The Federal Court recently confirmed that in certain instances it will not be misleading if retailers do not fully explain to consumers all of their rights under the Australian Consumer Law (ACL). In the decision, the Court considers the absence of express statements by a retailer as to consumers rights under the ACL and does not make any findings that this failure to inform is misleading or deceptive. By extension, it appears retailers do not have a general duty to advise consumers of all of their legal rights, but if they do provide information of that kind then it should be both complete and correct.

Background

In the proceedings, the Director of Consumer Affairs Victoria (CAV) alleged that a number of Good Guys stores breached sections 18 and 29(1)(l) and (m) of the ACL by engaging in misleading and deceptive conduct in connection with the promotion of extended warranties for its goods. The CAV’s case was based on five visits by its inspectors to Good Guys stores in which they posed as customers interested in purchasing a television. Generally, the inspectors spoke with a Good Guys’ staff member about the merits of different television brands and then asked them some questions about warranties.

The CAV alleged that during these approaches the Good Guys’ salespeople made a number of misrepresentations concerning the protections afforded to consumers under the ACL. Most relevantly, they failed to explain to the consumer their rights under the ACL, which was said by the CAV to breach the ACL. In particular, the CAV alleged that the Good Guys sales staff failed to explain that:

  • Good Guys, as the supplier, may, in some circumstances, have a legal obligation to provide a refund or to repair or replace a television
  • if the television fails completely, the customer would have a choice to seek either a refund or a replacement from Good Guys
  • the consumer guarantee and remedies provisions in the ACL may provide a customer with a remedy if their television breaks down either within or after 12 months of the purchase.

In essence, the CAV alleged the salesperson’s failure to mention the above matters constituted misleading or deceptive conduct because, in the context of purporting to inform and explain to potential customers their rights, the failure to refer to these matters was likely to lead potential customers into error.

The Court rejected this argument and held that the conduct of the Good Guy sales staff was not misleading or deceptive as, having regard to the conduct as a whole:

  • The focus of the in-store discussion (both the questions and the answers) was on the practice of warranties and dealing with problems rather than with rights and remedies. This made it difficult for the Court to conclude that the failure of the salesperson or staff member to refer to the consumer guarantees and related remedies in the ACL was misleading or deceptive, as the salesperson was not purporting to inform and explain a customer’s rights in the event of breakdown or defect.
  • Much of the in-store conversation was couched in words which were vague and general, making it difficult to conclude the statements were either an inaccurate description of the customer’s position or that the salesperson was purporting to inform and explain to potential customers their rights.
  • The whole course of conduct included the fact the Good Guys made available in its store an ‘extended warranty’ brochure, which described the consumer guarantee rights and remedies.

What does it mean for retailers?

To avoid breaching the ACL, retailers should ensure that when speaking to consumers their in-store sales staff and customer ‘helpline’ personnel:

  • clearly state to consumers that they are not giving them legal advice about their rights or remedies under the ACL
  • focus any discussion concerning consumer guarantees on what happens ‘in practice’ if a product purchased by a consumer proves to be defective.

This case follows the long-running and successful litigation commenced by the ACCC against a number of Harvey Norman franchisees for similar conduct. While this case shows that the consumer guarantee regime and extended warranties continue to be the focus of consumer protection regulatory authorities, it also confirms that retailers liability under these provisions will be assessed in all of the circumstances.  Although retailers do not have a general duty to advise consumers of all of their legal rights, if they do provide information of that kind then it should be both complete and correct.