ACCC pursues consumer guarantees case against MSY
On 30 November 2016, the ACCC commenced proceedings in the Federal Court against MSY Technology and related companies that sell computer goods in stores and online. The MSY companies are alleged to have misrepresented consumers’ rights to remedies for faulty products.
MSY Technology is a well known discount computer store that operates 28 retail stores around Australia, as well as an online store that sells various computer products and accessories.
The ACCC is alleging that the MSY companies made statements on the MSY Technology website, and that their in-store employees made statements to customers, that misrepresented consumer rights by suggesting that MSY Technology, among other things:
- had a discretion over whether a customer was entitled to a remedy for a faulty product;
- could choose which remedy to provide customers;
- would not provide any remedies for faulty software products; and
- would only provide a remedy for products returned within 7 days.
Unfortunately for the MSY companies, this is not the first time that allegations of this nature have been levelled against them. In 2011, they were fined $203,500 in total for very similar breaches of the Australian Consumer Law (ACL) relating to the operation of the consumer guarantee provisions. In that case, the companies admitted the conduct alleged against them, which the judge described as “an unacceptable form of commercial conduct and illegal”.
The ACCC is applying for a range of remedies, including penalties, declarations and a comprehensive compliance program. The maximum penalty per contravention is $1.1 million, and, given that the alleged conduct took place over more than 3 years (between January 2013 and February 2016), there is the potential for a large number of contraventions to be made out. (In the 2011 proceedings, the conduct took place over less than a year.)
Because one of the factors that a court will take into account in imposing a penalty is whether or not the company has previously been found to have engaged in similar conduct, the MSY companies may be up for a significantly higher penalty than last time. In 2013, similar conduct on a larger scale by Hewlett-Packard resulted in a $3 million penalty being imposed, as we blogged at the time.
The new proceedings against the MSY companies will first go before the Court on 15 December.
The case demonstrates once again that the ACCC takes consumer guarantees very seriously – particularly, as it said when it announced these proceedings, “conduct by businesses which have a national presence has the potential to cause significant consumer harm”. It also demonstrates that the ACCC will keep an eye on companies that have previously been found to have breached the ACL!
It also comes in the context of discussion that the penalties for breaches of the ACL should be significantly increased, as recommended in the Productivity Commission’s draft report on Consumer Law Enforcement and Administration, released today. More on that shortly.