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Another Harvey Norman franchisee pays for misleading consumers

The Federal Court has ordered a Harvey Norman franchise located in Campbelltown, New South Wales to pay $32,000 in civil pecuniary penalties for making false or misleading representations in relation to consumer guarantee rights. This is the fifth Harvey Norman franchise ordered to pay a penalty for such conduct with the Australian Competition and Consumer Commission (ACCC) awaiting judgment in proceedings against five other franchisees.

The court found that the Campbelltown franchise had made a number of false or misleading representations to consumers about their consumer guarantee rights under the Australian Consumer Law (ACL). The misrepresentations made included representations that:

  • The franchisee had no obligation to provide a refund for faulty goods;
  • The franchisee had no obligation  to provide a remedy other than an exchange or credit that had to be finalised within a few weeks; and
  • The franchise had no obligation to provide a remedy independently of the relevant product manufacturer

Sales representatives and store managers made the representations orally to consumers over a period of several months in 2012. In conjunction with the financial penalties the franchise will be required to display corrective notices in-store and implement a consumer law compliance program. The penalties serve as a reminder that misleading consumers about their rights under the ACL can have serious consequences for businesses.

Upon announcing the court’s orders, Rod Simms (ACCC Chairman) took the opportunity to reinforce the importance the ACCC places on the consumer guarantees stating “Complaints about consumer guarantees represent a quarter of the consumer protection complaints that the ACCC receives each year. Misleading conduct in relation to consumer guarantees remains an enforcement priority for the ACCC.”

The ACL gives consumers a set of rights called consumer guarantees for all goods purchased after 1 January 2011. These guarantees include that:

  • goods will be of acceptable quality;
  • goods will be fit for any disclosed purpose;
  • goods will match any description under which it is sold;
  • goods will have spare parts available for a reasonable tome; and
  • all express warranties will be honoured.

These guarantees cannot be excluded or modified by consumers or businesses. If a guarantee is breached, the consumer may have the right to a replacement, refund or repair, depending on the circumstance. Given the proactive stance of the ACCC towards enforcing the consumer guarantees ensuring compliance is of critical importance for businesses.