Apple forced to defend allegations of misleading and deceptive conduct

The Australian Competition and Consumer Commission (ACCC) has recently initiated proceedings in the Federal Court of Australia against Apple Pty Ltd and its US-based parent company, Apple, Inc. (together, Apple). The ACCC alleges that Apple made false, misleading and deceptive representations to consumers in relation to their rights under the Australian Consumer Law (ACL).

The ACCC undertook an investigation in relation to reports regarding an “error 53”, which disabled some consumers’ iPads and iPhones after downloading Apple’s iOS operating system. Many consumers who experienced this “error 53” had previously had their Apple devices repaired by third parties, often involving the replacement of cracked screens.

The ACCC alleges that Apple has routinely refused to look at or service consumers’ defective Apple devices where the consumers had previously had their devices repaired by third party repairers, even in circumstances where the third party repairs did not involve, and were not relevant to, the defects. In particular, the ACCC alleges that Apple represented to consumers with faulty Apple devices that they were not entitled to any free remedies if their devices had been previously repaired by third party repairers.

The ACL provides consumers with non-excludable guarantees regarding the quality, fitness for purpose and characteristics of goods and services (consumer guarantees). These consumer guarantees operate separately from, and in addition to, any express warranties offered by traders. Accordingly, whilst Apple may have had an express warranty that stated that no repairs were to be carried out on devices that had been repaired by unauthorised repairers, such a statement does not restrict or limit the rights of consumers to remedies under the non-excludable consumer guarantees. On its own, the mere fact that a third party had repaired a consumer good would not restrict or limit a consumer’s rights under the consumer guarantees.

The ACCC’s investigation and commencement of proceedings serves as a timely reminder for all traders to consider the legal compliance of their treatment of claims received from customers in relation to defective goods and services. In particular, it is important for all traders to be aware of the distinction between the rights of consumers under express warranties and the consumer guarantees under the ACL. Further, any voluntary, express warranties offered by traders also need to comply with the prescribed requirements of the ACL.

At Macpherson Kelley, we regularly review and prepare warranty statements, and advise on the operation of express warranties and the non-excludable consumer guarantees under the ACL. For further information, please contact Paul Kirton or Kelly Dickson.

This article was written by Scott Duke – Lawyer, Commercial.