Federal Court refers Apple and ACCC to mediation over warranty claims

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Federal Court judge Mark Moshinsky has referred the Australian Competition and Consumer Commission (ACCC) and Apple to mediation over claims that the iPhone maker misled customers about their rights in relation to defective devices.

The mediation is to be concluded by March 2, 2018 before a future trial date is set.

The ACCC had initiated legal action against Apple in April for allegedly refusing to provide a free remedy if a faulty device has been taken to a non-approved repairer.

The consumer watchdog commenced its investigation following reports relating to “error 53”, which disabled some consumers’ iPads or iPhones after downloading an iOS update.

Many consumers who experienced the error had previously taken their devices to third-party repairers, usually to replace a cracked screen, the ACCC said.

The investigation led the ACCC to believe that Apple routinely refused to look at or service customers’ defective devices if the customers previously had the device fixed by “unauthorised repairers” — even when the repair was unrelated to error 53.

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

Having a component of the Apple device serviced, repaired, or replaced by a third-party cannot, by itself, overturn the consumer’s right to a remedy for non-compliance with the consumer guarantees, the ACCC highlighted in April.

“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,” ACCC Chairman Rod Sims said at the time.

“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.”

The ACCC said earlier this year it would be seeking pecuniary penalties, injunctions, declarations, compliance program orders, corrective notices, and costs.

Earlier this month, the Australian Federal Court concluded that property giant Meriton interfered with guests being able to review its serviced apartments on TripAdvisor.

The ACCC began proceedings against Meriton in November 2016 when the property giant was allegedly preventing users from using TripAdvisor’s “Review Express” service — an arrangement where accommodation businesses pass on consenting customers’ email addresses so that the review site may email them prompting them to review their stay.

The court concluded that between November 2014 to October 2015, Meriton had engaged in misleading or deceptive conduct with the addition of extra characters into email addresses to prevent the TripAdvisor emails from reaching their intended inbox, or not passing the details on at all.

However, in September, the ACCC was not successful in its case against LG Electronics Australia, with the Federal Court dismissing claims that the electronics company had made false or misleading representations to consumers about their rights in relation to faulty LG products, including TVs.

The ACCC had previously brought legal action against LG for misleading or deceptive conduct in 2005, 2006, and 2010, and lodged an appeal against the Federal Court’s recent decision.

The ACCC was successful in its case against US-based video game distributor Valve Corporation, with the Federal Court concluding that Valve had made false or misleading representations regarding the application of the consumer guarantees, and was ordered to pay AU$3 million.

In handing down its AU$3 million decision at the end of last year, the Federal Court found that the terms and conditions in the Steam subscriber agreements, and Steam’s refund policies, included false or misleading representations about consumers’ rights to obtain a refund for games if they were not of acceptable quality, the ACCC previously said.

With AAP

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