Door to door and in-home sales techniques exposed

We like to think of ourselves as rational decision-makers, but the power of psychological selling techniques can have a serious financial impact for many.  Community legal centres that specialise in consumer and debt issues regularly help people who have felt pressured into expensive contractual obligations they can no longer meet – often when they had little understanding of the product.

With 30 years involvement in community legal services specialising in this area, I have seen many people who signed up to contracts that turned out badly for them.   To my surprise, people often signed expensive contracts in their home, immediately following a sales presentation. How could so many people make big purchase decisions, which in hindsight don’t make sense?

While high-pressure selling of things such as encyclopaedias and cladding is legendary, it is surprising that these techniques continue to be effective.  One of the problems is that while people tend to be wary of high-pressure selling, when faced with these often subtle techniques, they can feel ‘pushed into a corner’ before they know it.

Consumer Action Law Centre helped many people who had paid thousands for ‘mortgage reduction’ schemes sold in this way (the regulator subsequently warned these are basically worthless) and many more who had bought mathematics educational software for their children (often priced at $10,000 with 23% interest) following an in-home demonstration.

Our clients’ related that children either didn’t use the software at all, or stopped using it after a short time.  Many people were therefore out of pocket, or in debt, for something which was not even used.  It just didn’t make sense that so many people would just make bad decisions, and we felt it may help to better understand the selling techniques in order to help prevent these problems in future.

In 2010 Consumer Action Law Centre undertook joint research with Deakin University. At that time 5% of adult Australians had been approached by sellers of educational software in the previous 3 months, and thousands of people had purchased the software.

The research found that the activation of anxiety was one of the key factors influencing consumers during the sales process, and that salespeople attempted to manipulate parents’ emotions by stimulating their concern and anxiety regarding their children’s education, and future employment prospects.

The research also showed that while the visits were not usually ‘out of the blue’, the fact that the consumers may have agreed to a sales presentation over the phone or at a shopping centre a few days before only added to the impact of the psychological pressure.

One key problem was that legal ‘cooling off periods’, and some other additional protections, generally only apply to unsolicited (door-to-door) sales, and not to cases where consumers have agreed to a visit following prior contact by phone or at a shopping centre.  People who agreed to the salesperson’s visit might not get these protections.

Consumer Action has proposed that for in-home sales, a requirement for a consumer to confirm the agreement a day or so later could address some of the problems caused by high-pressure selling.  To date, this proposal hasn’t been accepted by government.

Based on the research, Consumer Action made a submission to the federal government, explaining the need to protect consumers, allowing them to keep their ‘cooling off’ rights unless the invitation was for the main purpose of negotiating a contract (not a competition or a demonstration or a quote).  This proposal was accepted, and is now reflected in the Australian Consumer Law.

While clients continue to seek help to challenge these contracts especially those signed under pressure or psychological duress, the research continues to inform the public and policy makers about the impact of psychological selling techniques which disadvantage consumers.

This is just one example of the way community community legal centres use  individual cases to unearth a bigger picture.  They can help to advocate for changes in industry practices or more appropriate legal protections, and assist governments to make reforms that can prevent certain problems arising in the first place.

By Carolyn Bond

Consumer Action Law Centre worked with Deakin University in 2010 to expose the tricks behind high pressure selling techniques.  A short film was based on the research, which was a finalist in the 2010 St Kilda Film Festival. 

Watch the video:

Read the report:

(See page 138 for an actual sales script)