Australian consumers trust in a company’s word when it comes to warranties, and when those promises are not upheld, there are consequences for businesses trying to cut corners.
In a real-world example of what can go wrong when a business is uncompliant, the Federal Court has recently ordered Agrison, a Victoria-based supplier of agricultural equipment, to pay major penalties after the ACCC initiated proceedings for false and misleading representations surrounding warranties and after-sales repair services.
AA Machinery, trading as Agrison supplies mainly Agrison branded tractors and wheel loaders ranging in price from $18,000 to $60,000. Following multiple complaints that warranties and other representations were not being honoured, the ACCC launched an investigation and commenced proceedings against Agrison for alleged breaches of Australian Consumer Law.
agrison misleads consumers with false representation of warranty
During the Federal Court proceedings, Agrison admitted that it had made false or misleading representations that they provided a five-year warranty period for all tractors sold and that, if any tractor was defective within those five years, Agrison would replace all defective parts at no cost to the consumer. Agrison also made false or misleading representations to consumers that it had a national service network that was accessible to all consumers and was capable of providing all spare parts for tractors within a reasonable time period. The reality was that there was no service network and no basis for claims regarding the availability of spare parts. Additionally, the warranty did not cover all parts and did not cover the full cost of repair.
a consumer’s right to transparent information
The ACCC was particularly concerned by the lack of communication made by Agrison to its consumers. Those who approached Agrison with their complaints were unable to make contact and struggled to have access to any of the repair services which were advertised.
The Federal Court ordered Agrison to pay $220,000 in penalties for the false or misleading representations. Agrison was also ordered to pay damages to four individual consumers, which amounted to approximately $64,000.
In addition, Agrison was subject to non-monetary orders, including orders to publish a corrective notice on its website which outlined the ACCC’s action and the court proceedings, to conduct Australian Consumer Law training for all staff, to set up an electronic complaints system and to inform the ACCC of all complaints and the actions taken to remedy them.
Consequences for agrison director
Lastly, Agrison’s sole Director was required to provide an undertaking to the court that prevents him from being involved in any other businesses that involve selling tractors for the next five years, without the consent of the ACCC.
This action comes as a timely reminder to ensure that the warranties and guarantees that are made to consumers are accurate to the abilities of your business. Warranty statements provided to consumers must also contain mandated content.