director, Sunny Srinivasan, was hit with a separate $450,000 fine.
In an analysis of the case, the Victorian Bar wrote: "The 'community bulk buy' marketing concept was a deceptive ruse to gain entry into the consumer's home. It was done in bad faith and sought to exercise undue influence on the consumer".
Former CHOICE Board chair Nicole Rich, now CAV's director, said at the time that "businesses cannot avoid responsibility for dodgy sales practices by using lead generators".
Older Australians are often more vulnerable to the third-party lead generation tactics behind unsolicited door-to-door sales.
Dodgy dealings 'out of sight'
That business model is still alive and well, Tonkin says. And it thrives on the fringes, where it's hard to rein in.
"Unsolicited sales are tricky as they happen out of sight, most often in regional areas, where people are pressured to sign up in their homes for very expensive products, they can neither afford, nor want," Tonkin says, adding that "we think companies are using lead generation to get around the very limited protections that do exist".
We think companies are using lead generation to get around the very limited protections that do exist
Consumer Action CEO Stephanie Tonkin
If the ACCC determines that a designated complaint stacks up, it has a range of options, including a review of the sector in question or a full-scale investigation. Or it may just issue a consumer warning.
If the regulator indicates to the complainant that it plans to take action, it has to do so within six months.
Consumer Action wants to see unsolicited sales banned across Australia, and it's also calling for new regulations around third-party lead generation.
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Stock images: Getty, unless otherwise stated.
