Electronic Retailers Found Flouting Refund Laws

Monday 2 December 2013 @ 12.25 p.m. | Trade & Commerce

A Choice consumer group enquiry into major electronics retailers has found a large number did not comply with parts of the current Australian Consumer Law (ACL) regarding the store’s obligation in the case of faulty goods.

Major Failure

To determine what constitutes a major failure, s 260 of the ACL states a number of different criteria including:

  • the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure;
  • the goods differ significantly from the description, sample or demonstration model;
  • the goods are substantially unfit for purpose and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose;
  • the goods are unfit for a special purpose that the consumer made known to the supplier of the goods and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose;
  • the goods are not of acceptable quality because they are unsafe.

The Investigation

Posing as customers, two Choice employees visited 80 Harvey Norman, The Good Guys and JB Hi-Fi stores across all Australian states and territories, and asked the salespeople at each of the stores if they had any responsibility should a $2500 TV cease to function after the manufacturer’s one-year warranty. The results revealed that 85% of sales staff either had incomplete or no appreciation of their obligations under the ACL.

Whereas the store is required in such circumstances is to either repair the TV or offer a refund, Choice found that the majority of sales people responded that the broken item was no longer the store’s responsibility.

TressCox Lawyers partner Mr Alistair Little explained that the change in 2011 to the legislation meant that while under the old laws that response would have been acceptable, things are different now:

“In 2011 a major change occurred in regard to warranties which meant that when a major failure of a good occurs, the consumer gets the choice of ending the contract with the supplier and seeking a replacement, repair or a refund...This concept of a major failure is still new and it’s causing confusion. It’s been defined as a failure where a reasonable consumer wouldn’t have purchased the goods had they been aware of the failure, or it was significantly different to the demonstration model they saw.”

Choice spokesperson Tom Godfrey said in a statement consumers need to be careful about warranty and extended warranty advice in stores.

“The fact that 85% of sales staff got it wrong and 100% offered an extended warranty is very concerning,”…“consumers should not be fooled into purchasing extended warranties they don’t need and we’d like to see the ACCC and fair trading bodies investigate these breaches.”

Despite sales staff’s lack of awareness, Choice found that, when contacting the Head Office directly, Harvey Norman and JB Hi-Fi both understood their obligations.

The Australian Competition and Consumer Commission has not yet pursued any company over this issue.

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