Beware of the Scare Tactics!

It is no surprise that during and post the COVID pandemic some business-aid organisations have intensified their use of numerous questionable tactics when trying to engage new customers. This may include instilling fear in small business owners, who may not be across all the legalities surrounding their employees, to relentlessly pursuing prospects for a sale.

We have recently received several enquiries about organisations doing exactly this, unsure if what they have been told is accurate and feeling lost as to what to do. Below we cover off some of the tactics these organisations are using and provide guidance on how to best address such approaches.

If you have received any such calls from business aid organisations and want to discuss your options, or even get a ‘Health Check’ please contact us on 1300 972 092 or via email at admin@constructivelegalsolutions.com.au

1. Scare Tactics

With COVID and the recent election, several changes have been made, and will be made, to Awards, entitlements, and employer obligations etc. These amendments are often used to scare business owners to sign up to new services, as they are told they do not meet the requirements and as such are risking financial penalties. In most circumstances, you may only need to make small adjustments instead of larger significant changes which these organisations will convince you otherwise.

Tip: It is always important to address changes for your business and stay up to date with recent legislative changes.  Getting advice from your trusted advisors, including Constructive Legal Solutions, should always be your first port of call.

2. Engagement Contracts

The issue with the majority of these business-aid organisations, is their contract structure. Clients have reached out stating they have been encouraged to sign up to a 3, 4 and even 5-year contract. This not only means you are locked in for a significant time – and potentially not using the service for most of that time – but you will be outlaying significant costs, that could heavily impact your cash flow in the short term.

Many of these contracts often include terms that cause a significant imbalance in the party’s rights and obligations and often cause financial and commercial detriment to clients. This is something the Australian Competition & Consumer Commission (ACCC) have been particularly weary of late and have previously published guidance for businesses in relation to unfair terms in contracts.[1]

More recently, one company was scrutinised for its termination clause, which had clients paying 100% of their remaining contract value if they wanted to terminate the contract at any given time. The company did pursue legal action against the client; however, the Court[2] found that it was a “penalty” clause and unenforceable.

Tip: Give Constructive Legal Solutions a call on 1300 972 092 and let us review your contracts before signing, you can have peace of mind that what you are entering into is for your benefit!

3. Misleading and False Representations

It is important to remember that if these business aid organisations are successful in gaining your business, that whatever they have promised is provided in writing. It is common practice for them to engage in unconscionable conduct or making a false representation (often conduct associated with the inclusion of the unfair contract term) on how they provide their service. These empty promises, unfortunately, are not isolated incidents, based on the feedback we have received from clients.

The ACCC takes such conduct seriously and has recently won in the Federal Court against an organisation for breaching the Australian Consumer Law by making false or misleading representations[3], after receiving over 100 complaints from consumers that had believed at the time that they were dealing with a government agency.

Tip: Always confirm who you are talking and engaging with, and any promises made verbally should always be followed up in writing.

4. Additional Extras

Often accompanying these contracts are “additional extras” they like to upsell to clients, for example insurance policies etc. However, what is not advertised is the likelihood of such matters that are covered under the policy becoming a contested legal matter, is quite low. Moreover, you may already have a policy that covers you; thus, an expense you could potentially avoid!

It is also important to remember that despite what extras are offered, if you are a business that follows certain protocols in order to maintain accreditation and/or you tender to a government agency, you need to consider whether the third-party organisations you use and the services they provide need to be accredited as well.

Tip: Don’t agree to anything without reviewing your current policies and financial position, and when in doubt speak to your trusted advisors at Constructive Legal Solutions.

For legal advice regarding this topic or any other, you can contact us on 1300 972 092 or via email at admin@constructivelegalsolutions.com.au

[1] “Unfair terms in small business contracts: A review of selected industries November 2016” at page 9.

[2] http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/nsw/NSWSC/2018/924.html

[3] https://www.accc.gov.au/media-release/employsure-to-pay-a-penalty-of-1-million-for-misleading-google-ads