The recent decision of Director of Consumer Affairs Victoria v The Good Guys Discount Warehouses (Australia) Pty Ltd [2016] FCA 22 affirmed an important lesson for consumers – the consumer guarantees exist to protect your rights and cannot be overridden or replaced! While the Court ultimately held that the Good Guys were, in fact, good guys, the case explored a number of consumer and privacy law issues.

Summary

The Good Guys were alleged to have engaged in misleading or deceptive conduct, or conduct that was likely to mislead or deceive. The Director of Consumer Affairs Victoria (Director) claimed that the electronics retailer implied customers who did not purchase the extended warranty would not be covered at all. However, under the Australian Consumer Law (ACL), a number of guarantees give rights and remedies to consumers and those guarantees mandatorily apply to any consumer contract and cannot be overridden.

The Court dismissed the proceedings and found that an extended warranty brochure was given to customers that outlined the consumer guarantees applied. So, there was no misleading and deceptive conduct on the part of the Good Guys.

Claim

The Director alleged that The Good Guys were engaged in misleading or deceptive conduct or conduct that was likely to deceive. The basis of this claim was that The Good Guys implied to customers that if they did not agree to an extended warranty, they would not be covered should the item develop a fault, where in fact, consumers had recourse under the ACL consumer guarantees.

The case was based on five store visits in which Consumer Affairs Victoria (CAV) inspectors posed as customers during a “mystery shop” where they asked questions about a television. In four instances, the conversations were recorded and later transcribed. In each of the occasions, the extended warranty brochure was available to customers. The brochure described both the extended warranty and consumer guarantees and the related remedies.

The main issues to be considered were:

Evidence (Issue 1)

1. Did the inspectors of the CAV trespass in the store?

2. Did the CAV inspectors act beyond the scope of their power in posing as customers and recording?

3. Did the CAV inspectors infringe the salesperson’s right to privacy?

4. Was the information from the stores improperly obtained under s 138 of the Evidence Act?

Misleading and Deceptive Conduct (Issue 2)

  • Did the Good Guys engage in misleading or deceptive conduct or conduct that was likely to mislead or deceive?

Principles

Issue 1: Evidence

Trespass: It was held that the CAV inspectors did not trespass. In the case of Barker v The Queensland Byrne v Kinematograph Renters Society Ltd, the store was open to the general public to look at objects and ask questions – this is what the CAV inspectors did, even if they did so under false pretence.

Posing as customers and recording: Under s 109 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) (Act), the function of the Director is to monitor compliance with the Act and Consumer Acts. This enables them to investigate and prosecute breaches thereof, and to institute and defend proceedings for breaches against the Act and Consumer Acts.

Under s 110 of the Act, the Director has all the power necessary to perform their functions and can delegate anyone employed under the Public Administration Act 2004 (Vic) any functions or powers under the Act. This is what occurred in the circumstances. Also, every individual has the power of inquiry – they can ask questions as the CAV staff did.

Salesperson’s Privacy: The right to privacy was not infringed. The respondent argued that per section 13 of the Charter, a person has the right not to have their privacy interfered with and their reputation attacked. Additionally, under s 38(1) of the Charter, public authorities are not allowed to act in a way that is incompatible with a human right. However, drawing on Duarte v R, the secret recording of the conversation did not infringe on the salesperson’s right not to have his or her privacy unlawfully or arbitrarily interfered with. Secondly, the conversations were not private conversations as they took place in a public place where they could easily be overheard.  

Was the admission and evidence illegal obtained? The admissions from the salespersons were not improperly obtained because false statements (pretending to want to buy a TV) do not cause a person who is being questioned to make an admission (in this case, a statement about warranties).  

 

Issue 2 – Misleading and Deceptive Conduct

The Good Guys did not engage in misleading or deceptive conduct for several reasons. In all store visits, the salesperson offered the extended warranty as something extra. They did not exclude the possibility of rights that arise from consumer guarantees. Importantly, the brochure available to customers included information about both the extended warranty and a description of the consumer guarantees and related remedies. This was sufficient to inform any customer of their rights under the consumer guarantees. The salesperson was not attempting to explain the customer’s rights should the television breakdown. Rather, they were explaining what happens in practice if there are problems with the item.

 

Key Points

In each of the issues regarding evidence, the CAV inspectors were acting in the course of their duties.

The CAV inspectors did not trespass; they did not exceed their power in posing as customers and recording, they did not violate the rights to privacy of the salespeople, and they did not illegally obtain the evidence.

The Good Guys did not engage in misleading or deceptive conduct because in each of the store visits, the salesperson did not imply that the consumer would not be covered if they did not purchase the extra warranty.

This was supported by the fact that a brochure was offered in each case, clearly describing the consumer guarantees afforded by the ACL.

Questions? Let our consumer lawyers know on 1300 544 755.

Damien Timms

Next Steps

If you would like further information on any of the topics mentioned in this article, please get in touch using the form on this page.