Direct Selling Legal Update – December 2019

Welcome to the December 2019 edition of the Addisons Direct Selling Legal Update.

As the year draws to a close, we look at some of the legal issues which are relevant to those operating in the direct selling sector in Australia. 

Ho-ho-how to have an ACL Compliant Christmas

With Christmas just around the corner, there’s one list you definitely don’t want to end up on – the ACCC’s black list. The ACCC, which is the regulator for the Australian Consumer Law (ACL), has had a mammoth year of enforcement activity both in and out of the Federal Court.

Our Focus Paper provides guidance to retailers in avoiding common pitfalls when advertising sales, running promotions and dealing with customers in relation to faulty products this festive season. Read more here.

Federal Court orders Unique to pay $4.165 million in penalties – A reminder of why complying with the Australian Consumer Law is vital for direct sellers

On 31 October 2019, the Federal Court ordered Unique International College Pty Ltd to pay penalties of $4.165 million for breaches of the ACL; namely engaging in unconscionable conduct, making false and misleading representations and for breaching the unsolicited consumer agreement (UCA) provisions of the ACL.

The case is a timely reminder to direct selling companies to ensure that their sales force is aware of their obligations if a sale is unsolicited and that their sales agreement complies with the very prescriptive requirements for UCAs contained in the ACL. Read more here.

Outsourcing your IT arrangements? What are your privacy obligations?

Are you taking reasonable steps to ensure that the personal information your direct selling business holds is protected from misuse, interference and loss and from unauthorised access, modification or disclosure? Are your service providers also taking reasonable steps to secure the personal information of your distributors and customers that you entrust to them? The recent Federal Trade Commission investigation of Infotrax Systems LC, a service provider to many in the direct selling industry, is a timely reminder for direct selling businesses not to be complacent in respect of data security. Our Focus Paper considers what you can do to reduce your data security risk. Read more here.

What should be included in board minutes? 

The Australian Institute of Company Directors and the Governance Institute of Australia have recently collaborated to explore contemporary issues in board minute taking practices, and have outlined their perspective in a Joint Statement. Our Focus Paper summarises some key takeaways and useful reminders from the Joint Statement. Read more here.

Is the ACCC losing its touch? “Flushable Wipes” and “Biodegradable Plates” cases break down in Federal Court

Environmental claims are becoming increasingly popular with marketers as companies seek to win over environmentally conscious consumers. Within one week earlier in the year, the ACCC had two high-profile consumer law cases thrown out of the Federal Court – against Kimberly-Clark and Woolworths, separately. Both cases involved the use of environmental claims by the respondents which highlighted the sustainable nature of the products. 

The ACCC has had notable wins in similar actions commenced in the past so our Focus Paper considers what went wrong for the ACCC in these cases. Read more here.

TGA releases Guidance on “natural” claims in therapeutic goods advertising

On 11 June 2019, the Therapeutic Goods Administration (TGA) published guidance in relation to the use of “natural” claims when advertising medicines and medical devices to the public. Our Focus Paper considers how the TGA will interpret “natural” claims in light of the new guidance material. Read more here.

If you have any questions or would like to provide feedback or discuss, please get in touch with any of Addisons’ Direct Selling team. 

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