The Federal Court has recently made serious findings of unlawful conduct against two different businesses (one involving the sale of complex financial products to retail customers, and the other selling cleaning products and printer cartridges to business customers) for unconscionable business design. The common message for business is that policies, procedures and systems can be unconscionable when poorly designed. If they mislead, pressure or exploit customers, including through conflicting employee incentives, inadequate employee training, poor customer onboarding, unfair complaint handling, or by creating barriers to withdrawals, returns and refunds, then they may well be unlawful.

Union Standard: complex products, conflicting incentives and reliance on account managers

Background

Between 2017 and 2020, Union Standard operated an online trading platform that allowed customers, with little or no investment or securities trading experience, to trade high-risk leveraged derivatives, including contracts for difference (CFDs) and margin foreign exchange contracts (Margin FX Contracts). In short, these products were high risk and unsuitable for unsophisticated investors. Customers could make large gains from small trades, but could just as easily suffer large losses. Customer acquisition relied heavily on online marketing and promotions. Many customers first engaged with pop-up or social media advertising referring to automated Bitcoin or cryptocurrency trading platforms associated with celebrity or businessperson endorsements. 

ASIC’s concerns

ASIC alleged that the defendants’ Union Standard’s business model (and those of it associates, EuropeFX and TradeFred) was designed to profit from customers’ losses while using aggressive, misleading and advice-driven account management to induce inexperienced customers to trade and deposit more funds. 

ASIC argued that EuropeFX and TradeFred effectively made money when customers lost, while account managers were rewarded for securing more deposits. That structure created a clear conflict: staff were incentivised to encourage customers to keep depositing and trading, even where customers did not understand the products or risks. This revenue model was combined with:

• The vulnerable nature of many of the customers who had little or no investment experience and relied heavily on account managers to explain what they were doing.
   
• The sales system involved misleading advertising and promotions, inadequate onboarding relative to the product risk, inadequate training and monitoring of account managers, and a one-sided complaints process. 

Together, those practices placed inexperienced customers at a serious disadvantage and encouraged unjustified reliance on account managers. They also breached EuropeFX and TradeFred’s financial service licences as they had provided personal financial product advice. Consequently, the Court found that all three companies had engaged in systemic unconscionable conduct. 

Beacon Products: unordered goods, pressure to pay and a dishonest sales system

Background

From 2016 and 2020 (respectively), Beacon Products operated two specific sales systems:

• Under the first system (from 2016), representatives contacted customers under the pretence of marketing or gathering information, then later confirmed delivery details for goods that the customer had not ordered. As part of this process, Beacon recorded only the part of the call confirming delivery details and used that partial recording as supposed proof of the customer’s order. 
   
• Under the second system (from 2020), customers made an initial purchase and then received further unsolicited deliveries, often in larger quantities and at higher prices. If customers challenged the invoices, representatives told them the earlier order involved multiple deliveries, that they needed to place a final order to close the account, or that company records proved an ongoing arrangement.

ACCC's concerns

The ACCC argued that the systems were more than aggressive sales tactics, and were designed to deceive customers into believing they had ordered goods and had no option but to pay. The Court found that the companies had pressured customers to pay invoices for unordered goods and obscured their rights to refuse to pay for or accept orders they did not make, or to seek refunds. His Honour characterised the conduct as fundamentally dishonest and unconscionable despite the affected customers not having a pre-existing, or contextual, vulnerability vis-à-vis their dealings with Beacon Products. 

Key considerations to prevent systemic unconscionability 

Both of the above cases demonstrate how courts and regulators may assess systemic unconscionability by considering a business’ sales model and operations as a whole. This can include revenue models, sales tactics, employee risk and compliance training, employee incentives, customer risk and product education, customer onboarding, customer complaint handling, sales scripts, employee supervision, and withdrawal, return or refund processes.

Both cases also show that consumer vulnerability (an important factor in many cases involving findings of unconscionability) need not be fixed or pre-existing. It may arise from the sales conduct and context itself - for instance, customers’ inexperience with complex financial products in Union Standard, or the business’ practices adopted and with sophisticated non-consumer customers in Beacon Products.

For businesses, particularly those employing ‘aggressive’ sales tactics or selling consumer products, a key consideration to minimising regulatory risk is the design of the operating model. Incentives, targets and revenue structures can encourage staff to prioritise sales over customer understanding and agreement. Onboarding, complaints and refund processes can also increase risk if they make it harder for customers to understand their position or exercise their rights. Such practices might also fall foul of other consumer protections under the Australian Consumer Law (ACL) and the ASIC Act, including the prohibitions on unfair terms and the ACL’s new unfair trading practices (which will start in 2027). 

We recommend that businesses should:

• Review sales systems as a whole. Look beyond individual scripts or customer interactions. Assess whether the combined effect of marketing, onboarding, sales calls, invoicing, complaint handling and refund or cancellation processes creates pressure, confusion or unfairness.
   
• Test whether customers understand what they are buying. Formal acknowledgements of specific contractual terms may not be enough if customers are rushed, discouraged from reading key documents or led to rely on staff to explain risks later.
   
• Identify conflicts in revenue and incentive structures. Review whether commissions, deposit-based incentives, sales targets or revenue models reward conduct that may place staff interests ahead of customer understanding or choice.
   
• Make customer rights clear. Ensure customers can readily understand their rights to cancel, withdraw, refuse payment, return goods, seek refunds and complain. Avoid scripts or processes that obscure those rights.
   
• Train staff on the limits of what they can say. Customer-facing staff should understand the difference between general information and personal advice, the need to avoid misleading statements, and the risks of pressure tactics or unjustified reliance.
   
• Monitor for circumstantial vulnerability. Customers may be vulnerable due to the product, the sales context, a lack of experience, reliance on staff, information asymmetry, or pressure created by the business’s own processes.
   
• Audit complaints, refunds and withdrawal data. Patterns in complaints, refund refusals, cancelled withdrawals, repeat invoices or disputed sales may reveal systemic issues before they become enforcement problems.
   
• Escalate known risks and intervene early. Where management knows, or should know, that a sales practice is misleading, unfair or causing customer harm, the business should stop the practice, remediate affected customers and strengthen supervision.