Harvey Norman franchisees face fines

ELEVEN Harvey Norman franchisees face fines of up to $1.1 million for giving customers misleading information about their right to claim a refund or replace faulty products.

By InvestSMART · 21 Nov 2012

By InvestSMART ·
21 Nov 2012

Comments

ELEVEN Harvey Norman franchisees face fines of up to $1.1 million for giving customers misleading information about their right to claim a refund or replace faulty products.

Consumers who purchased mobile phones, laptops, refrigerators and espresso machines that developed faults were told they had to pay for repairs or wait for manufacturers to provide a refund, documents lodged with the Federal Court in NSW show.

A store in Bundall, Queensland, allegedly told a customer trying to replace a faulty laptop worth $1200 that Harvey Norman could not do anything until it was contacted by the Australian Competition and Consumer Commission.

Other consumers were told Harvey Norman did not give refunds, or only exchanged products worth less than $300, or that they would only get refunds if the retailer received the money from the manufacturer first.

However, the Competition and Consumer Act applies to the retailer.

The ACCC launched legal action against the owners of Harvey Norman stores in Launceston and Moonah, Tasmania, Albany and Mandurah in Western Australia, Hoppers Crossing and Sale in Victoria, Bundall, Ispwich and Oxley in Queensland, and Campbelltown and Gordon in NSW.

"The Australian Consumer Law provides consumers with rights to certain remedies from retailers and manufacturers when goods fail to comply with the consumer guarantee provisions, including that goods are of acceptable quality and fit for the purpose for which they were sold," the ACCC chairman, Rod Sims, said.

Each contravention carries a potential infringement notice fine of $6600 or penalty of $1.1 million. Consumers have the right to ask for repairs, replacement or a refund if goods are faulty, unsafe, look unacceptable or do not do what they are supposed to do.

Go to Google News, then click "Follow" button to add us.

Share this article and show your support

Frequently Asked Questions about this Article…

What happened with Harvey Norman franchisees and why did the ACCC take legal action?

The ACCC launched legal action after alleging 11 Harvey Norman franchisees gave customers misleading information about their rights to refunds or replacements for faulty goods. Documents lodged in the Federal Court in NSW say consumers who bought phones, laptops, refrigerators and espresso machines were told incorrect things about repairs, refunds and manufacturer responsibility.

Which Harvey Norman stores are named in the ACCC legal action?

The ACCC action names owners of Harvey Norman stores in Launceston and Moonah (Tasmania), Albany and Mandurah (Western Australia), Hoppers Crossing and Sale (Victoria), Bundall, Ipswich and Oxley (Queensland), and Campbelltown and Gordon (New South Wales).

What kinds of misleading statements were customers allegedly told by Harvey Norman franchisees?

The documents allege customers were told they had to pay for repairs, wait for manufacturers to provide refunds, that Harvey Norman did not give refunds, that exchanges only applied for items under $300, or that refunds would only be provided after the retailer got money from the manufacturer.

What consumer protection laws apply and who is responsible — the retailer or the manufacturer?

Under the Competition and Consumer Act and Australian Consumer Law, retailers are responsible for consumer guarantee remedies. The ACCC emphasised that the law provides rights to remedies from both retailers and manufacturers when goods fail to meet consumer guarantee provisions like acceptable quality and fitness for purpose.

What remedies can consumers ask for if goods are faulty — refund, replacement or repair?

Consumers have the right to request a repair, replacement or a refund if goods are faulty, unsafe, look unacceptable or do not do what they were supposed to do, under the Australian Consumer Law consumer guarantee provisions.

What fines or penalties could Harvey Norman franchisees face if found to have contravened consumer laws?

Each alleged contravention can carry an infringement notice fine of $6,600 or a penalty of up to $1.1 million, according to the documents lodged with the Federal Court.

Should everyday investors pay attention to the ACCC legal action against Harvey Norman franchisees?

Yes — investors may want to monitor the ACCC's legal action and any outcomes because the case involves potential large fines and reputational issues for named franchise stores. The action highlights regulatory scrutiny of compliance with consumer rights, which can be material information for shareholders and potential investors.

If a retailer tells me I don’t have a right to a refund, what can I do based on the ACCC’s position?

If a retailer says you have no right to a refund or replacement, you can assert your rights under the Australian Consumer Law: ask for a repair, replacement or refund. The Competition and Consumer Act applies to the retailer, so consumers are entitled to remedies when goods fail to meet consumer guarantees.