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The Federal Court has determined three standard contracts from hair loss business Ashley & Martin are void because they are unfair to consumers.
The Australian Competition and Consumer Commission (ACCC) highlights the company signed up more than 25,000 customers to its 'Personal RealGROWTH Program' to contracts on unfair terms from June 2014 until at least July 2017.
Customers were typically signed up to a 12-month Ashley & Martin program by a sales consultant, and the unfair terms required consumers to pay for all of the medical treatment before they received, or could properly consider, medical advice.
The court also found that under one of the terms consumers who wished to terminate the contracts more than two days after they accepted the program and consulted with a doctor were required to pay 100 per cent of the total price payable.
As a result, the unfair terms could have caused consumers to lose hundreds or thousands of dollars if they left the program after considering medical advice or developing side effects to the treatment.
It is, however, not illegal for businesses to include or rely on unfair contract terms against consumers. Courts can declare unfair terms to be void and consequently unenforceable, but they can not impose penalties on companies that use them.
The ACCC will be seeking an order for consumer redress and costs at a later date to be set by the court.
"Ashley & Martin's terms meant consumers were penalised for stopping their hair loss treatment even if they developed an adverse side effect to the medication," says ACCC Commissioner Sarah Court.
"Consumers should be allowed a fair opportunity to fully consider the treatment program and medical advice when they sign up and not be penalised for exiting a treatment plan if necessary.
"The ACCC is committed to taking action against businesses that seek to impose unfair contract terms and we welcome the Government's commitment in March this year to consult on options to strengthen protections for consumers
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