ACCC says, ‘”No, Harvey Norman!”

20 11 2012

The Australian Competition and Consumer Commission has ruined Christmas for eleven Harvey Norman franchisees accused of misrepresenting consumer rights.  On 19 December, when most people will be counting sleeps til Christmas, the franchisees will be in the Federal Court in Sydney as orders are made for progress of the case.

ACCC says that the eleven retailers gave consumers false information about their rights when goods weren’t up to scratch.  It says that staff rolled out old red herrings like:

  • “We only have to replace damaged goods if you return them within 24 hours.”
  • “Sorry, this is under the manufacturer’s warranty.  You’ll have to contact them.”
  • “No, sir.  That was just a $20 item and we don’t replace or refund for those low cost items.”
  • “Yes, we can fix that, but there’s a $75 transport and repair charge.”

Some of these statements can sometimes be valid in some circumstances.  But where goods simply aren’t of reasonable quality when supplied, traders can’t use excuses to push complaining customers away.  Australian law says they have rights to a remedy, and no store can limit or exclude them.

A familiar story

Of course, there have been no adverse findings against any of the eleven yet.  But ACCC’s allegations have a familiar ring.  Just last year, discount computer chain MSY was caught making up its own law on consumer warranties.  According to MSY:

  • They did not provide any statutory warranties to consumers in relation to their products.
  • They would only provide statutory warranties to consumers in a restricted range of circumstances.
  • They required consumers to pay a fee to obtain a warranty beyond that provided by the manufacturer.

According to the Federal Court, they could pay a $203,500 penalty and submit to a five year court restraint for misleading consumers about their rights.

ACCC:  It’s a campaign

ACCC has made no secret of the fact that it has these kinds of misrepresentations in its legal gun sights.  “Consumer Guarantees has been identified as a national priority by ACL Regulators and is a matter of particular concern for the ACCC with more than 16,000 contacts from members of the public to the ACCC’s Infocentre so far this year” said its Chairman Rod Sims this week.  And its website now states that “The ACCC is conducting a number of investigations into other large manufacturers and retailers for alleged misrepresentations of consumer guarantee rights in breach of the ACL.”  And to prove the point, ACCC launched the same kind of legal action last month against Hewlett-Packard Australia Pty Ltd.

A good website or policy is not enough

Many businesses think they can cover off legal risk with paperwork.  It’s true that a well drafted contract or a comprehensive trade practices compliance policy document is a key tool in managing risk.  But they’re almost never enough, if they aren’t backed up in practical ways.

Harvey Norman’s website has clear and accurate information about what remedies consumers are entitled to if goods are not satisfactory.  If ACCC’s case is right, it means that the franchisees were operating in disregard of the information on their own group website.  That would indicate a serious disconnect between what the group’s head office knows (ie that consumers have bedrock rights) and what’s filtered through to staff on the shop floor.  And that kind of disconnect can be very expensive.

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