Christmas hamper maker Chrisco has been ordered to pay $200,000 for misleading customers about lay-by rules.
The Federal Court found Chrisco Hampers Australia breached the Australian Consumer Law when it told customers they could not cancel a lay-by agreement after making their final payment.
Under the law, consumers have the right to cancel a lay-by agreement at any time prior to the delivery of the goods, including after they have made the final payment.
Chrisco's business is designed so that customers spread the financial burden of Christmas by gradually paying off Christmas food, toys and other gifts throughout the year.
The case, brought by the Australian Competition and Consumer Commission, covers the company's dealings with consumers between January 2011 and December 2013.
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The court also found an unfair contract term in Chrisco's 2014 lay-by agreement, allowing the company to continue taking payments by direct debit after the consumer had fully paid off their order.
It was only through opting out, that consumers could avoid being automatically charged.
ACCC chairman Rod Sims said the penalty imposed against Chrisco should send a strong message to other businesses not to mislead customers about their rights.
