The ACCC's recent successful prosecutions of a number of
Harvey Norman franchisees is a timely reminder to B2C businesses
that it's not enough to have a complaint returns or refunds
policy – your staff must know it in detail, as well as your
legal obligations, and apply them.
It also doesn't matter if your staff didn't mean to
mislead your customers. Your business can still be liable for a
failure to deal with a "consumer" statutory guarantee
issue, resulting in significant penalties (in addition to loss of
THE COST OF BREACH
The Australian Competition and Consumer Commission
(ACCC) has succeeded in Court action against nine
Harvey Norman franchisees for misleading or deceptive conduct and
false representations in relation to consumer guarantees that every
"consumer" has under the Australian Consumer Law
(ACL), and obtained Court ordered penalties
WHAT THE HARVEY NORMAN FRANCHISEES DID WRONG
Simply put, in a variety of situations, each Harvey Norman
franchisee made misrepresentations (mostly verbally, but some in
writing) to customers about their consumer guarantee rights. For
example, a franchisee, through its sales staff, represented
The store had no obligation to provide the customer a choice of
return, replacement or repair of faulty or unsuitable goods if they
were supplied over three months ago;
The store didn't have to provide a remedy where the goods
were still under a manufacturer's warranty;
The customer was obliged to pay postage and handling to have
goods already sent for repair returned to the customer.
None of these representations are accurate and are false,
misleading and deceptive.
CONSUMER GUARANTEES: WHAT YOU NEED TO KNOW
Under the ACL, a "consumer" has the right to expect
that any goods purchased after 1 January 2011 (other than by way of
auction) meet a number of minimum guarantees. These guarantees
include that the goods:
are of acceptable quality,
reasonably fit for any disclosed purpose;
will match the description under which they are sold;
will have spare parts and a repair facility by the manufacturer
available for a reasonable time from the date of sale.
Suppliers who supply consumer goods that breach any obligation
in a major way must (at the option of the consumer) replace the
goods or refund the price paid. Where the failure is minor the
supplier must (at its option) repair the goods, refund the price or
pay the costs of repair.
These obligations apply to any goods where the price paid is
less than $40,000, all goods that are of a kind ordinarily acquired
for personal, domestic or household use or consumption,
irrespective of price, and motor vehicles or trailers for
transporting goods on public roads, again irrespective of price.
It's critical that businesses understand that whilst they may
not consider that they are in the B2C space (for example because
they sell office furniture to SMEs or lease office equipment to
businesses) if amount paid for the "supply" is less than
$40,000, the retailer must comply with the guarantees, and, just as
importantly, the retailer must ensure that it doesn't mislead
any of its customers about their rights, or the retailers
obligations, in those circumstances.
It doesn't matter if you don't mean to mislead your
Training and regular refreshers are needed for all staff
Update your terms and conditions to ensure they comply
Ensure your compliance manual and return and refund policies
are up to date (or get a set in place if you don't have
Review all POS material for compliance
Have a process for complaints handling, and ensure all matters
are escalated to the most appropriate level when needed
The Federal Court decision is likely to encourage the ACCC to maintain unconscionable conduct as an enforcement priority.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).