ACCC starts legal proceedings against Harvey Norman franchisees

The Australian Competition and Consumer Commission has instituted proceedings in the Federal Court in Sydney against eleven Harvey Norman franchisees for allegedly misrepresenting consumer rights.

The Harvey Norman franchisees are:

• Avitalb Pty Limited, located in Albany, Western Australia
• Bunavit Pty Limited, located in Bundall, Queensland
• Camavit Pty Limited, located in Campbelltown, New South Wales
• Gordon Superstore Pty Limited, located in Gordon, New South Wales
• HP Superstore Pty Limited, located in Hoppers Crossing, Victoria
• Ipavit Pty Limited, located in Ipswich, Queensland
• Launceston Superstore Pty Limited, located in Launceston, Tasmania
• Mandurvit Pty Limited, located in Mandurah, Western Australia
• Moonah Superstore Pty Limited, located in Moonah, Tasmania
• Oxteha Pty Limited, located in Oxley, Queensland, and
• Salecomp Pty Limited, located in Sale, Victoria.

The ACCC alleges that the franchisees engaged in misleading or deceptive conduct by making false or misleading representations to consumers about their rights under the consumer guarantee provisions of the Australian Consumer Law (ACL).

“The Australian Consumer Law provides consumers with rights to certain remedies from retailers and manufacturers when goods fail to comply with the consumer guarantee provisions, including that goods are of acceptable quality and fit for the purpose for which they were sold,” ACCC Chairman Rod Sims said.

“These rights cannot be excluded, restricted or modified.”

“For example, if an item purchased breaks down within a short time of being puchased, the consumer may be entitled to a refund or a replacement item.”

The ACCC alleges that the franchisees misled consumers about these rights by making representations including that: 

• the franchisee had no obligation to provide remedies for damaged goods unless notified within a specific period of time such as 24 hours or 14 days
• the franchisee had no obligation to provide remedies for goods still covered by the manufacturer’s warranty
• the franchisee had no obligation to provide refunds or replacements for particular items such as large appliances or items priced below a certain amount, and
• consumers must pay a fee for the repair and return of faulty products.   

The court orders the ACCC is seeking include penalties, declarations, injunctions and costs.

The matter is set down for a directions hearing at 9:30am on 19 December 2012.

Earlier this year the ACCC embarked on a national consumer guarantees awareness raising campaign, ‘If it’s not right, use your rights. Repair, replace, refund.’

“Consumer Guarantees has been identified as a national priority by ACL Regulators and is a matter of particular concern for the ACCC with more than 16,000 contacts from members of the public to the ACCC’s Infocentre so far this year,” Mr Sims said.

The ACCC has also engaged with industry to educate retailers and manufacturers about their obligations under the ACL.

The ACCC is conducting a number of investigations into other large manufacturers and retailers for alleged misrepresentations of consumer guarantee rights in breach of the ACL.

On 16 October 2012 the ACCC instituted proceedings in the Federal Court in Sydney against Hewlett-Packard Australia Pty Ltd (HP), a wholly owned subsidiary of Hewlett-Packard Company, for alleged contraventions of the ACL. http://www.accc.gov.au/content/index.phtml?itemId=1085167 

For more information about consumer guarantee rights under the ACL, please visit the website: http://www.accc.gov.au/consumerrights.

Background

• Under the Australian Consumer Law, consumers have a set of rights called the consumer guarantees for goods purchased after 1 January 2011. These include guarantees that:
• goods will be of acceptable quality
• goods will be fit for any disclosed purpose
• goods will match any description under which it is sold
• goods will have spare parts available for a reasonable time
• all express warranties offered will be honoured.
• Businesses can offer additional warranties with their goods and services. These additional warranties do not override or limit consumer guarantees and consumers must not be misled about either their consumer guarantee rights or the protections afforded by additional warranties.
• For goods purchased on or after 1 January 2011
  
• Where a good develops a major fault, consumers have a right to a replacement or refund from the supplier of the good.
• For goods that develop a minor fault, a consumer has a right to have the good remedied (at the suppliers discretion) within a reasonable time. If the supplier doesn’t do so, the consumer can either reject the goods and get a refund, or have the problem fixed and recover reasonable costs of doing so from the supplier.
• The ACCC alleges that Harvey Norman franchisees made false or misleading representations to consumers about their rights under the consumer guarantee provisions of the ACL. Specifically, it is alleged:
• The misrepresentations occurred during the period April 2011 to mid 2012.
• In all 11 cases, the misrepresentations were made orally by employees of the relevant Harvey Norman franchisee to customers. Additionally, in one case, a misrepresentation appeared on the receipt provided to the customer.
• The ACCC’s campaign “If it’s not right, uses your rights. Repair, replace, refund” aimed to raise consumer awareness about their rights when they have bought a product that is faulty, or doesn't perform as described, or a service that does not meet expectations. This is because questions around guarantees and warranties are one of the most common reasons that consumers contact the ACCC and other ACL regulators. 
• The ACCC’s Infocentre has received over 16,000 complaints and inquires about Consumer Guarantees this calendar year - this represented 25% of total contacts (excluding scams).