LG Electronics Found to Have Made Misleading Representations

Thursday 28 June 2018 @ 2.26 p.m. | Legal Research | Trade & Commerce

On 27 June 2018, the Full Federal Court partially upheld an appeal by the Australian Competition and Consumer Commission ('the ACCC') in the case of ACCC v  LG Electronics Australia Pty Ltd [2018] FCAFC 96. The Full Court found that LG Electronics Pty Ltd (‘LG’) made certain representations related to rights available to consumers that were misleading and false.


The ACCC initially brought proceedings against LG Electronics in December 2015, which has been covered by TimeBase in an earlier article. The ACCC argued that LG made certain misrepresentations to consumers, retailers and repairers to the effect that remedies available to consumers were limited to the LG manufacturer’s warranty.

Additionally the ACCC alleged that the representations implied that if a defect occurred after the warranty had expired, the consumer would only be entitled to a remedy if the consumer paid for the costs of assessing the defect. In this situation LG was alleged to have made representations to the effect that it had no further obligations and that any step it would take in relation to the product would be an act of goodwill. LG also represented that the consumer would only be entitled to have the product repaired, but not refunded or replaced, and the consumer would be liable for the labour costs of the repair. The case was dismissed at first instance in September 2017, which has been covered by TimeBase in an earlier article.

Findings upon Appeal

The Full Court found that apart from two occasions, LG did not make false representations concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy. The Full Court took into account section 18(1) of the Australian Consumer Law (ACL), and section 29(1)(m) of the ACL.

The Court found that LG had made false or misleading representations to the effect of implying that no rights other than LG’s manufacturer’s warranty existed, which is false because consumers will have rights under the ACL in addition to any existing manufacturer’s rights.

The Court noted that LG trained its staff to not mention rights under the ACL unless they were specifically mentioned by a consumer may lead to false and misleading representations. The Court stated in relation to representations and statements made by LG staff to customers about their consumer rights:

“We are unable to characterise the statements as reflecting only that which LG, at that time, was prepared to offer. Nor, in our view, does characterising the statements as part of a negotiation, avoid the false character of the representations in contravention of s 29(1)(m). This is for two reasons. One, as a matter of principle, the context of negotiation does not exclude the potential for conduct to be misleading, deceptive or false. Two, even if the statements can be taken as a mere statement of LG’s position, their terms carry the false representation of non-existence, exclusion or non-effect of the ACL consumer guarantee of acceptable quality.” [53]

The Court also held that the fact the customer in question was not misled did not alter the misleading nature of LG’s statements, and the fact that the customer had knowledge of the ACL did not alter the effect of the misleading representation.

The Court noted that the training given by LG to its customer service representatives not to mention the ACL unless raised by a consumer carried the risk of contravening sections 18(1) and 29(1)9m) of the ACL. The Court stated:

“It is a small distance from only mentioning the ACL consumer guarantees if it is expressly raised by a customer to effectively denying the existence of the ACL consumer guarantees altogether. In the case of the Third PG Statement the LG representative travelled that distance.” [57]

Media Response

In a media release issued by the ACCC, ACCC Commissioner Sarah Court said:

“The ACCC welcomes the Court’s decision, which should serve as a warning to businesses they run a risk if they choose not to mention the ACL consumer guarantees to customers. The ACCC will continue to take action where we believe that customers have been misled about their consumer guarantee rights.”

In a media release issued by LG, the company stated:

‘LG Australia is committed to honouring our obligations under Australian Consumer Law and will be carefully reviewing the findings of the Court.’

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