News

Australians have been told for decades that “cooling off” periods will protect them from predatory salespeople, but new research shows dodgy salespeople still have the upper hand.

Dr Paul Harrison, co-Director of Deakin University’s Centre for Consumer and Employee Wellbeing, and professor of Marketing at Deakin Business School, was commissioned to undertake the research by Consumer Action.

Under the Australian Consumer Law, Australians have a 10 day cooling off period on any sale that was “unsolicited” – usually through door knocking or telemarketing.

Dr Harrison tested consumer responses when presented with cooling off and opt-in alternatives. The research found that when people were offered a “cooling off” period, they did not change their minds.

“These findings are explained by the behavioural concept of consumer “inertia”” says Dr Harrison. “This means that those who make an initial decision are very unlikely to use their cooling off rights to change their mind. “

In October, reviewers of the Australian Consumer Law (ACL) flagged the possibility of replacing the current “cooling off” model for unsolicited consumer agreements with an “opt-in” model. “Opt-in” would empower Australians to make purchases free of predatory sales tactics—the contract is only final when you re-contact the trader after 2 days.

“The best recent example of this is Australia’s vocational education scandals” says Gerard Brody, Consumer Action CEO.

“An opt-in requirement would have stopped the high pressure sales that rorted the Government and taxpayers for billions of dollars. This research shows that opt-in could have helped stop the exploitation of thousands of Australian students.”

Consumer Action understands that the heads of Australia’s consumer protection agencies are currently in discussion, with the final report for the ACL review due to be delivered in March.

A copy of the headline results can be found here and a policy briefing can be found here. Dr Harrison’s full report is due to be delivered later this month.

Quotes attributable to Gerard Brody, CEO Consumer Action Law Centre:

“We are not surprised by these results—it confirms what we regularly see through our legal casework. Cooling off rights simply do not work. In fact, in many cases the cooling off option is actually used by unsolicited sales staff to pressure people into making unnecessary purchases. Cooling off can act as false reassurance that the agreement will not be binding—when sales staff know full well that very, very few people will act within the 10 day period to cancel the purchase.”

“Consumer Action believes that Australians are sick and tired of being sold to in their own homes by unsolicited sales staff—either by phone, or through door knocking. We believe that the requirement to opt-in is the very least protection that the ACL should provide.”

Quotes attributable to Dr Paul Harrison, professor of marketing at Deakin’s Centre for Employee and Consumer Wellbeing

“An opt-in option, after the completion of the sales process, presents the most appropriate means for providing an even playing field for consumers, particularly for products and services that could cause harm such as short-term loans, or low value financial products like timeshare or add-on insurance.”

“Cooling-off looks like it should be effective, but our research has found that inertia (sticking with what you have) overpowers consumers’ desire to change.”