Audio company introduces fairer contract terms for small-business customers

contract, ATO protecting honest businesses, unfair contract terms

UK based audio branding company Please Hold (UK) Limited (PHMG) has committed to amend its contract terms after the ACCC expressed concerns of alleged unfair terms in its standard form contract which it says potentially limited consumers’ guarantee rights.

In particular, the ACCC was concerned that PHMG’s contracts, which usually had 24 to 36-month terms, rolled over for another full contract term if the customer did not provide written cancellation at least 42 days before the end of the initial contract. Customers who did not cancel in time had their contracts extended without further notice and faced early termination charges equivalent to the payments for the full contract term, less three per cent.

“The ACCC considered these contract terms were unfair, as the combination of PHMG’s termination clause and the automatic roll-over of the contract had the potential to cause significant financial detriment by requiring customers to, in effect, pay for a service they may no longer have needed, under a contract they thought had expired or had tried to cancel,” ACCC Deputy Chair Mick Keogh said.

PHMG, a provider of audio branding services including on-hold music and on-hold marketing services to small-business customers, contended that their contracts were not unfair under the Australian Consumer Law (ACL). The company, however, co-operated with the ACCC’s investigation and agreed to amend its contract terms to address the ACCC’s concerns.

“We welcome PHMG’s decision to amend its contracts to address the ACCC’s concerns, including the introduction of a rolling month-by-month contract term after the end of the initial contract period, allowing cancellation at any time with 30 days notice,” Keogh said.

“Businesses, including overseas entities conducting business in Australia, are reminded of the importance of carefully reviewing their standard form contracts with consumers and small businesses, to ensure they do not contain unfair contract terms,” Keogh added.

PHMG will notify Australian customers whose contracts include one or more of the clauses of concern of the amendments.