The ACCC has identified consumer guarantees as a matter of particular concern, having received more than 16,000 complaints in the last year.
As a result of the ACCC’s crusade, 11 Harvey Norman franchisees are in the ACCC’s firing line for allegedly misleading consumers by saying they did not have to give a refund or exchange for goods with a major fault. This contravenes Australian Consumer Law.
ACCC Chairman Rod Sims said “The Australian Consumer Law provides consumers with rights to certain remedies from retailers and manufacturers when goods fail to comply with the consumer guarantee provisions, including that goods are of acceptable quality and fit for the purpose for which they were sold”.
The ACCC alleges that the franchisees misled consumers who purchased faulty mobile phones, laptops, refrigerators and espresso machine about these rights by making representations including that:
the franchisee had no obligation to provide remedies for damaged goods unless notified within a specific period of time such as 24 hours or 14 days;
the franchisee had no obligation to provide remedies for goods still covered by the manufacturers warranty;
the franchisee had no obligation to provide refunds or replacements for particular items such as large appliances or items priced below a certain amount; and
consumer must pay a fee for the repair and return of faulty products.
The ACCC says that a consumer’s rights under the Australian Consumer Law “cannot be excluded, restricted or modified” as Australian consumers have the right to ask for repairs, replacement or a refund if goods are faulty, unsafe, look unacceptable or do not do what they are supposed to do.
The alleged actions of the 11 franchisees have caused the ACCC to commence Federal Court proceedings against them.
Each contravention carries a potential infringement notice fine of $6,600 or penalties of up to $1.1 million.
It will be interesting to see the defence the 11 franchisees put on in response to the ACCC’s allegations.
The case against the 11 Harvey Norman franchisees is not the first of its kind, with the ACCC having commenced proceedings in the Federal Court against Hewlett-Packard Australia Pty Ltd (a wholly owned subsidiary of Hewlett-Packard Company) (“HP”) on 16 October 2012 for alleged contraventions of the Australian Consumer Law by making false or misleading representations to:
consumers in relation to consumers’ statutory warranties and consumer guarantee rights; and
retailers that HP was not liable to indemnify them if they provided consumers with a refund or replacement without HP’s prior authorisation.