Australia’s publisher of Yellow Pages and White Pages, Sensis, has admitted it may have breached consumer laws by automatically renewing 12-month customer contracts without clearly telling them.
The acknowledgement came after “a large number of complaints” from small businesses made to the Australian Competition and Consumer Commission (ACCC), which investigated Sensis behaviour in selling bundled ad packages for its telephone books and online directory.
The probe found that the bundles came with a minimum 12-month contact period, but during a period between January 2015 to August 2016 the company didn’t “adequately” let the customer know the agreement automatically renewed for another a year, and that any cancellation forced the customer to pay out the full remainder of the contract.
“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,” said ACCC deputy chair Dr Michael Schaper.
“Traders who fail to adequately disclose key terms in their contracts risk misleading their customers and breaching the Australian Consumer Law.”
In response, Sensis “acknowledged” that it may have breached legislation on “misleading or deceptive conduct” and “false or misleading representations”. The company told Business Insider that it has refunded affected customers, improved its disclosure of automatic renewal and cancellation policies, and published a correction message on its website.
The ACCC, which only in November extended out ACL coverage from individual consumers to small businesses, also raised concerns with other parts of Sensis bundle contract, especially a clause that allowed it to cancel a customer’s contract “without cause”.
Dr Shaper said such terms risked the wrath of the consumer watchdog, which could escalate to legal action to have the contract declared “unfair”.
“The ACCC has serious concerns about the use of wide-ranging termination clauses that allow a business to unilaterally terminate a contract without reasonable cause,” he said.
Sensis, in response, has announced that it would change the clause to only allow it to cancel the agreement when it’s “acting reasonably”.
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