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Misleading consumers costs Harvey Norman $52,000

A Harvey Norman franchisee has been fined AUD$52,000 for making false or misleading representations about consumer guarantee rights.

Bunavit Pty Ltd, which operates the Harvey Norman Superstore Bundall in Queensland, is the latest of ten Harvey Norman franchisees around the country to be penalised by the Federal Court for breaching consumer protection laws.

The Australian Competition and Consumer Commission (ACCC) brought the action against Bunavit for ten false or misleading statements made by store employees to customers about their statutory rights.

One salesperson told a customer whose new computer was malfunctioning, “There’s nothing we can do.” Another customer who had complained about receiving a faulty laptop was informed, “We can’t help you.”

A store employee told her to contact the laptop manufacturer for help instead and that retailer would not pay for a refund or a replacement. The same employee later advised her that they would pay half of the repair costs if she sent it to a third party computer shop.

ACCC Acting Chair Dr Michael Shaper said, “Products sold in Australia come with a consumer guarantee under the Australian Consumer Law that they will be of acceptable quality. Faulty products must be repaired, replaced or a refund must be provided by the retailer.”

Consumer guarantees cannot be limited by the manufacturer’s warranty and any replacement or repair must be provided at no cost to the consumer.

“Business are expected to take appropriate and effective steps to ensure that their staff understand the rights of consumers and the obligations of businesses under the consumer guarantees provided by the Australian Consumer Law,” Dr Shaper said.

The total amount of penalties levied against Harvey Norman franchisees for false and misleading representations about consumer rights to $286,000.

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Sources: ACCC, TimeBase, Sydney Morning Herald 

Misleading labelling causes a consumer law headache for Nurofen

The manufacturer of painkiller label Nurofen has misled customers by falsely claiming that its products target different types of pain.

Nurofen has been selling a range of products that purportedly targeted different types of pain, including back pain, tension headache pain, period pain and migraines.

In fact, its products contain the same active ingredient: 342 milligrams of ibuprofen lysine.

Reckitt Benckiser cooperated with the Australian Competition and Consumer Commission (ACCC) after conceding that none of its Nurofen range of products were better at treating one type of pain than another.

ACCC chairman Rod Sim pointed out that Nurofen was being sold at almost double the price of its rivals’ products and noted the potential risk that the misleading labelling presented.

“It’s conceivable someone could exceed the daily dose by looking at a pack of Nurofen Back Pain and taking that in accordance with what they should, and doing the same with Nurofen Tension Headache and thereby overdosing,” he said.

A spokeswoman denied the company intended to mislead. “The Nurofen specific-pain range was launched with an intention to help consumers navigate their pain relief options, particularly within the grocery environment when there is no healthcare professional to assist decision-making,” Montse Pena said.

Nurofen has 12 months to stop selling its mislabelled ‘specific pain’ range products in their current form. The company faces a fine of up to AUD$1.1 million per breach.

Source: AFR

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Fisher & Paykel fined $200,000 for misleading and deceptive conduct

Appliance company Fisher & Paykel and its warranty provider, Domestic & General, have each been ordered to pay $200,000 for misleading and deceptive conduct involving extended warranties.

The Federal Court of Australia found Fisher & Paykel misled and deceived their customers into thinking they were had to purchase an extended warranty in order to protect their products from repair costs. Under Australian consumer law, customers can seek repairs, replacements or refunds, even after the manufacturer’s warranty has expired, if the product is of unacceptable quality or is affected by a “major failure”.

Customers who had purchased a dishwasher with a two-year warranty received letters from Fisher & Paykel stating that “your dishwasher is now a year old, which means you have 12 months remaining – after that your appliance won’t be protected against repair costs. Fisher & Paykel can help.” The letter then offered the option to purchase an extended two-year warranty in addition to the original warranty. According to the ACCC, 48,214 letters were sent out.

The Court found it was not enough for the letter to note that customers were “entitled to a replacement or refund for a major failure and compensation for any other reasonably foreseeable loss damage” since this was “in relatively fine print” on the back page of the letter.

After the legal proceedings commenced against the two companies, all 1326 consumers who bought the extended warranties were contacted and offered a full refund. However, only 107 actually claimed a full refund.
Justice Wigney of the Federal Court also ordered the two companies to pay $15,000 in costs.

Source: Sydney Morning Herald

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Reebok’s walk of shame

competition and consumer protection breaches

The Federal Court of Australia has ordered Reebok Australia Pty Ltd (Reebok) to pay $350,000 for making false and misleading representations about the benefits of Reebok EasyTone shoes. Reebok claimed that “if a person walked in a pair of EasyTone shoes, they would increase the strength and muscle tone of their calves, thighs and buttocks more than if they were wearing traditional walking shoes”.

These representations were plastered across shoe boxes, shoe tags, information cards and in-store promotional material. Unfortunately, for the customers who bought these shoes, the court found Reebok had no reasonable grounds for making such claims.

The Deputy Chair of The Australian Competition and Consumer Commission’s, Delia Rickard, was reported as saying, “where businesses claim their products have certain performance characteristics and benefits, they have a responsibility to ensure that those claims are accurate and supported by credible evidence”.

Although Reebok has imported and sold their EasyTone shoes in Australia since 2009, the proceedings brought by the ACCC were in connection with the shoes’ sale and promotion between 2011 and 2013. The fact that Reebok settled with the US Federal Trade Commission in 2011 for charges of deceptive advertising of “toning shoes” for $25 million, yet still continued with the advertising in Australia, was of particular concern to the ACCC.

Reebok is required to provide customers with a refund of $35 per pair of EasyTone they purchased from September 2011 to February 2013. The Court also ordered Reebok to implement a compliance program.

If your organisation is at risk of breaching Competition and Consumer Laws in your operating jurisdiction, contact us today.