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ACCC slams Visy Recycling over unfair customer contracts

Corporate regulator the ACCC has forced Visy Recycling, part of cardboard packaging giant Visy Industries, and two other major recycling businesses to change what it calls unfair waste management contracts that allowed for price increases and penalties.

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“Visy Paper (trading as Visy Recycling), Cleanaway and Suez Recycling & Recovery have reviewed and amended potentially unfair contract terms in their standard form contracts following an ACCC investigation into the use of unfair contract terms in the waste management industry,” the ACCC said in a statement on Monday.

“All three companies have agreed to make changes to their price variation and liquidated damages clauses that previously allowed them to unilaterally increase their prices in specified circumstances and impose penalties on customers who wanted to exit their contracts before the end of the contract term.”

D16 133918 Mick Keogh Corporate Photo 2 September 2016
       'Likely to be unfair':
       Mick Keogh, ACCC

“Our view was these price variation and liquidated damages clauses in Visy Recycling’s, Cleanaway’s and Suez’s previous contract terms were likely to be unfair within the meaning of the Australian Consumer Law,” ACCC Deputy Chair Mick Keogh said.

“For example, Visy Recycling customers did not have a right to terminate their contracts if they were dissatisfied with price increases, and yet the contract required customers wanting to exit their contract early to pay the average monthly fees for the previous 12 months multiplied by the remaining number of months on the contract.”

“Both Cleanaway’s and Suez’s liquidated damages clause required small business customers to pay 30 percent of the payments remaining over the life of their contract, if they ended their contract early. In our view, customers had no of way assessing the justification for price increases which were unilaterally determined by Cleanaway and Suez."

The ACCC has called for a change in existing laws to allow courts to impose penalties on businesses that “take advantage” of customers.

“As we continue to investigate potentially unfair contract terms being used by large businesses, the ACCC is calling for legislative change to enable the Court to impose penalties and order compensation for customers where large businesses take advantage of unfair terms in dealings with small business and consumers.”

The corporate watchdog says it continues to investigate potentially unfair contract terms used and included in standard form small business contracts across the waste management industry.

“The ACCC urges all businesses to review their standard form contracts to ensure they do not include unfair contract terms,” Keogh said.