Harvey Norman franchisees pay for misleading consumers

The Federal Court has ordered four Harvey Norman franchisees to pay a total of
$116,000 in penalties for making false or misleading  representations to customers about their consumer guarantee rights. The Australian Competition and Consumer Commission (ACCC) awaiting judgment in proceedings against another six Harvey Norman franchisees
for similar conduct, where the ACCC is seeking court orders including penalties,
declarations, injunctions, corrective notices and compliance training.

The Court found that each franchisee had made a number of false or misleading representations to consumers about their consumer guarantee rights. For instance, staff at the stores had told customers that: “No refunds or exchanges will be made for faulty goods unless notified within 14 days” and at another: “You can only take up your rights for faulty goods with the manufacturer.”

At one store receipts were given to customers which said: “No responsibility taken for damaged goods if not notified within 24 hours of pick up or delivery.”

All of these statements were held to be misleading. Under the Australian Consumer Law, consumers have the right to refunds and replacement of defective goods within a reasonable time.

“These penalties send a strong message to all businesses, including franchisees, that they must not mislead consumers about their rights to repair, replacement or refund for faulty goods under the Australian Consumer Law,” ACCC Chairman Rod Sims said.

The Australian Consumer Law gives consumers a set of rights called consumer guarantees for all goods. These guarantees include a guarantee that:

  • goods will be of acceptable quality;
  • goods will be fit for any disclosed purpose;
  • goods will match any description under which it is sold;
  • goods will have spare parts available for a reasonable time; and
  • all express warranties offered will be honoured.

Where a good develops a major fault, consumers have a right to a replacement or refund from the supplier of the good. For goods that develop a minor fault, a consumer has a right to have the good remedied (at the suppliers discretion) within a reasonable time. If the supplier doesn’t do so, the consumer can either reject the goods and get a refund or have the problem fixed and recover reasonable costs of doing so from the supplier.


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