The Australian Competition and Consumer Commission is demonstrating its commitment to the area of consumer guarantees. In the last five months the ACCC has commenced separate proceedings against Hewlett-Packard Australia Pty Ltd and eleven Harvey Norman franchisees. Both of these cases relate to representations made to consumers regarding consumer guarantees.
Harvey Norman franchisees
The ACCC commenced proceedings in the Federal Court in Sydney against a select group of Harvey Norman franchisees. They are:
- Avitalb Pty Limited (Albany, WA)
- Bunavit Pty Limited (Bundall, Qld)
- Camavit Pty Limited (Campbelltown, NSW)
- Gordon Superstore Pty Limited (Gordon, NSW)
- HP Superstore Pty Limited (Hoppers Crossing, Vic)
- Ipavit Pty Limited (Ipswich, Qld)
- Launceston Superstore Pty Limited (Launceston, Tas)
- Mandurvit Pty Limited (Mandurah, WA)
- Moonah Superstore Pty Limited (Moonah, Tas)
- Oxteha Pty Limited (Oxley, Qld)
- Salecomp Pty Limited (Sale, Vic)
It has been alleged that these companies engaged in misleading or deceptive conduct by making false or misleading representations to consumers in relation to their consumer guarantee rights under the Australian Consumer Law (ACL).
In these proceedings it has been alleged by the ACCC that the franchisees misled consumers about their rights by representing that the franchisee had no obligation to provide:
- remedies if they had not been notified about damaged goods within a specific period of time
- remedies for goods covered by a manufacturer’s warranty
- refunds or replacements for particular items or items priced below a specific amount.
Further, the ACCC alleges that a representation was made that consumers must pay a fee for the repair and return of faulty products.
Hewlett-Packard Australia Pty Ltd
The ACCC commenced proceedings in the Federal Court in Sydney alleging that HP engaged in misleading or deceptive conduct by:
- Making false or misleading representations to consumers in relation to consumers’ statutory warranty and consumer guarantee rights.
- Making false or misleading representations to retailers that HP was not liable to indemnify them if they provided consumers with a refund or replacement without HP’s prior authorisation.
In the instance of the HP case, it is important to note the allegations also relate to representations made in the course of business by HP to retailers. Often the relationships as between a manufacturer and retailer are governed by private distribution agreements.
The ACCC alleges that HP represented:
- remedies available for faulty HP goods were limited to HP’s sole discretion
- that consumers could only receive a replacement if there had been a previous attempt to repair the goods
- that warranties were limited to a specified express warranty period and following the expiration of that period consumers would have to pay HP for such repairs
- that consumers could not return or exchange HP goods purchased from the HP Online Store unless otherwise agreed by HP at its sole discretion.
In early 2012, the ACCC identified the area of consumer guarantees as a national policy priority and a matter of particular concern.
The ACL contains various provisions in relation to consumer guarantees. Many of these consumer guarantee rights cannot be excluded or limited. We have previously prepared information on consumer guarantees which can be accessed here.
Additional warranties can be offered by businesses with respect to goods and services. Such warranties must be additional to those guarantees provided under the ACL and must not limit those guarantees under the ACL.
The ACL also regulates the manner which warranties against defects are communicated to consumers. That is, in the instance where a representation is made to a consumer regarding remedies available to a consumer in the event goods or services are defective, the ACL specifies that particular information is to be provided to consumers. Often such information is included on goods packaging and warranty cards supplied with goods.
The Federal Court has considered breaches of relevant provisions to be serious. In 2011 the Federal Court imposed penalties totalling $203,500 against MSY Technology Pty Ltd and four related companies for making false or misleading representations regarding consumer warranties.
- Every year the ACCC receives a considerable number of complaints and inquiries regarding guarantees and warranties, recently estimated at 16,000 per year by the ACCC’s Infocentre. It is important that businesses supplying goods and services make appropriate and accurate representations relating to consumer guarantees. To this end businesses should:
- check, and obtain advice regarding, terms and conditions of contracts with consumers (this includes websites and in-store signage)
- check, and obtain advice regarding, terms and conditions of contracts with manufacturers and retailers (this includes distribution agreements)
- check, and obtain advice regarding, warranties against defects
- train staff appropriately in relation to consumer rights (this includes having staff manuals and a compliance programme in place)
- ensure that any advertising material is clear and complies with the ACL.