The ACCC has instituted proceedings in the Federal Court in Sydney against 11 Harvey Norman franchisees for allegedly misrepresenting consumer rights. The ACCC alleges the franchisees made "false or misleading representations to consumers about their rights under the consumer guarantee provisions of the Australian Consumer Law (ACL)".
The ACCC alleges that each franchisee misled consumers by representing that the franchisee had no obligation to provide remedies:
- for damaged goods unless notified within a specific time period such as 24 hours or 14 days
- for goods still covered by the manufacturer's warranty (because the consumer must return the goods to the manufacturer)
- for particular items such as large appliances or items priced below a certain amount.
The ACCC also alleges that the franchisees misled consumers by making representations that consumers must pay for the repair and the return of faulty goods.
The ACCC says:
- the misrepresentations occurred during the period from April 2011 to mid 2012
- in all 11 cases, the misrepresentations were made orally by the franchisees' employees to customers
- in one case, a misrepresentation appeared on the receipt provided to the consumer.
The ACCC is seeking penalties, declarations, injunctions and costs, which include pecuniary penalties of up to A$1.1 million, for a corporation or A$220,000 for individuals.
Consumer Guarantees
In 2010 the Competition and Consumer Act 2010 (Cth) replaced the Trade Practices Act 1974 (Cth) and introduced, as part of the ACL, new national consumer guarantee provisions which replaced the previous statutory implied conditions and warranties. The consumer guarantees provide consumers with rights to certain remedies from retailers and manufacturers where goods purchased after 1 January 2011 fail to comply with the consumer guarantee provisions in the ACL. These include guarantees that:
- goods will be of acceptable quality
- goods will be fit for any disclosed purpose
- goods will match any description under which they are sold
- spare parts will be available for a reasonable time
- all express warranties offered with the goods will be honoured.
These rights cannot be excluded, restricted or modified.
While businesses are still able to offer additional warranties with their goods and services (such as manufacturer's warranties or extended warranties), any additional warranty does not override or limit the consumer guarantee provisions. Importantly, consumers must not be misled about their consumer guarantee rights or the protections afforded by any additional warranties.
ACCC Campaign
Earlier this year, the ACCC launched a national consumer guarantee awareness campaign to educate consumers on their rights in relation to faulty goods and to educate retailers and manufacturers about their obligations under the ACL.
The ACCC says consumer guarantees are a national priority for ACL regulators.
The ACCC has also indicated that it is investigating other large manufacturers and retailers for misrepresentations of consumer guarantee rights in breach of the ACL.
Recommendation
The ACCC's recent actions show that the ACCC is actively monitoring and prosecuting manufacturers and retailers who mislead consumers about their rights under the ACL.
Manufacturers and retailers should ensure their documentation (including receipt dockets, warranty documents, refund policy etc), marketing and promotional material and product packaging are fully compliant with the ACL. Importantly, businesses must ensure that their employees undertake adequate ACL training to ensure they understand the laws. This includes both sales staff who deal with consumers, and employees who communicate with retailers and manufacturers in the supply chain.
Middletons regularly advises clients in relation to the ACL and has a number of ACL compliance training programs available to help you and your staff to understand and comply with the ACL. We can provide on-site training, online training, checklists and compliance manuals tailored to suit your business.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
