Legal

Apple fined $9 million by the ACCC over misleading customers with ‘error 53’ issue

Dominic Powell /

Global technology giant Apple has been fined $9 million by the Australian Competition and Consumer Commission (ACCC) over the infamous ‘error 53′ debacle which occurred last year, disabling a number of users’ devices after they had them repaired by third party repairers.

At the time, the ACCC alleged Apple had “routinely refused” to fix devices that had been repaired by a third party, and in doing so, was in breach of Australian Consumer Law by making false or misleading representations.

Yesterday, the ACCC announced the Federal Court had found Apple US to be in breach of Australian Consumer Law and had fined the company $9 million. The company admitted it had told at least 275 Australian customers they were not eligible for a repair if their device had been fixed by a third party.

ACCC Commissioner Sarah Court said in a statement:
“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.”

She went on: “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. 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.”

After being alerted to the ACCC investigation, Apple began an outreach program to approximately 5,000 customers affected by the ‘error 53’ issue, offering to compensate customers and provide them with a new device.

In a statement to the ABC, an Apple spokesperson said: “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.”

For a company of Apple’s size, $9 million could be considered a tiny penalty. At last estimate, the consumer tech producer had around $US200 billion ($270 billion) cash in the form of various investments and profit. The ACCC’s penalty will drain just 0.003% of that.

When the court case was first announced, commercial lawyer at LegalVision Ursula Hogben told SmartCompany SME owners should be on top of their obligations when it comes to offering repairs.

“Consumers are entitled to repairs from your business, if your product is not of acceptable quality or not fit for purpose, even if other repairs were carried out by a third party,” Hogben said.

However, Alistair Little, a commercial lawyer at TressCox Lawyers, told SmartCompany there was one exception: when the consumer’s product was broken as a result of third-party repairs.

“If the repairs have in some way damaged the equipment, you’re entitled to say you don’t have to repair it,” he said at the time.

NOW READ: Australian banks take on Apple Pay: Why ANZ and Amex are the only winners

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Dominic Powell

Dominic Powell is the lead reporter at StartupSmart.

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