The Federal Court has ordered US-based Fitbit LLC to pay penalties of $11 million after it admitted making false, misleading or deceptive representations to 58 consumers about their consumer guarantee rights to a refund or a replacement after they claimed their device was faulty.
This is the second time a company within the Fitbit Group has come to the ACCC’s attention regarding conduct involving consumer guarantee rights.
“In this case, consumers may have incurred additional expense and inconvenience paying for repairs or replacement products because they were told false and misleading information about their consumer guarantee rights,” Acting ACCC Chair Catriona Lowe said.
“All products sold to consumers come with a guarantee that goods are of acceptable quality, and retailers must provide a remedy for faulty goods if this guarantee has not been met, which includes repair, replacement or refund, depending on the circumstances.”
Specifically, Fitbit admitted that its customer service staff told 40 consumers (between about November 2020 and February 2022) they did not have a right to a replacement product because Fitbit’s two-year ‘warranty period’ had expired.
Of those 40 consumers, 39 had contacted Fitbit about a problem with a replacement product, and Fitbit represented that the warranty period was that of the original device, which had expired.
In one example, a consumer complained to Fitbit about a faulty device that had recently been provided as a replacement for the original faulty device by Fitbit. The purchase date for the original device was more than two years ago.
The Fitbit customer service representative agreed the new device was defective but informed the customer that they were not eligible for a replacement, saying “Your device does not meet the requirements for a replacement…. based… on the original purchase date.”
Fitbit also admitted that its staff told 18 other consumers (between about May 2020 and February 2022) they did not have a right to a refund unless they returned the faulty product ‘within 45 days of purchase’.
In another example, a consumer claimed to be experiencing technical issues with their Fitbit device and ultimately requested a refund, when they were advised they did not meet the requirements for a refund and told:
“To be eligible for a refund, there are two requirements needed:
* Within 45 days upon shipment of the device.
* Purchased directly from Fitbit online web store.”
Fitbit admitted that its representations were false or misleading, and that they constituted conduct that was misleading or deceptive conduct, or likely to mislead or deceive.
In fact, all consumers have consumer guarantee rights under the Australian Consumer Law, and when the guarantee that goods are of acceptable quality has not been met, consumers are entitled to applicable remedies including for replacement goods, which cannot be restricted in any way.
Fitbit apologised for its conduct and the Federal Court recognised that the compliance measures implemented under a 2018 court-enforceable undertaking by Fitbit (Australia) Pty Ltd did not prevent the contraventions.
“We took this action as a reminder to Fitbit, and other businesses, that they must honour their customer’s consumer guarantee rights without restrictions and not mislead consumers about these rights,” Ms Lowe said.
“We are pleased Fitbit admitted its misconduct, especially since this is the second time we have had to respond to a company in the Fitbit group with concerns about representations involving consumer guarantee rights.”
The parties filed joint submissions, a statement of agreed facts and admissions and joint proposed orders.
Background
Fitbit LLC (previously Fitbit Inc) is a consumer electronics and fitness company based in the United States of America which provides health and fitness devices, including wearable trackers.
Fitbit, Inc was a publicly listed company on the New York Stock Exchange until January 2021, when it was acquired by Google and became Fitbit LLC.
Fitbit is responsible for the operation of Fitbit’s customer support services internationally, including for Australian consumers. It provides its customers support services through representatives based overseas, primarily in the Philippines. Australian consumers can access customer support either through the Fitbit website or the Fitbit mobile app.
Fitbit (Australia) Pty Ltd is a related company of Fitbit, which manages Fitbit’s relationships with its third-party retailers in Australia, and Australian marketing and promotional activities.
In Australia, Fitbit products can be purchased directly from Fitbit’s website or from third‑party retailers.
In May 2018, Fitbit (Australia) Pty Ltd, gave the ACCC a court-enforceable undertaking after it acknowledged that representations it made to consumers about warranties for faulty products may have contravened the Australian Consumer Law. It was not alleged the conduct subject to this judgment was a breach of the 2018 undertaking.
In October 2022, the ACCC instituted Federal Court proceedings against Fitbit LLC for alleged false and misleading representation to consumers about their consumer guarantee rights.