Since the ACCC identified consumer guarantees as an area of national policy priority in 2012, they have so far commenced enforcement actions against numerous businesses and have issued financial penalties up to a sum of $203,500 for breaches of the consumer guarantees. This is only the start of the ACCC's campaign in this area. Is your business at risk or is your business compliant?

Although the consumer guarantees have been introduced recently, the ACCC is active in its commitment to compliance by continually bringing cases before the Federal Court. As early as 19 April 2011, the Federal Court imposed penalties totaling $203,500 against MSY Technology Pty Ltd and four of its related companies ("MSY Companies") for making false and misleading representations regarding the consumer warranties. In that case, the Court found that the MSY Companies:

  1. did not provide statutory warranties to consumers with their products; and
  2. required consumers to pay a fee to obtain a warranty beyond that provided by the manufacturer.

Recent Action

The ACCC commenced proceedings against Hewlett-Packard Australia Pty Ltd ("HP") on 22 October 2012 for making false and misleading representations to:

  1. consumers in relation to consumers' statutory warranty and consumer guarantee rights;
  2. retailers that HP was not liable to indemnify the retailer if they provided consumers with a refund or replacement without HP's prior authorization; and
  3. retailers that HP has no obligations and rights under the Australia Consumer Law ("ACL") in circumstances where HP products were not of acceptable quality.

Furthermore, ACCC alleges that HP wrongly represented that:

  1. remedies available for faulty HP goods were limited to HP's sole discretion;
  2. consumers could only receive a replacement if there had been a previous attempt to repair the goods by HP;
  3. warranties were limited to the express warranty period and that, following the expiration of that period consumers would have to pay HP for carrying out any required repairs on the HP goods;
  4. consumers could not return or exchange HP goods purchased from the HP online store unless, it was otherwise agreed by HP, and at HP's sole discretion.

The ACCC has also commenced proceedings against 11 Harvey Norman franchisees on 20 November 2012 for misleading and deceptive conduct. The allegations by the ACCC was that the franchisees made false and misleading representations to consumers in relation to their consumer guarantee rights under the ACL. Such representations included that:

  1. the consumers had no remedies if they had not notified the franchisee about damaged products within a specific period of time such as 24 hours or 7 days;
  2. the franchisee had no obligation to the consumer to provide remedies for products still covered by manufacturer's warranty;
  3. the franchisee had no obligations to the consumer to provide refunds or replacement for particular items or items priced below a specific amount; and
  4. that the customers must pay a fee for the repair and return of faulty products.

What should you do?

Businesses need to ensure that they make accurate and correct representations relating to consumer guarantees and express warranties and that they do not mislead by making incorrect misrepresentations to consumers. Further information on consumer guarantees can be found by clicking here and information on warranties against defects can be found by clicking here.

It is not too late to comply. If businesses have not already done so, they should:

  1. determine whether its activities fall within the ambit of the ACL;
  2. ensure that all consumer contracts and sale terms and conditions are reviewed so as to be ACL compliant and to ensure their enforceability;
  3. ensure all warranties against defects/express warranties are reviewed for compliance;
  4. ensure all advertising material is reviewed for compliance;
  5. ensure that all employees, including sales staff, are aware of the ACL and that everyone is ready to implement the necessary steps to accommodate the ACL.

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.