Apple taken to Court by ACCC over Alleged Consumer Warranty Misrepresentations

Friday 7 April 2017 @ 8.33 a.m. | Legal Research | Trade & Commerce

It has been reported that the Australian Competition and Consumer Commission (ACCC) has instituted proceedings in the Federal Court against Apple Pty Limited and its US-based parent company, Apple Inc., (Apple) alleging that Apple made false, misleading, or deceptive representations about consumers’ rights under the Australian Consumer Law (the ACL) [Sch 2 to the Competition and Consumer Act 2010 (Cth) (the Act)].

Background to the Court Action

The ACCC commenced an investigation following reports relating to error 53 – an error which disabled some consumers’ iPads or iPhones after downloading an update to Apple’s iOS operating system. Many consumers who experienced error 53 had previously had their Apple device repaired by a third party; usually replacing a cracked screen.

ACCC Chairman Rod Sims said the central allegation was that consumers who had gone to third parties for repairs, for example to fix a cracked screen, were routinely refused any service to their Apple device, even if the fault had nothing to do with the cracked screen.

Consumer rights under the ACL

Under the ACL, there are a number of consumer guarantees regarding the quality, suitability for purpose and other characteristics of goods and services, and consumers are entitled to certain remedies at no cost where goods and services do not comply with the consumer guarantees.

The ACCC alleges Apple represented to consumers with faulty products that they were not entitled to a free remedy if their Apple device had previously been repaired by third party “unauthorised repairers”. However, according to the ACCC, having a component of the Apple device serviced, repaired, or replaced by someone other than Apple cannot, by itself, extinguish the consumer’s right to a remedy for non-compliance with the consumer guarantees.

Reaction and Response from the ACCC

Mr Sims said:

“Consumer guarantee rights under the Australian Consumer Law exist independently of any manufacturer’s warranty and are not extinguished simply because a consumer has goods repaired by a third party. Denying a consumer their consumer guarantee rights simply because they had chosen a third party repairer not only impacts those consumers but can dissuade other customers from making informed choices about their repair options including where they may be offered at lower cost than the manufacturer. As consumer goods become increasingly complex, businesses also need to remember that consumer rights extend to any software or software updates loaded onto those goods. Faults with software or software updates may entitle consumers to a free remedy under the Australian Consumer Law.”

According to Mr Sims, Apple's behaviour is "very unusual" and not the sort of behaviour that should be going on in a modern economy, he was quoted as saying:

"I find [Apple's behaviour] puzzling. We often find with companies generally that they like to have goods repaired by themselves, rather than by third party repairers."

Penalties sought by the ACCC

The ACCC is alleging breaches of the law [ACL]relating to 275 customers, with each breach potentially carrying a maximum penalty of $1.1 million. The ACCC is also seeking pecuniary penalties, injunctions, declarations, compliance program orders, corrective notices, and costs.

Previous action against Apple

In December 2013, the ACCC accepted a court enforceable undertaking from Apple Pty Limited following an investigation into Apple’s consumer guarantees policies and practices, and representations about consumers’ rights under the ACL.

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Sources:

Apple taken to court by ACCC over alleged consumer warranty misrepresentations – abc.net.au

ACCC takes action against Apple over alleged misleading consumer guarantee representations – ACCC Media Release MR 46/17

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