ACCC takes court action against LG Electronics Australia Pty Ltd alleging false and misleading warranty statements

The Australian Competition and Consumer Commission has instituted proceedings in the Federal Court, Perth, against LG Electronics Australia Pty Ltd for alleged false and misleading warranty statements in breach of the Trade Practices Act 1974.

Specifically, the ACCC alleges that LG made false representations and/or engaged in misleading or deceptive conduct in relation to statements made in online LG mobile phone user manuals concerning the existence, exclusion or effect of consumer statutory warranties, conditions, rights or remedies*. 

The ACCC alleges that by making the representations (which were contained in the user manuals since at least November 2005), LG breached sections 52 and/or 53(g) of the Act.

The ACCC is seeking:

• declarations that LG contravened sections 52 and/or 53(g) of the Act
• injunctions restraining similar conduct in the future
• orders for corrective/public notices
• orders for the upgrade of LG's trade practices compliance program, and
• costs.

The matter has been listed for a directions hearing in the Federal Court, Perth on 9 February 2006.

Background

*The Trade Practices Act 1974 implies a number of statutory warranties and/or conditions into consumer contracts, including:

• the consumer is entitled to enjoy quiet possession of the goods and to own the goods outright (s. 69)
• the goods must be of merchantable quality and fit for their purpose (s.71), and
• goods that are supplied by description or sample must correspond with the description or sample (ss. 70 and 72).

A business cannot exclude, restrict or modify these statutory rights. Any term of a contract that attempts to do so will be void (s. 68).

The Act also confers consumers with a direct right of action of against manufacturers in a number of circumstances, including when goods are not fit for their purpose, are of unmerchantable quality or have been falsely described (Part V, Division 2A).