Harvey Norman Franchisees Fined $116,000 For Lying About Consumer Rights

The Federal Court has found four Harvey Norman franchisees guilty of lying to consumers about their rights. The stores were fined a total of $116,000 for making false or misleading representations to customers — including the claim that they were under no obligation to provide an exchange or refund for faulty goods supplied.

Picture by Richard Kendall/Getty Images

Following a court order enacted by the Australian Competition & Consumer Commission (ACCC), the Federal Court has ordered four Harvey Norman franchisees to pay a total of $116,000 in civil pecuniary penalties for making false or misleading representations to customers regarding consumer guarantee rights.

Launceston Superstore Pty Ltd (since closed), Moonah Superstore Pty Ltd, located in Moonah, Tasmania, HP Superstore Pty Ltd, located in Hoppers Crossing, Victoria and Salecomp Pty Ltd, located in Sale, Victoria were found guilty of making numerous false or misleading representations to consumers about their consumer guarantee rights.

The Launceston store was fined $32,000 while the other three franchisees were each fined $28,000. In addition to penalties, the franchisees are also required to display in-store corrective notices and implement a consumer law compliance program.

Some of the false representations made by store representatives included:

  • that the franchisee had no obligation to provide remedies for damaged goods unless notified within a short specified period, such as 14 days
  • that the franchisee had no obligation to provide an exchange or refund for faulty goods supplied
  • that the franchisee had no obligation to provide a remedy independently of the relevant product manufacturer

Launceston Superstore Pty Ltd, which copped the biggest fine, also stated on receipts that customers could not claim a refund on damaged goods unless notified within 24 hours of delivery or pick-up.

In his judgment, Justice Middleton reiterated that if goods were not of acceptable quality when sold, consumers can obtain a remedy.

"These penalties send a strong message to all businesses, including franchisees, that they must not mislead consumers about their rights to repair, replacement or refund for faulty goods under the Australian Consumer Law," ACCC Chairman Rod Sims said in a statement.

"The ACCC has moved from raising awareness of the law to taking enforcement action where it believes consumers have been misled about their rights under the consumer guarantee provisions of the ACL."

The ACCC is awaiting judgment in proceedings against another six Harvey Norman franchisees for similar conduct.

You can read an overview of Australia's consumer protection laws here.

Have you ever run into resistance when trying to return a faulty product at retail? If so, how did you resolve it? Share your stories in the comments section below.


Comments

    I don't even bother with stores that quote these things anymore. If I'm part way through a transaction, and they say they are not liable, then I simply turn and walk away. I don't even bother explaining to them they are breaking the law, in fact, I don't say a single word. I just walk away and send an email to their head office.

    There are so many options these days to getting the goods you want that you simply do not need to put up with this.

    I think this sort of behavior, no matter where it's found, should be rewarded by a lack of sales!

      Most people though wouldn't ask about their returns policy when buying something, figuring that they would surely be adhering to consumer law, and even if they aren't going to, there's no saying they will be honest about it up front..

      Good on ya slappy! Well said...

    "Yes, you do have a 1 year limited warranty on all goods, but we recommend you purchase the 3 year warranty. A customer recently bought a new TV with just the 1 year warranty, and when they opened the box, a bobcat came out and mauled them. The next customer bought the 3 year warranty and was promoted at work for being so damn handsome and awesome, so I highly recommend you buy the 3 year extended warranty"

    - Harvey Norman's newest sales pitch after the fines were handed down.

      What happened to the bobcat? Was it OK? What if it had of come out of the box purring, would the bobcat mauling be covered under the normal 1yr warranty?

      Next review on Yelp or equivalent:
      '***** Came with free bobcat'

        Hardly Normal's bobcat prices are simply outrageous. I found a bobcat on ebay for 1/2 the price, including postage. Take that Gerry Harvey. Next thing you know he'll be demanding that the government slap the GST on all imported bobcats so he can maintain his high bobcat prices.

      I've never had them tell me I had to buy that warranty, if that's what you're getting at. I think this is far more related to when people are ACTUALLY trying to return things.

      It was funny, I was with a friend buying a lap top in Harvey Norman. Yes I know.. but it actually was cheaper there than some other shops. The guy was trying to upsell on warranty and customer care shit. Clearly annoyed I was there. Trying to see some sort of phone line help, extra warranty crap for $100 or maybe even $150 more. I was very firm, no it's fine with out it. When they saw he wouldn't make a sale, he literally just goes, 'well I'll throw it in there anyway.'

      I couldn't believe it, that shows how little worth it is. I knew it was worthless but in the blink of an eye going, 'you really need to give us a $100 for this' to, 'ah have it for free.'

    Why would anyone ever shop at Harvey Norman? They are a bunch of con men out to steal your hard earned money - don't shop at Harvey Norman. Shop online (FU Gerry) or give your money straight to the asians (e.g. Bing Lee).

    The biggest issue (as someone who worked for the Harvey Norman group a few years ago) is that most staff aren't doing it on purpose, they're simply ignorant of what the law is.
    Having said that, the management level (and above) usually know exactly what's going on.

    Didn't know people actually shopped there lol

      Move to tassie then. Choices when it comes to big white goods/furniture are extremely limited...

    One of the problems is that the people who shop at Harvey Norman are generally shopping there BECAUSE they don't know the market and/or rights. When I see someone talking to a salesperson in the PC section at Harvey Norman, I feel like it's wrong of me to not interrupt and direct them to MSY or even BCC.

    There's this idea that buying from a big store gives you a better deal or more security on the same product but the psychology of it says that you're better off returning an item to a store with fewer employees.

    I don't understand though. Is it just laziness? It's not like Harvey Norman lose money on it right? surely they can claim it as faulty/DOA. The tyre shop I worked at used to send truckloads (literally) of tyres back to wholesalers after complaints.

    Maybe ACCC should have pamphlets at big retailers around Aus with an explanation of consumer rights. Make it a compulsory thing at the registers in these sort of places.

    They could also come up with clearly defined minimum product life expectancy and have the retailers add that to the tag so people know if they buy something, they know they're covered for so many years.

      It's not laziness, stupidity or any other kind of ignorant insult you want to hurl at people because they don't share your poignant views on department stores. Some people simply do not care in the slightest. Some people want to walk in and out with a product that they're happy to pay a ridiculous amount for because they can afford it and regardless of what a salesperson says, they have rights that are easily enforcable.

      Stop assuming that when people don't make the same decisions you would, it's because they're stupid or have some made-up idea you've invented. It's incredibly unfair to judge based on something so mind-bogglingly petty.

        Pretty sure he meant "Is it laziness on the part of the store, that they try to weasel out of providing exchanges, returns, etc? Surely they can claim money back/replacements from their suppliers if the goods are faulty anyway."

        I have no idea what you're angry about. Your view seems to align with mine but you seem to be looking for a fight or something.

      I like the pamphlet idea. It allows customers to easily know their rights, and may also educate the sales people.
      Most people don't know their rights as a customer, and I'd venture to say a large proportion of HN staff don't know any different to what management tells them.

    When I worked at Dick Smith management pounded this into out heads,
    when doing my sales pitch I had to always state the 'new' consumer law to customers.
    "blah blah this item has a 1 year warranty though you can still return the item after that 1 year because of *said law here* however we offer a extended warranty service which covers more than what the default option would give you"

    you get the point

    harvey norman has always been sneaky.

    Last edited 09/12/13 7:23 pm

    I don't think it's just retailers that are the problem here.
    Having worked in the returns/RA area of a Harvey Norman store for a few years now, I have been stonewalled by suppliers when trying to return something for a customer under warranty a crazy number of times.
    The reason you see so many people getting up in arms about HN stores specifically is that they get very limited support from their upper management, and every return that can't get sent back to the supplier for some reason or other comes directly out of the Franchisee's pocket - and at some stores, they can afford it just as little as you can.

    So don't JUST blame the stores for this, there needs to be a safeguard in place so that a retailer that returns a faulty item outside of the manufacturer's arbitrary 14/30 day 'DOA' period can return it for a credit. Retailers need to have the same rights as consumers for the ACL to function properly, until this happens, customers will continue to get ripped off when it comes to warranty replacements, because there's no certainty that the retailer will be able to recoup their costs.

    Disclaimer: I'm by no means condoning the actions of the HN stores in question, just trying to play devil's advocate. Lying is bad, misleading people is bad, and breaking the law is bad.

      I'd like to return this Mr. Manufacturer. What? Not in the original box? And you can't accept it back? But its faulty and I bubble wrapped it perfectly? Not good enough you say?

      Harvey Norman Returns Department.

    When I picked up my PS4 from a HN franchise I had the sales staff trying to pressure me into buying another years warranty. When questioned about my rights through the ACCC and statutory warranty I was informed that wouldnt hold up..... Anyway three people behind me questioned me about their rights and also told them to stick their $90 one year extended warranty

    Purchased a garmin gps at HN. Got it home...whole parts of my Adelaide suburb couldn't be found. Similarly searching for an address in the cbd. Took it back to HN, said its not fit for purpose it was purchased for. They said stiff,basically. phoned consumer affairs ... they asked can it show your location. Said yes,they said stiff, basically. So stuck with a crap gps. Only positive is telling people not to shop at HN and saying why.... I enjoy that more than using the dysfunctional gps.

    Moonah HN are still misleading people...

    Same bad experience with HN MARION, SA. Washing machine stopped working after 2 months. HN CLAIMING its manufacturers responsibilitiy since under warranty. Manufacturer doesn't give a [email protected]@@. When I asked HN isn't it your responsibility as my contract is with you, their sales person keeps referring it back to the manufacturer! I'm sick of this @@@@@@@@! I think ACCC should take all of the HN to the cleaners.

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