ACCC Takes LG Electronics Australia Pty Ltd to Court for Alleged False or Misleading Representations
As reported in a recent ACCC Media Release, the Australian Competition and Consumer Commission (the ACCC) has commenced proceedings in the Federal Court against LG Electronics Australia Pty Ltd (LG) alleging that LG made false or misleading representations to consumers about their rights in relation to faulty LG products.
It is alleged by the ACCC that, in relation to complaints about defects with its televisions, LG misrepresented to consumers, retailers or repairers that:
- the remedies available to consumers were limited to the LG manufacturer’s warranty;
- where the defect occurred after the LG manufacturer’s warranty had expired:
- the consumer was only entitled to a remedy if the consumer paid for the costs of assessing the failure; and/or
- LG had no further obligations, and any step it took in relation to the television was an act of goodwill; and/or
- the consumer was only entitled to have the television repaired (and not to a refund or a replacement); and/or
- the consumer was liable for the labour costs of the repair.
Protection for Consumers
Under the Australian Consumer Law (the ACL) [contained in Sch 2 to Competition and Consumer Act 2010 (Cth)] when consumers buy products:
- they come with a guarantee that they will be of acceptable quality – meaning the products will be as free from defects, safe and durable as a reasonable consumer would regard as acceptable;
- the guarantee of acceptable quality is in addition to any manufacturer’s warranty;
- the guarantee of acceptable quality is not limited to the period of the manufacturer’s warranty - in many cases, it will apply for longer than the manufacturer’s warranty; and
- if the product is not of acceptable quality, consumers are entitled to remedies, such as a refund, replacement or repair, at no cost to the consumer.
The ACCC has previously taken court action against LG for misleading or deceptive conduct with respect to the existence and duration of statutory warranties. LG has also previously provided the ACCC with three separate s87B undertakings relating to allegations of misleading or deceptive conduct, in 2005, 2006 and 2010.
During 2010, the ACCC accused LG of misleading Australian consumers over the energy efficiency characteristics of its fridges.
Comment from the ACCC Chairman
In a recent ACCC Media Release, the ACCC Chairman Rod Sims said:
“When consumers buy products, they come with a consumer guarantee under the Australian Consumer Law that they will be of acceptable quality. This guarantee is in addition to any express manufacturer’s warranty. Although the manufacturer’s warranty only applies for a specified period of time, consumers will often still be entitled under the consumer guarantee to a repair, refund or replacement after the manufacturer’s warranty ends...The Australian Parliament has conferred these important rights on consumers, and these rights should not be undermined by misrepresentations.”
Reaction from LG
A spokesperson for LG said in a statement the company is committed to its obligations under the ACL:
“Due to the ongoing nature of these proceedings, no further comment will be made at this stage except to say that LG is committed to its customers and compliance with its obligations under the Australian Consumer Law.”
Penalties sought by the ACCC
The ACCC is seeking declarations, injunctions, pecuniary penalties, corrective notices, a trade practices compliance program and costs.
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ACCC takes action against LG for alleged false or misleading representations relating to consumer guarantees –