Foreign Firms Accused Of Cheapening Warranty
Sydney Morning Herald
Thursday January 5, 2006
THE Australian Competition and Consumer Commission has taken legal action against LG Electronics for telling customers who bought its mobile phones that it offered only a limited and voluntary one-year warranty.
The commission said the law enshrined basic warranty conditions for the return and refund of money for faulty goods, and this was not limited by time. In a statement of claim lodged in the Federal Court, the commission said companies could not restrict or modify a statutory warranty. The case comes amid concern about multinational corporations seeking to impose global warranty policies that undermine Australian consumers' rights. Fair Trading agencies in Tasmania and NSW recently investigated complaints about Apple's warranty dealings with customers who had bought iPods that turned out to be faulty. The West Australian Department of Consumer Protection received 30 complaints about the limited warranties offered on LG mobile phones between April and October 2005. The matter was passed on to the commission to pursue nationally. The commission alleges that LG has breached the Trade Practices Act by making false warranty statements in its mobile phone online manuals. It is particularly concerned that LG told consumers the limited warranty was "in lieu of all other warranties, expressed or implied in terms of marketability or fitness for a particular use".The company also claimed it bore no liability for any indirect or special loss caused by the malfunction of its phones.LG Electronics said in a statement yesterday that it was "undertaking an internal investigation" into the matters alleged by the commission.The deputy chief executive of the Australian Consumers Association, Norm Crothers, said the statutory warranty and the requirement that goods must be fit for purpose when sold were fundamental provisions in the Trade Practices Act when it was introduced in 1974."It was an important move forward in consumer rights. They were benchmarks," he said. Until then consumers had been at the mercy of a company's policy."When you get strong business interests pushing against [the law] it is up to the regulator to pick some cases and send a clear message back," Mr Crothers said.The matter is listed for a Federal Court hearing in Perth on February 9.
© 2006 Sydney Morning Herald
