A households goods company which sold products through a layby system has been fined for the "unconscionable conduct" of repeated unsolicited sales to an elderly woman suffering from dementia.
Tech Vault Enterprises Ltd – trading as HouseSmile – was fined $60,000 for what the Commerce Commission labelled as "disturbing practices".
It was also ordered to make a payment of $7500 for emotional harm.
The company invited prospective customers to contact it via Facebook advertisements or through its website. Sales agents would then phone customers, and make unsolicited calls to customers on its database.
Commerce Commission deputy chair Anne Callinan said, in this case, the company had been contacted by the daughter of the victim who said her mother was elderly, suffered from dementia and could not operate a computer.
Despite agreeing not to contact the victim again, the company continued to contact the elderly woman for more thanr a year and a half to either make new sales or restart previously cancelled sales for products including tablets, phones, and Bluetooth speakers.
Callinan said the fact the company was aware of the woman’s vulnerabilities and continued to contact her so frequently was “highly aggravating”.
“During these phone calls, HouseSmile's sales agents repeatedly engaged in conduct that was unconscionable by putting unfair pressure on the victim and trying to influence her decisions.”
Callinan said this included telling the victim she was a “really good customer” who had paid the company “really well in the past”.
She added this was not correct, as all previous orders had been cancelled.
“The company also offered inducements such as free gifts or special deals, including as a $200 offer, or free credit.”
Sales agents from HouseSmile would use bait and switch tactics – initially suggesting a product would cost a lower amount to secure a commitment to purchase, then clarifying the price was much higher at the end of a call.
During the calls, the commission said HouseSmile would often fail to disclose key information, such as product details or cancellation rights.
'Clearly wrong on many levels'
“In addition to this, HouseSmile’s sales staff ignored signs the victim was cognitively impaired, such as an inability to recall information like bank details.”
She said the sales agents’ taking advantage of the elderly woman “with a serious cognitive condition” is “disturbing and clearly wrong at many levels”.
“This sort of conduct is completely unacceptable, and businesses that employ such tactics should expect to be on the receiving end of enforcement action.”
Callinan said the sentence sent a strong message that the commission took this sort of conduct extremely seriously.
Judge Marshall described the business' actions as “egregious conduct” against one of the most vulnerable members of the community.
The fine imposed would have been much higher but was discounted in consideration of the company’s financial circumstances – HouseSmile put itself into liquidation just a week before sentencing.
The commission had also recently filed charges against Brand Developers Ltd, trading as The TV Shop, in Auckland District Court.
“Tackling unconscionable conduct is an enforcement priority for the commission, and these cases demonstrate our commitment to delivering on this,” Callinan added.
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