The Australian Competition and Consumer Commission has instituted proceedings in the Federal Court against Apple Pty Limited and its US-based parent company, Apple Inc., (together, Apple) alleging that Apple made false, misleading, or deceptive representations about consumers’ rights under the Australian Consumer Law.

The ACCC commenced an investigation following reports relating to ‘error 53’ – an error which disabled some consumers’ iPads or iPhones after downloading an update to Apple’s ‘iOS’ operating system. Many consumers who experienced error 53 had previously had their Apple device repaired by a third party; usually replacing a cracked screen.

The ACCC investigation revealed that Apple appears to have routinely refused to look at or service consumers’ defective devices if a consumer had previously had the device repaired by a third party repairer, even where 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, and consumers are entitled to certain remedies at no cost where goods and services do not comply with the consumer guarantees.

The ACCC alleges 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”. However, having a component of the Apple device serviced, repaired, or replaced by someone other than Apple cannot, by itself, extinguish the 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.

“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.”

“As consumer goods become increasingly complex, businesses also need to remember that consumer rights extend to any software or software updates loaded onto those goods. Faults with software or software updates may entitle consumers to a free remedy under the Australian Consumer Law.”

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

Background

Under the Australian Consumer Law:

when consumers buy products, they come with a number of guarantees, including a guarantee that they will be of acceptable quality and a guarantee that they will be reasonably fit for any disclosed or represented purpose.

the consumer guarantees are in addition to any manufacturer’s warranty;

the consumer guarantees are not limited to the period of the manufacturer’s warranty. In many cases, they will apply for longer than the manufacturer’s warranty;

if the product is not of acceptable quality or fit for purpose, consumers are entitled to remedies, which may include a refund, replacement or repair, at no cost to the consumer.

In December 2013, the ACCC accepted a court enforceable undertaking from Apple Pty Limited following an investigation into Apple’s consumer guarantees policies and practices, and representations about consumers’ rights under the ACL.

See: Apple Australia gives undertaking to ACCC to improve its consumer guarantees policies and practices

To find out more about consumer guarantee rights, please visit ACCC's page on consumer rights & guarantees.