Online consumers will be better informed about their warranties and returns rights after Australian Competition and Consumer Commission action.
"The ACCC is concerned that many online sites misrepresent consumers' rights and is putting these companies on notice that they are in for special attention," ACCC chairman, Graeme Samuel, said today.
"It appears many sites simply 'cut and paste' information from other sites on warranties and refunds without checking that the facts are correct.
"Online traders be warned: the ACCC is reviewing sites and will be considering action if remedial work is not quickly undertaken."
Mr Samuel highlighted recent ACCC intervention with Australia's leading online department store, Auction Alliance Pty Ltd, which trades as Deals Direct (www.DealsDirect.com.au).
"Deals Direct has given the ACCC court enforceable undertakings after concerns about the company's warranties and returns policy."
The company sells a wide variety of goods including kitchen items, furniture, computers, electronics, jewellery, tools, fitness equipment, alcohol, manchester, musical instruments and toys.
The ACCC raised concerns that the warranties and returns policy breached the Trade Practices Act 1974 because it contained misleading and false information about consumers' rights.
The ACCC was concerned about statements to the effect that:
- goods were only warranted by Auction Alliance for 30 days
- if Auction Alliance did accept goods for return after 30 days, the consumer was required to pay associated shipping costs
- consumers were only entitled to a refund if a replacement product could not be provided by Auction Alliance, and
- in some cases Auction Alliance did not provide any warranty and consumers were required to deal directly with the supplier or manufacturer of the product.
The Act provides that consumers have certain statutory rights in respect of goods purchased from a retailer. For example, if a good is defective the consumer may be entitled to request a refund from the retailer rather than accept an offer of replacement or repair. Such a right is usually available for a 'reasonable time' after the consumer received the good. A 'reasonable time' depends on the cost and quality of the good.
The ACCC was also concerned about materials, including warranty information, supplied with the Ultimate Pilates Workout Chair bought by consumers from Auction Alliance. The materials suggested the UPW Chair was manufactured and warranted by Guthy-Renker Australia Pty Ltd when this was not so.
Auction Alliance admitted its warranties and returns policy contained false and misleading statements about consumers' statutory warranty rights. It has also admitted to misleading consumers about the manufacturer of the UPW Chair.
Auction Alliance has cooperated fully and has worked with the ACCC to resolve the issues. It has undertaken to amend its warranties and returns policy and place notices on its website and in its daily e-newsletters explaining its conduct. It has also agreed to consider warranty claims for faulty products purchased since 1 September 2008 where consumers may not have pursued a remedy because of Auction Alliance's admitted false and misleading statements.
Auction Alliance has also agreed to write to consumers who purchased the UPW Chair offering to either provide a warranty on the same terms as the Guthy-Renker warranty or provide a full refund of the purchase price (including postage).
"Online retailers must recognise that they are subject to the same laws as shop front retailers," Mr Samuel warned. "Ensuring compliance with the law may involve some costs but in the long run it will reduce the risk of action by the ACCC and will benefit the business by fostering goodwill among their customers."
A copy of the court enforceable undertaking provided by Auction Alliance, including further background on the matter and details of all measures Auction Alliance has undertaken to implement, will be available on the ACCC's website.