HP to pay $3 million for misleading consumers and retailers

5 July 2013

The Federal Court today ordered Hewlett-Packard Australia (HP) to pay a $3 million civil pecuniary penalty for making false or misleading representations to customers and retailers regarding consumer guarantee rights.

The Australian Competition and Consumer Commission instituted proceedings against HP on 16 October 2012. Subsequently, the ACCC and HP came to an agreed settlement on the matter.

The Court found, based on the parties’ agreed facts, that HP made a number of false or misleading representations to consumers about their consumer guarantee rights, including that:

  • the remedies available to consumers were limited to the remedies available at HP’s discretion;
  • consumers were required to have their product repaired multiple times before they were entitled to a replacement;
  • the warranty period for HP products was limited to a specified express warranty period;
  • consumers were required to pay for remedies outside the express warranty period; and
  • products purchased online could only be returned to HP at HP’s sole discretion.

In addition, the Court found that HP represented to retailers that it was not liable to indemnify the retailer if the retailer failed to obtain authorisation from HP before giving a consumer a refund or replacement.

The above representations were made by HP staff working at call centres located around the world, as set out in HP’s internal guidelines and scripts.

In his judgment, Justice Buchannan stated that the penalty was appropriate and “reflects an acknowledgment of the seriousness of the respondent’s conduct”. 

Justice Buchannan noted the Court’s disapproval of HP’s conduct and the need for general and specific deterrence for such behaviour.

“This was an important case to the ACCC. The misconduct was widespread and systemic from a very large multi-national firm,” ACCC Chairman Rod Sims said.

“The ACCC believes that this penalty sends a strong message to all companies, particularly large multi-national companies, that the Australian Consumer Law is not negotiable. This result also shows that the Court is not afraid to impose significant penalties for serious contraventions of the ACL.”

“All businesses operating in Australia require robust mechanisms to comply with the consumer guarantees provisions under the Australian Consumer Law,” Mr Sims said.

In addition to the $3 million penalty, the Court also made orders including:

  • declarations;
  • injunctions;
  • a contribution towards the ACCC’s costs of $200,000;
  • consumer redress orders;
  • public disclosure orders;
  • corrective advertising orders; and
  • orders to implement a compliance program.

The Court’s orders include a requirement that HP set up a consumer redress process for affected consumers. If you feel that you have been misled about your consumer rights, you should contact HP.

The Australian Consumer Law gives consumers a set of rights called consumer guarantees for all goods purchased after 1 January 2011. These guarantees include a guarantee 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; and
  • all express warranties offered will be honoured.

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.

For further information about consumer rights, visit http://www.accc.gov.au/consumerrights

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Mr Duncan Harrod - (02) 6243 1108 or 0408 995 408