The ACCC has accepted a court enforceable undertaking from marketing services provider Sensis following an investigation into the company’s automatic contract renewal and cancellation processes, triggered by complaints from small business customers.
The regulator says that from January 2015 to August 2016, Sensis represented on its website that its Yellow Pages and White Pages bundled print directory and online packages had a monthly fee with a 12-month minimum contract period.
However, the company failed to disclose that the package automatically renewed for a further 12 months unless cancelled by the customer and that customers could be charged a cancellation fee equal to the remaining cost of the contract if they cancelled an automatically renewed contract after a certain date.
During its investigation, the ACCC also raised concerns that certain clauses in Sensis’ standard Product Contract Terms may be ‘unfair’ under the new business-to-business unfair contracts terms provisions in the Australian Consumer Law.
Specifically, they say clauses in the contracts gave Sensis broad discretion to cancel a customer’s contract – including the ability to terminate a contract “without cause”.
“Automatic renewal terms must be prominently disclosed, along with all the steps customers can take to cancel a contract and any cancellation fees that may apply. This is particularly important for small business customers,” ACCC Deputy Chair Dr Michael Schaper said.
“Traders who fail to adequately disclose key terms in their contracts risk misleading their customers and breaching the Australian Consumer Law.”
Following the ACCC’s findings, Sensis has acknowledged that its conduct may have contravened existing ACL prohibitions on misleading or deceptive conduct and false or misleading representations.
As a result, they’ve agreed to amend its Product Contract Terms to make automatic renewal terms more transparent and to include an obligation on Sensis to remind customers of the pending automatic renewal of their contracts as well as more clearly qualify Sensis’ right to terminate a customer’s contract to circumstances where Sensis is “acting reasonably” and in order to protect its legitimate interests.
