ACCC Fines Harvey Norman Franchisee Over Consumer Rights Breach

The Federal Court has ordered a Harvey Norman franchisee, to pay a total of $52,000 in penalties for making false or misleading representations regarding consumer guarantee rights, in proceedings brought by the Australian Competition and Consumer Commission.

TK Kurikawa / Shutterstock.com

Under the Australian Consumer Law, when consumers buy products, they come with a guarantee that they will be of acceptable quality. Non-defective, safe and reasonably durable.

The "guarantee of acceptable quality" is in addition to and is not limited to any manufacturer’s warranty — and in many cases, it will apply for longer than the manufacturer’s warranty.

If the product doesn't meet these standards, customers are entitled a refund, replacement or repair, at no cost. These rights cannot be excluded from a businesses terms and conditions of sale.

Sales staff at the Harvey Norman Superstore Bundall in Queensland told customers on no less than ten occasions that the franchisee was in no way obligated to give customers refund, replacement or repair of any products of unacceptable quality.

They instead referred customers to the manufacturer.

In some cases the customers were told the store couldn't help them unless they paid for some or all of the required repairs.

"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," ACCC Acting Chair Dr Michael Schaper said.

"This penalty is a timely reminder to all businesses, whether large or small, that they must not mislead consumers about consumer guarantee rights under the Australian Consumer Law."

"Businesses 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 Schaper said.

[ACCC]


Comments

    I hope this sets a precedent - Harvey Norman is hardly the only retailer that does this. I certainly hope JB HiFi is paying attention.

      Yeah, the ubiquitous extended warranty sale is a bit of a eyebrow-raiser. Selling you the rights that you already have for free?

        Not always true. What you pay for is in addition to your statutory rights and in some cases are more than those rights, particularly given your right to replacement or refund applies only to major faults. What's reasonable is the kicker - a $50 fan lasting a year is reasonable. A $500 lasting the same year is not. Said fan's not operating on one of the speed settings is hardly a major fault. And lets not get started on what different individuals think reasonable is.... Not that i am defending HN, but survey people regarding their rights and you will find that most people think their rights are far greater than they are, particularly refunds for change of mind.... I feel sorry for retail workers sometimes....

          If it is a minor problem, they may choose to give you a refund. If it is a major problem, you have the right to ask for a replacement or a refund.

          And you're right, consumer guarantees don't apply due to change of mind.

          Source: https://www.accc.gov.au/consumers/consumer-rights-guarantees/repair-replace-refund

          [I'm merely pointing out that you're right to a repair is with a minor fault.]

          Said fan's not operating on one of the speed settings is hardly a major fault.

          Not true. From the ACCC web site:

          A product or good has a major problem when:
          - it has a problem that would have stopped someone from buying it if they’d known about it
          - it is unsafe
          - it is significantly different from the sample or description
          - it doesn’t do what the business said it would, or what you asked for and can’t easily be fixed.

          A speed setting not working fits this description under point four, and arguably under points one and three.

          Now it is true that many people believe that they are always entitled to a refund even when there is no fault, and this is incorrect. It's also true that the "reasonable" period varies widely depending on the item being sold.

          But there are a lot of people who don't understand their statutory consumer rights and a lot of stores that actively deny those rights; the "NO REFUNDS" sign being one common example. Another is the store's requirement that you provide a copy of the original receipt; you only need to provide proof of purchase (such as a credit card statement showing the purchase), not necessarily the receipt itself.

          Most extended warranties cover the period when the item is least likely to fail (the middle of its lifetime) and so are basically a waste of money. If the policy were not of net benefit to the retailer i.e. it cost them less to service than they received for the extra coverage, on average) they would not be selling it to you.

        It's selling you the convenience to have an easy replacement of a faulty TV etc. in addition to your rights. I know it's not right, but some people pay for this blindly or knowingly.

        Caveat Emptor.
        Some of those extended warranties, including Apple Care give you coverage well beyond your rights as a consumer. A 3 year extended warranty on top of a manufacturers 2-3 year warranty is probably going to be beyond your standard rights.
        Apple warrants screen repairs on Apple Care now, even if it's your fault.

          so you need to be aware of the cost of a sreen repair vs the cost of Apple care to know if it is actually worth while.

          Actually the explicit wording of consumer law is "a reasonable period of time" now this is very ubiquitous. My old man would consider a reasonable period of time for a $2500 laptop to be 6-7 years, the manufacturer will usually stretch to 2 years at most, and the retailer is stuck between an angry customer and lost profits.

          I used to be a Harvey Norman Tech Bay employee(the job that handles refunds/exchanges/hardware upgrades/repairs/and software issues). It was a trying 4 and a half months because I was just one person with 30-60 active repair jobs, 6-18 new repair jobs every day, plus the 5-15 new laptops sold that needed to had an SSD upgrade weekly with a 3 hour to next day promise by salespeople.

          Oh boy my only regret is that I remain jobless since its not easy to explain the nightmare work load that job gave one person.

          In all likelihood the person who was telling customers that just wanted to minimise the amount of current jobs. I know I got referred to a lot by the Bundall store

            Sounds like this is a common thing for the tech bay. Had a friend who also worked in the Tech Bay section and said exact same thing. Log into the computer in the morning and see 30-60 new jobs added on top of the ones he was already working on. He took a weeks holiday mostly due to the stress and when he got back, he thought they got someone to cover for him but didn't. He saw 350 new jobs listed, handed his resignation in at 9.30 am.

              Sad thing is, I have been unable to get a job since I quit August last year

          @red_t_rex so you need to be aware of the cost of a screen repair vs the cost of Apple care to know if it is actually worth while.
          And not just for phones - my Macbook's screen was covered under Apple Care. $279 vs >$600 for the screen.

          @theaptpupil Actually the explicit wording of consumer law is "a reasonable period of time" now this is very ubiquitous. My old man would consider a reasonable period of time for a $2500 laptop to be 6-7 years, the manufacturer will usually stretch to 2 years at most, and the retailer is stuck between an angry customer and lost profits.
          Yeah, that's a problem across consumer protection - what I consider reasonable may not be what my States Fair Trading law agrees with.

      I've never had a problem returning stuff to JB HiFi and I have done it quite a few times even for trivial reasons. I think it depends on the individual store operators but it is by no means isolated to Harvey Norman. I've had arguments with staff at Myer but I just pull out my phone and show them the ACCC app that states my consumer rights and they shut up. Most stores do the right thing.

    Always never take the law into your own hands, you take them to court. Always take them to court, this way, they'll learn.

      Unless you've got a very solid case, it can be rather difficult for a number of individuals to go up against a large company such as Harvey Norman. Wouldn't it be easier to at least talk to the ACCC first?

    Jbhifi is the best, always happy to return or exchange, i never had a problem before :)

      It only takes a couple of instances of what we've seen in this article before something, like in this article occurs.

      I regularly buy components from a PC shop (PLE), and they're always fantastic with their refunds.

    Extended warranties will generally cover you for both major AND minor faults, whereas Australian Consumer law will only help you if your product has a major fault.

      Minor faults mean they'll repair repair the fault. If they can't, they'll replace it.

    Wait, so do all products purchased in AU get a fixed 12 month warranty?! Or is it legitimately just 'a reasonable amount of time' - relating on product price/quality.

      The guidelines on the consumer protection sites indicate that it's seriously just 'a reasonable amount of time' relating to type of product and quality/cost. A thirty buck set of headphones isn't going to have the same length of protection as a $2,000 fridge.

      Most manufacturers will automatically include 12 months warranty. A good example of the consumer protection is that most mobile phone handsets including Apple come with 12 months warranty but if you get the handset included in a 2 year contract the handset MUST be covered for the 2 years at a minimum even though the initial reaction by a lot of suppliers is to deny. but still, even outside of a plan, if you are paying over $800 for a handset then you would also "reasonably" expect it to last longer than 2 years. You pay $500 for a cheap 50" TV you might only expect a couple of years life, but pay $3000 for the latest hi tech TV and you could possibly argue up to 5 years warranty depending on the problem and how much noise you are prepared to make. I find that if you start getting stonewalled when returning something to talk calmly but in a loud voice. You will usually quickly get to someone who can do the right thing.

      Also sometimes it is the retailer and not the supplier that is the problem. I once had a problem with a TV repair that was taking forever and the retailer didn't care so I contacted Samsung myself and they couriered the parts overnight and fixed it for free.

      It depends on the product AND its price/quality.

      You won't get a 12 month warranty on a $0.50 pen. You won't get it on non-durables such as milk or vegetables. You would normally get it on consumer durables, with the term depending on how long the good would reasonably be expected to last.

      Normally more expensive items would be expected to last longer and so will have a longer statutory warranty. But even something like a can of peaches could be returned if found to be bad when first opened after 12 months, because canned goods are expected to last a long time (which is why they often don't have a use-by date marked.)

      The consumer guarantee applies between you and the RETAILER, since you purchased the good from them; if the manufacturer goes bust and the product fails they can't just use that as an excuse, they must provide a reasonable substitute. That said, dealing directly with the manufacturer can be simpler.

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