The Court ordered Chrisco to pay a $200,000 penalty for contravening the Australian Consumer Law (ACL) by making a false or misleading representation to consumers between January 2011 and December 2013 that consumers could not cancel their lay-by agreement after making their final payment.

The ACL provides that consumers have a right to cancel a lay-by agreement at any time prior to delivery of the goods, including after paying their final lay-by instalment.

The Court has also found that Chrisco’s 2014 lay-by agreement contained an unfair contract term.  The term related to Chrisco’s “HeadStart Plan”, and allowed Chrisco to continue to take payments by direct debit after the consumer had fully paid for their lay-by order. Consumers were required to ‘opt out’ in order to avoid having further payments automatically deducted by Chrisco after their lay-by had been fully paid.

In concluding that this was an unfair contract term, Justice Edelman considered the agreement as a whole, the transparency of the term, and whether the term caused a significant imbalance in the rights and obligations between Chrisco and its customers arising from the agreement.

“We understand that making purchases by lay-by agreement is a convenient way for many Australians to shop, particularly for products such as Christmas hampers and presents” ACCC Chairman Rod Sims said.

“The Australian Consumer Law provides that lay-by agreements must be in writing and transparent.  Consumers have termination rights at any time before the delivery of the goods, subject to a reasonable termination charge in some circumstances,” Mr Sims said.

“The importance of the penalty imposed by the Court against Chrisco is that it sends a strong message to businesses using lay-by as a method of sale that they must meet all of their ACL obligations, and do not mislead consumers about their rights” Mr Sims said.

Chrisco supplies goods to consumers in most areas of Australia, including regional areas and remote Indigenous communities. The ACCC became aware of concerns regarding Chrisco’s lay-by agreements during a meeting with the Indigenous Consumer Assistance Network (ICAN) on North Queensland’s Palm Island, as part of the ACCC’s Indigenous consumer protection and outreach work.

Further information on lay-by agreements is available for consumers and business on the ACCC’s website.