Australia’s consumer watchdog, the Australian Competition and Consumer Commission (ACCC), is taking LG Electronics Australia Pty Ltd (LG) to the Federal Court. The ACCC alleges that LG informed their customers that the manufacturer’s warranty limited remedies for faulty LG televisions.
Not only that, but the ACCC claims that LG misrepresented consumers’ entitlements, and told them that they were only entitled to a remedy if they had paid the costs for assessing the failure of the television.
LG informed consumers that they were entitled to have their television repaired, but not entitled to a refund or replacement, and that the consumer would have to pay the cost of repair.
LG claimed they had no further obligations after the expiry of the manufacturer’s warranty, but any assistance it provided in relation to the faulty televisions was an act of goodwill.
What is a Consumer Guarantee?
The Australian Consumer Law (ACL) ensures that each product comes with a consumer guarantee that the product is of acceptable quality. The ACL protects consumers from defective products.
The key point here is that the manufacturer’s warranty does not replace the consumer guarantee and that the manufacturer’s warranty is in addition to the consumer guarantee. The consumer guarantee does not expire when the manufacturer’s warranty expires, and it usually applies for a much longer period.
Under the consumer guarantee, consumers are entitled to have a faulty good refunded, replaced or repaired at no cost.
How Did LG Mislead Consumers?
When a manufacturer’s warranty expires, consumers are still able to claim repairs, refunds or replacements under the consumer guarantee. This is very different to LG telling consumers that they were only able to have the television repaired and that the consumer would have to pay the costs for repair.
By telling their customers that the manufacturer’s warranty limited the available remedies, LG was essentially removing the consumer guarantee and the rights built in by the ACL.
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What Do We Learn?
This isn’t the first time the ACCC has initiated proceeding against LG for misleading or deceptive conduct. In 2006, the ACCC took action against LG for misleading consumers about the existence and duration of statutory warranties. This time around, the ACCC is seeking from the Federal Court:
- Injunctions,
- Penalties,
- Corrective notices,
- Legal costs, and
- A trade compliance program.
The ACCC takes the ACL and misleading conduct very seriously and appear determined to discipline LG.
Australian Consumer Law confers a number of rights and obligations on businesses and consumers. It is important to have a firm understanding of where you stand. As a business owner, make sure you are complying with the ACL and not engaging in misleading conduct. Ensure that any Terms & Conditions you offer your customers reflect the ACL and do not try to contract out of your obligations.
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