Hewlett Packard repairs its way

Published On 11/07/2013 | By Melissa Monks | Consumer protection, Enforcement, Litigation

Misleading warranty claims have resulted in Hewlett-Packard Australia being ordered to pay a $3 million dollar penalty.

Between January 2011 and September 2012, HP call centre staff located around the world using internal guidelines and scripts made various representations to customers calling about faulty HP computers or printers to the effect that:

  • the remedies available to consumers were limited to those available at HP’s discretion;
  • multiple repairs were required before a replacement product would be provided;
  • the warranty for the products was limited to a specified express warranty period;
  • outside the warranty period, consumers must pay for repairs; and
  • products purchased online were returnable or replaceable only in HP’s sole discretion.

HP also represented to retailers that HP was not liable to indemnify them if the retailer provided consumers with refunds or replacements without HP’s prior approval.

The ACCC considered the representations by HP to be false and misleading given the statutory rights of consumers under the consumer guarantees regime and the statutory right of indemnification to retailers under the Australian Consumer Law (ACL) and instituted proceedings.  HP ultimately conceded that the representations were likely to mislead customers as to their ACL rights.

The Federal Court accepted HP’s admissions based on agreed facts between the parties and also endorsed their comprehensive settlement without any changes.  The orders, which comprise almost fifteen pages of detail, include in addition to the $3 million dollar penalty (one of the highest imposed under the ACL), declarations, injunctions, extensive corrective advertising online and in press, a consumer redress program, payment by HP of $200,000 towards the ACCC’s costs and implementation of a new compliance program.

Justice Buchanan emphasised that the orders were necessary to ensure that the conduct was not repeated and to minimise the risk of any future ACL breach by HP.  His Honour endorsed the magnitude of the pecuniary penalty, stating that it was “an acknowledgment of the seriousness of the respondent’s conduct”, and that it was required as a matter of both specific and general deterrence against misleading consumers in relation to warranties.

HP released a public statement, which notes how the company “deeply regret that in the instances identified by the ACCC, HP fell short of our core commitment to high standards of service … and of our duties under Australian consumer laws.”

The ACCC Chairman, Rod Sims, noting the “widespread and systemic” nature of the conduct over an extended period, has reminded companies “that the Australian Consumer Law is not negotiable”.  It has also warned that, despite actions against HP and certain Harvey Norman franchisees in relation to consumer guarantees misrepresentations, there will be more proceedings to follow.

By Melissa Monks and Rob Sinni

Photo credit: włodi / Foter / CC BY-SA

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About The Author

Melissa Monks is a Special Counsel in the Melbourne office of King & Wood Mallesons specialising in competition and consumer protection, retail energy, food law and general commercial law.

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