Household goods retailer HouseSmile has been fined $60,000 for taking advantage of an elderly woman suffering from dementia.
The District Court ordered the fine after convicting the company of unconscionable conduct that involved repeated unsolicited sales calls to the customer. The firm was also required to make a $7500 payment for emotional harm.
According to the Commerce Commission, HouseSmile invited customers to contact it via Facebook advertisements or through its website. Its sales agents would then phone consumers, and would also make unsolicited calls to customers on its database.
In this case, the company had been told by the victim’s daughter that her mother was elderly, suffered from dementia and could not operate a computer.
Despite this, sales agents continued to contact the victim for over a year and a half to either make new sales or to restart previously cancelled sales for products including tablets, phones and Bluetooth speakers.
The agents put unfair pressure on the victim and tried to influence her decisions, such as telling the victim she was a “really good customer” who had paid the company “really well in the past”. They would also use the ‘bait and switch’ tactics – initially suggesting a product would cost a lower amount to secure commitment to the purchase, then only clarifying the price was much higher at the end of a call.
In addition, the sales staff ignored signs the victim was cognitively impaired, such as an inability to recall information like bank details.
“The fact that the victim was contacted so frequently over an extended period of time, despite HouseSmile’s knowledge of her vulnerabilities, is highly aggravating,” said Commerce Commission deputy chair Anne Callinan.
“This sort of conduct is completely unacceptable, and businesses that employ such tactics should expect to be on the receiving end of enforcement action,” she added.
Judge Marshall described HouseSmile’s actions as “egregious conduct” against one of the most vulnerable members of the community.
He added that the fine imposed would have been much higher, but was discounted due to HouseSmile’s financial circumstances. The company placed itself into liquidation just a week before the sentencing.
The Fair Trading Act describes “unconscionable conduct” as business activity that is a substantial departure from the generally accepted or expected standards of business conduct.
If found guilty of unconscionable conduct, businesses can be convicted and fined up to $600,000 and individuals can be liable for fines of up to $200,000.
Earlier this month, the Commerce Commission filed proceedings against The TV Shop over high-pressure sales tactics on customers who were vulnerable, including customers with cognitive impairments.
