If you’ve ever had to deal with trying to get a faulty product repaired or replaced, you’ve probably at least once experienced the struggle of dealing with an unhelpful customer service representative who seems unwilling to assist. Now, a Federal Court decision has unwittingly handed companies a “cheat sheet” on how to get out of repairing faulty goods.
Enter LG versus the Australian Competition and Consumer Commission (ACCC), a court case in which a judgment was delivered this week that found LG had on two out of seven occasions misled consumers about their rights under Australian Consumer Law concerning repairs of televisions.
The electronics company now faces fines of up to $1.1 million for each of the contraventions.
But in the five other instances, the three judges in the case effectively gave LG a pass, deciding that it had not misled consumers. The ACCC believed LG had omitted information about potential consumer guarantees that should have been communicated.
Under Australian Consumer Law and irrespective of any manufacturer warranty, consumers are entitled to a repair, replacement or refund if goods or services are considered faulty and it is “reasonable” that the products should still be in a functioning quality considering their typical lifespan.
Say you have a one-year manufacturer’s warranty on a TV, for instance, the Australian Consumer Law (ACL) still applies after that lapses, and it is still likely you would be entitled to a repair, replacement or refund if: 1) you ask for your case to be looked at under Australian Consumer Law; 2) it is deemed to be a manufacturing fault that caused the television to malfunction, and; 3) the length of time for which it is “reasonable” for the product to be used remains in place.
But most worryingly for consumer rights advocates, the LG case highlights a flaw in Australian consumer law: companies that sell you goods and services are not required to tell you any of this should what they sell you become defective, putting the onus on you to know your rights.
“The judgment found that merely not mentioning consumers’ ACL rights is not in itself misleading,” Adrian Kuti, special counsel at law firm Clayton Utz, tells Fairfax.
As played out in the LG case, the judges found that it was not misleading for LG to say to consumers who were seeking repairs words to the effect of “this product is out of warranty, therefore we can’t offer any remedy under the warranty” or “this product is out of warranty, but we’d like to offer you this remedy anyway”, even if the remedy involved the customers having to pay for some of the costs involved in the repair when they could have otherwise potentially had their TV replaced for free under the Australian Consumer Law.
Only if a representation similar to “this product is out of warranty, therefore we can’t do anything to help you” was made would it breach consumer law, the judges found, as that suggested warranty rights were the only rights a consumer had, when this was false (Australian Consumer Law rights applied too).
“This is not ideal,” says Sarah Agar, head of campaigns and policy at consumer advocacy group CHOICE. “In my view, businesses should have an obligation to inform their customers of their rights under the consumer law.”
CHOICE has previously called for signage to be placed at the point of sale of goods and services, summarising consumer guarantee rights, to help ensure consumers physically taking products back are reminded of their rights, “because, in our experience, many businesses are not proactive about sharing this information”.
For consumers, Agar says a key takeaway from the LG case is for consumers to know their rights.
“If you have bought a faulty product, you should directly ask for a remedy under the consumer guarantees,” she says. “If you mention the guarantees you often have a better chance of getting an appropriate remedy provided quickly than if you don’t specifically mention the law.”
Kuti of Clayton Utz adds that the “curious” and perhaps still unclear part of the case remains “where the line is drawn between a company avoiding misleading consumers about their rights and a company having a positive obligation to tell consumers about their rights”.
“I don’t think this judgment goes as far as saying there is a positive obligation on companies to do so,” Kuti said. “Arguably, that isn’t the role of the company; that is more appropriately the role of the regulator or government to educate consumers about their rights.
“But,” he said, “what this judgment does provide is a warning [that] while there is no positive obligation to educate consumers about their rights, companies need to be careful not to make sweeping statements denying remedies in all circumstances unless an assessment [of the faulty goods] has been performed [and it is found not to be the fault of the manufactuer].”
One quirk of the case that makes it difficult to draw broader conclusions, according to CHOICE’s Agar, is that so much of it relied on individual communications between each customer and LG. Second, the question of whether the TVs in question were actually not of acceptable quality was not proven.
This aside, the court appears in my view to have unwittingly handed companies a cheat sheet on how to get out of repairing faulty goods under the ACL by simply deflecting consumers unaware of their rights with wordplay. That’s not to say they still can’t enforce their consumer law rights.
But if a consumer doesn’t know their rights, a company may be able to get away with just referring to a product being out of warranty, pretending as though the ACL doesn’t exist only until it’s mentioned.
A further case will hopefully clarify all this.
In the meantime, consumers should learn their rights.
On January 1, new consumer protection laws came into place across Australia. We've got the lowdown on how the new rules protect you against door-to-door selling, telemarketing, warranty rip-offs and more.Read more