22 April 2024
3 min read
#Dispute Resolution & Litigation, #Competition & Consumer Law
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The Australian Competition & Consumer Commission (ACCC) has recently taken enforcement action against brands such as A&S Labels Pty Ltd (trading as Tiger Mist), Fitbit LLC (Fitbit) and Mazda Australia Pty Ltd (Mazda) for misrepresenting consumer guarantee rights under the Australian Consumer Law (ACL) and misleading consumers in relation to their rights for a refund or replacement where a product is faulty or defective.
Under the ACL, when buying goods, the seller guarantees (amongst other things) that the goods will be of acceptable quality, be fit for a particular purpose and match their description. Consumers have a right to a refund, replacement or repair (depending on whether the fault is major or minor in nature) where a product does not meet these consumer guarantees. As demonstrated in the cases below, it is unlawful for businesses to seek to override or exclude these consumer guarantee rights.
In 2022, Tiger Mist received two infringement notices from the ACCC regarding statements in its returns policy on its website. These statements falsely represented that consumers could only return faulty items within 30 days of receiving their order and that the item must be returned in its original packaging. Tiger Mist was penalised $26,640 for misleading consumers about their rights under the ACL.
On 12 December 2023, the Federal Court found Fitbit in violation of the ACL by making false, misleading or deceptive representations to 58 consumers in relation to their rights to a refund or replacement in circumstances where the product was faulty.
Fitbit falsely advised those consumers that they had:
Fitbit was fined $11 million.
On 14 February 2024, the Federal Court found Mazda made false or misleading representations to nine consumers in relation to their rights to a refund or replacement vehicle, in circumstances where their vehicles had experienced recurring and serious faults within two years of purchase.
Mazda refused those consumers’ requests for a refund or replacement vehicle, claiming that the only available remedy was a repair despite the vehicles already having undergone multiple unsuccessful repair attempts.
Mazda was required to pay a penalty of $11.5 million and 70 per cent of ACCC’s total costs of the proceeding.
These cases demonstrate the importance of ensuring that businesses do not mislead consumers about their consumer guarantee rights under the ACL and their right to return faulty or defective items. This involves ensuring returns policies and procedures are compliant with the ACL.
Besides reviewing your returns policy and procedures, below are some other helpful tips to ensure your business is complying with the ACL:
The ACCC also recently flagged that it has a number active investigations and other matters before the court dealing with similar conduct. The ACCC is also expanding its focus to the consumer electronics sector. Watch this space for updates on further action taken by the ACCC in respect of these issues and other other tips to ensure your business is compliant with the ACL.
If you need any assistance in relation to understanding your rights and obligations under the ACL, please get in touch with a member of our team below.
Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.
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