​ACCC takes Apple to court over alleged misleading consumer guarantee

The Australian Competition and Consumer Commission (ACCC) has initiated proceedings in the Federal Court against Apple and its US-based parent company, Apple Inc, alleging that the tech giant made false, misleading, or deceptive representations about consumers' rights under the Australian Consumer Law.

In a statement, the ACCC said it commenced an investigation into Apple following reports relating to "error 53", which was an error that disabled some consumers' iPads or iPhones after downloading an update on their devices.

According to the ACCC, many consumers who experienced error 53 had previously had their Apple device repaired by a third party, for instances such as a cracked screen.

The ACCC said its investigation revealed that Apple appeared to have routinely refused to look at or service consumers' defective devices if they had the device repaired by a third party, even when that repair was unrelated to the fault.

Under the Australian Consumer Law, there are a number of "consumer guarantees" regarding the quality, suitability for purpose, and other characteristics of goods and services, the ACCC explained, and consumers are entitled to certain remedies at no cost where goods and services do not comply with the consumer guarantees.

As a result, the consumer watchdog alleges that Apple represented to consumers with faulty products that they were not entitled to a free remedy if their Apple device had previously been repaired by third-party unauthorised repairers.

This practice, according to the ACCC, cannot by itself remove a consumer's right to a remedy for non-compliance with the consumer guarantees.

"Consumer guarantee rights under the Australian Consumer Law exist independently of any manufacturer's warranty and are not extinguished simply because a consumer has goods repaired by a third party," ACCC Chairman Rod Sims said on Thursday.

"Denying a consumer their consumer guarantee rights simply because they had chosen a third-party repairer not only impacts those consumers but can dissuade other customers from making informed choices about their repair options, including where they may be offered at lower cost than the manufacturer."

Sims used the opportunity to inform other players in the consumer tech space that under Australian law, consumer rights extend to any software or software updates loaded onto goods and devices.

"Faults with software or software updates may entitle consumers to a free remedy under the Australian Consumer Law," he explained.

The ACCC is seeking pecuniary penalties, injunctions, declarations, compliance program orders, corrective notices, and costs against the Californian giant.

In December 2013, the ACCC accepted a court-enforceable undertaking from Apple following an investigation into the iPhone maker's consumer guarantees policies and practices, and representations about consumers' rights under the Australian Consumer Law.

The ACCC conducted its investigation after becoming concerned that Apple was misleading customers on what consumer guarantee rights they had. These included telling customers that Apple is not required to provide refunds and/or replace or repair products, when these guarantees are covered under the Australian Consumer Law.

According to the ACCC, Apple staff may also have told customers that they were not entitled to refunds 14 days after purchase, or that they are only covered by a 12-month limited manufacturer's warranty. However, under the Australian Consumer Law, customers are always permitted a refund if there is a major problem with the product, and products sold are always automatically protected with a consumer guarantee.

"The ACCC was concerned that Apple was applying its own warranties and refund policies effectively to the exclusion of the consumer guarantees contained in the Australian Consumer Law," Sims said at the time.

The watchdog informed Apple at the same time that a retailer cannot refuse to help a customer, even in the case of faulty non-Apple products.