Technology giant Apple has been fined $9 million in court for misleading hundreds of customers about their rights over faulty iPads and iPhones.
The consumer watchdog took Apple to the Federal Court over a series of consumer complaints about ‘error 53’ – an error message that disabled some devices after updating the operating system.
Apple admitted that it told at least 275 Australian customers that their entitlements to a repair or replacement were void, because the devices had been repaired by a third party, in breach of Australian Consumer Law.
According to the ACCC, these claims were made both in-store by sales staff as well as on its customer service phone line, and occurred between February 2015 and February 2016.
Around 5,000 customers were contacted by Apple as part of an outreach program to compensate affected customers, which was introduced after ACCC began its investigation.
In finding Apple guilty of making misleading representations to its customers, the court fined Apple $9 million.
“If a product is faulty, customers are legally entitled to a repair or a replacement under the Australian Consumer Law, and sometimes even a refund. Apple’s representations led customers to believe they’d be denied a remedy for their faulty device because they used a third party repairer,” ACCC commissioner Sarah Court said following the verdict.
“The Court declared the mere fact that an iPhone or iPad had been repaired by someone other than Apple did not, and could not, result in the consumer guarantees ceasing to apply, or the consumer’s right to a remedy being extinguished.
She added: “The Court’s declarations hold Apple US, a multinational parent company, responsible for the conduct of its Australian subsidiary. Global companies must ensure their returns policies are compliant with the Australian Consumer Law, or they will face ACCC action.”
Ms Court said that anyone who suffers a major fault with a product is entitled by law to a full refund or to a replacement.
“If customers would prefer a replacement, they are entitled to a new device as opposed to refurbished, if one is available,” she said.
In response to the judgement, Apple issued a brief statement in which it said: “Apple has been operating in Australia for over 35 years and we work hard to offer our customers the best possible service. We’re constantly looking for ways to enhance the service we deliver and we had very productive conversations with the ACCC about this. We will continue to do all we can to deliver excellent service to all of our customers in Australia.”
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.