Management - Part One Martha Assessment Answer

Part One

Martha is a single mother in her early 40s who has been out of the workforce for a long time. Now that her kids are all at school, she has decided that she would like to start earning some money, but she needs her work to be sufficiently flexible to fit around school hours.

While at the supermarket one morning, Martha runs into a parent of a child in her daughter’s class. The school parent, Helena, mentions that she has recently started selling products Veganics Skin Care and they are looking for more people to go into business with. Helena invites Martha to come with her to an information session the following day.

The information session is held downtown in a fancy hotel conference room. Up the front of the room, a Veganics Skin Care executive gives a presentation about how Veganics Sales Representatives can earn up to $5000 a week, working flexibly from their own homes. He talks at length about the power of positive thinking and how it enables Veganics Sales Representatives to expand their sales and influence. Finally, there is a brief presentation on the Veganics line of skin care products.

At the end of the presentations, Helena asks Martha if she is interested. Martha tries to say that she’d like to give it some more thought, but Helena drags her over to a sign-up table before she can articulate herself clearly. At the sign-up table, Anna, a Senior Sales Representative greets Helena before rapidly running Martha through the terms and conditions of becoming a Veganics Sales Representative.

Anna tells Martha that she must purchase a starter kit of Veganics Skin Care products for $700 and attend a two-day training seminar on ‘Selling the Veganics Ways’. She then asks Martha to sign the final page of a lengthy contract, which she explains, ‘Just sets out the terms of our agreement, such as the price of products and all the opportunities available to you to make extra money as a Veganics Sales Representative. Martha is feeling uncomfortable, but it is almost time to collect the kids from school, so she quickly signs the agreement in order to leave quickly without making a fuss.

Two months later, Martha has been struggling to sell many Veganics Skin Care products. There are eight other Veganics Sales Representatives amongst the parents at her kids’ school and everyone she approaches has either already bought some products or is sick of being asked to. She has also received a bill from Veganics of $700 for the starter kit and $2000 for the two day training. She had not been aware that the training was going to cost her anything. Worried about money and how to pay her invoice, Martha approaches Helena to see what she is doing wrong.

Helena tells Martha that she needs to focus more of her time on recruiting new Sales Representatives, because then she will receive commission from the starter kits and training in addition to 10% of the new Sales Representatives’ product sales. She confides in her that she’s never going to make money by selling the products because they are too expensive and the market is already completely saturated.

The following day Martha’s neighbour, Christina, knocks on her door. Martha sold Christina the Veganics cream face wash and moisturiser a few weeks ago. Christina has an angry red rash on her face and is clearly very upset. She tells Martha that the products have given her a terrible rash and she has been fired from her job at a local modelling agency.

Christina tells Martha that after she lost her job, she googled Veganics and discovered that many people have come out in terrible rashes after using their products. Several people also allege that Veganics products have never been properly tested. Christina asks Martha for a refund and for Veganics’ details, so that she can sue them for damages. When Martha looks at her paperwork, she discovers that the Veganics Skin Care products are manufactured in the Philippines and Veganics is the sole Australian distributor.

In your first letter of advice:

(a) Advise Martha and Christina as to their legal options for pursuing any remedies against Veganics under the Australian Consumer Law.

Please refer to any relevant cases and potential remedies in your answer.

Part Two

The ACCC have been looking into the activities of Veganics and have decided that it needs to further investigate what is going on with both its sales practices and the safety of its products. In your second letter of advice, advice the ACCC as to:

(b) What powers are available to the ACCC under the Australian Consumer Law to gather evidence against Veganics? (under ACL only no general comments in this)

(c) What kind of enforcement actions might the ACCC pursue against Veganics separately to Martha and Christina?