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The Federal Court has ordered hair loss treatment business Ashley & Martin to give refunds to customers affected by unfair contract terms in its 'Personal RealGROWTH' program.
The Australian Competition and Consumer Commission (ACCC) estimates more than 25,000 customers were affected by the unfair terms across three standard contracts signed between June 2014 and at least July 2017.
However, Ashley & Martin CEO Richard Bond clarifies "the courts have in fact ruled that the majority of patients have not been affected" with the outcome only impacting 1 per cent of contracts from that period.
Under these historical contracts customers were typically signed up to a 12-month 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.
While it is 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.
Even though penalties can't be imposed, the ACCC has been able to seek an order for consumer redress and costs.
Meanwhile, the watchdog has advocated for a change in consumer law to make these kinds of practices illegal, and has welcomed the Government's commitment in March this year to consult on options to strengthen consumer protections.
"Under these unfair contract terms, Ashley & Martin customers were required to pay for treatment before they had a chance to consider doctor's advice," ACCC Commissioner Sarah Court said.
"Consumers faced losing hundreds or thousands of dollars if they cancelled the contract, after considering medical advice or even if they developed side effects to the prescribed medication."
The Court has ordered Ashley & Martin to refund consumers who had entered the program between June 2014 and June 2017 before receiving medical advice, who had, as a result, asked to terminate their contract or who had asked to terminate their contract because of the medical advice received.
Ashley & Martin was also ordered to refund consumers who had experienced side-effects from the medical treatment which meant they could no longer continue with the program.
"We welcome the Court's decision to ensure affected consumers get a refund," Commissioner Court said.
The ACCC is continuing to take action against businesses that include and use unfair contract terms in their standard form contract with consumers and small business."
In a release, Ashley & Martin says it is pleased with today's Federal Court outcome, highlighting it has corresponded extensively with the ACCC since June 2016 to address its concerns.
In 2017 the company updated all its patient contract terms, including the addition of transparent termination fees and a seven-day cooling off period after seeing the medical doctor in the clinic.
Furthermore, as guided by the ACCC, Ashley and Martin provided a redress in July 2017 for those patients wishing to cancel their Personal RealGROWTH Program against the terms of the new contract.
"During the last redress in 2017 against our new contracts, 100 patients were identified and contacted twice. Of those, there were 52 responses with 44 patients refunded," Bond said.
"These patients will be redressed again for shampoos, conditions and the like, following the court orders from Thursday.
"The courts have allowed us to conduct a full search of all records for the relevant contract period, over the next 90 days to identify initial patients for redress, who experienced a side effect and after subsequent dealings to amend the program with the medical doctor, wanted to terminate the contract. We estimate to find between 50 to 150 more cases."
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Business News Australia
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