On Friday 1 June, the Australian Competition and Consumer Commission (ACCC) accepted a court enforceable undertaking from Fitbit (Australia) Pty Limited in response to the ACCC’s allegation that Fitbit Australia’s product warranty misrepresented consumer rights for faulty goods under the consumer guarantee regime of the Australian Consumer Law (ACL).
Fitbit Australia is not the only company failing to measure up. There was a 39% increase in reports to the ACCC of consumer guarantee issues in 2017 versus 2016, increasing the total number of these complaints from 21,000 in 2016 to 29,000 in 2017 (see full details here).
How are companies still getting this wrong?
After all, the consumer guarantee regime has been in place now since 2011.
You would think high profile multinational companies like Fitbit – not to mention the likes of Ford, Holden and Hyundai which have recently come under the ACCC’s spotlight as part of the New Car Retailing Industry Market Study – would have the legal budget to get this right.
Perhaps it is because multinationals take a global rather than local approach to supply chain management
Fitbit Australia, like many other Australian subsidiaries of overseas parent companies, sells goods in Australia under a warranty that operates on a global basis.
The ACCC was concerned that, among other things, Fitbit Australia’s online returns policy and limited warranty was false or misleading in breach of the ACL by representing that:
- defective product remedies were only available within one year of purchase;
- consumers may have to pay to return products;
- replacement products were only warranted for the longer of 30 days or the remainder of the original warranty period; and
- consumers could not claim consequential losses.
The fact the warranty included phrases such as “to the extent permitted by law” or “except where prohibited by applicable law” language did not render the warranty compliant according to the ACCC.
Nor does the Federal Court consider such language good enough. US-based gaming company, Valve Corporation, had this re-affirmed in April 2018 when the High Court dismissed a special leave application to appeal the Full Federal Court’s decision uphold the trial judge’s finding that Valve had made false or misleading representations about Australian gamers’ consumer guarantees in its online policy. This was despite its policy stating it applied “subject to existing laws and legal process…”
Does this mean Australian-specific documentation is required?
In short, yes. Product warranties must expressly state they apply in addition to the rights consumers otherwise have under the ACL, not just under unnamed “local laws”.
Companies do not necessarily need to draft a completely separate document for goods or services supplied in Australia. Instead, a small number of specific amendments may be all that is required for product warranties to comply with the Australian consumer guarantee regime. For example, Fitbit Australia gave undertakings that, among other things, it would amend content directed to Australians in its online warranty:
- to include the mandatory wording required for all warranties against defects: “Our goods come with warranties that cannot be excluded under the Australian Consumer Law…” ;
- to include the statement “The Fitbit Return Policy and Limited Warranty is in addition to any other rights and remedies that you may have under the Australian Consumer Law”; and
- to prominently display a section on the ACL.
Ensure your warranties are ACL compliant now
If your company sells goods or services in Australia under standard form global documentation, consider whether the warranty or returns/complaints policy expressly refers to the ACL. If you work for an Australian company, there are no excuses.
Don’t wait for the ACCC to notice before taking action.
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