On 5 July 2013 the Federal Court handed down a decision which resulted in Hewlett-Packard Australia Pty Limited (HPA) being fined $3 million for misleading consumers and retailers about their rights under the Australian Consumer Law (ACL) in relation to HPA computer products. 

The decision is particularly relevant to suppliers of consumer products who provide an express warranty in relation to their products. 

The Federal Court found that HPA had represented that:

  • consumers' remedies for HPA computer products were limited to those available from HPA at its discretion;
  • consumers must have HPA computer products repaired multiple times before they would be entitled to a replacement product;
  • the warranty period for HPA computer products was limited to a specified express warranty period;
  • after the expiry of the express warranty period, consumers could only have HPA computer products repaired if they paid for the repairs; and
  • retailers of HPA computer products were not entitled to be indemnified by HPA if they provided consumers with a refund or replacement without HPA's prior authorisation. 

These representations were made by staff at HPA's help desk (or call centre), who were following internal policies, guidelines and scripts prepared by HPA.  The representations were inconsistent with consumers' rights under the consumer guarantee provisions of the ACL.  They therefore contravened:

  • the prohibition against misleading or deceptive conduct in section 18 of the ACL; and
  • the prohibition against misleading representations concerning rights and remedies in relation to goods in section 29(1)(m) of the ACL.

In addition to being fined $3 million, the Court ordered injunctions, disclosure of the Court order to HPA retailers, disclosure of consumers rights via HPA's website, disclosure of the Court order and consumer rights via various Australian newspapers, the development and maintenance of a compliance program, and costs. 

Attached are links to the Federal Court Judgement:http://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2013/2013fca0653

and the ACCC's media release in relation to the case:http://www.accc.gov.au/media-release/hp-to-pay-3-million-for-misleading-consumers-and-retailers

Significance of this case

The case highlights the importance of:

  • adequate training and support of all employees involved in communicating with customers concerning product defects and warranty issues; and
  • careful delineation of customers' rights under express warranties and statutory consumer guarantees by relevant employees when communicating with customers.

 Action

In the light of this case, companies may wish to review the adequacy of training and support provided to relevant employees and, in particular, the adequacy of any guidance material provided to support them.