The Commission is taking its first High Court proceedings seeking declarations that contracts contained unfair terms.
The two actions are against Switzerland-based ticket resale website Viagogo and Auckland mobile trader Home Direct.
In March 2015 it became unlawful under the Fair Trading Act 1986 to include, apply or rely on terms that have been declared by a court to be unfair. The law applies to standard form consumer contracts, which are ‘take it or leave it’ contracts where the consumer is not given a meaningful opportunity to negotiate the terms.
Only the Commission can ask a court to make a declaration on whether a term is unfair. If a court decides a term is unfair a business cannot enforce it and may be prosecuted if it continues to use the term.
Viagogo’s contract includes a term stating that all disputes brought by a consumer must be heard in Swiss courts under Swiss law, but Viagogo can choose to take court action against consumers in the consumer's own country. The Commission alleges that term to be unfair.
Viagogo has become the Commission’s most complained about trader, with more than 400 complaints since the start of 2017. The Commission also alleges various false or misleading representations, such as claims it was an “official” ticket seller, and that consumers were “guaranteed” to receive valid event tickets.
Home Direct sells household goods via mobile shops, online and via telephone. Its customers were invited to opt-in to a “voucher entitlement scheme” when they signed up to purchase goods. Under the voucher scheme, direct debit payments did not stop after the goods were paid off. Instead they were converted every week into “voucher entitlements” which could be used towards purchasing more goods from Home Direct.
The Commission alleges that terms of the scheme are unfair, because “vouchers” could not be refunded or exchanged for cash, and expired after 12 or 24 months (depending on when the customer joined the scheme), with the proceeds forfeited to Home Direct.