Apple fined for false and misleading representations

The Federal Court recently ordered Apple Inc (Apple US) to pay $9 million in penalties for making false or misleading representations to customers with faulty iPhones and iPads about their rights under the Australian Consumer Law (ACL).

The ACCC took action against Apple US and Apple Pty Ltd (Apple Australia) after investigating complaints relating to ‘error 53’. The error disabled some iPhones and iPads after owners downloaded an update to Apple’s ‘iOS’ operating system.

Apple US admitted it represented to at least 275 Australian customers affected by the error between February 2015 and February 2016 that they had no Apple warranty if their device had been repaired by a third party.

Australian Consumer Law upheld

“If a product is faulty, customers are legally entitled to a repair or a replacement under the Australian Consumer Law, and sometimes even a refund. Apple’s representations led customers to believe they’d be denied a remedy for their faulty device because they used a third party repairer,” ACCC Commissioner Sarah Court said.

The Court held that the fact that an iPhone or iPad was repaired by someone other than Apple did not, and could not, result in the consumer guarantees ceasing to apply, or the consumer’s right to a remedy being extinguished.

Overseas companies bound by Australian Consumer Law

Apple US, a multinational parent company, was held to be responsible for the conduct of its Australian subsidiary. Global companies must ensure their returns policies comply with the Australian Consumer Law.

After the ACCC notified Apple about its investigation, Apple compensated approximately 5,000 individual consumers whose devices were made inoperable by error 53.

Apple Australia offered a court enforceable undertaking to improve staff training, audit information about warranties and the ACL on its website, and to improve its systems and procedures to ensure future compliance with the ACL.

New replacements to be offered

Apple had been allegedly providing refurbished goods as replacements for products which suffered a major failure. The undertaking provides that Apple will provide new replacements if a major failure occurs if the consumer requests one.

If a customer buys an iPhone or iPad from Apple and it suffers a major failure, they are entitled to a refund. If the customer prefers a replacement, they are entitled to a new device as opposed to a refurbished one, if one is available.

 

Disclaimer

This article is general in nature, is not legal advice and must not be relied on as such. If you need assistance relating to the topics discussed, please contact us to obtain advice specific to your circumstances. Call 07 5597 3366 or send an email to law@belllegal.com.au