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Almighty bollocking and $3 mil fine for HP

Hewlett-Packard Australia (HP) has been fined $3 million in the Federal Court for making false or misleading representations to customers and retailers regarding consumer guarantee rights.

This is the highest penalty awarded to date for a breach of Australian Consumer Law penalty-related provisions.

The offences were committed by HP staff working at call centres located around the world, who were following HP’s internal guidelines and scripts.

The ACCC’s legal representative described the offences as a ‘systemic issue’ within HP.

‘The misconduct was widespread and systemic from a very large multinational firm,’ noted ACCC chairman, Rod Sims.

The Australian Competition and Consumer Commission instituted proceedings against HP in October last year.

The Court found, based on facts agreed between the ACCC and HP, that the corporation was telling Australian customers:
– the remedies available to consumers were limited to the remedies available at HP’s discretion;
– consumers were required to have their product repaired multiple times before they were entitled to a replacement;
– the warranty period for HP products was limited to a specified express warranty period;
– consumers were required to pay for remedies outside the express warranty period; and
– products purchased online could only be returned to HP at HP’s sole discretion.

In addition, the Court found that HP represented to retailers that it was not liable to indemnify the retailer if the retailer failed to obtain authorisation from HP before giving a consumer a refund or replacement.

– This is a key point for retailers: it would seem that if retailers act in good faith in recompensing consumers in accordance with the consumer laws, they can in turn expect their suppliers to support them.  

In his judgment, Justice Buchannan stated that the penalty was appropriate and ‘reflects an acknowledgment of the seriousness of the respondent’s conduct.’

Justice Buchannan noted the Court’s disapproval of HP’s conduct and the need for general and specific deterrence for such behaviour.

‘This was an important case to the ACCC. The misconduct was widespread and systemic from a very large multinational firm,’ said ACCC chairman, Rod Sims.

‘The ACCC believes that this penalty sends a strong message to all companies, particularly large multinational companies, that the Australian Consumer Law is not negotiable. This result also shows that the Court is not afraid to impose significant penalties for serious contraventions of the ACL.

‘All businesses operating in Australia require robust mechanisms to comply with the consumer guarantees provisions under the Australian Consumer Law,’ Mr Sims said.

In addition to the $3 million penalty, the Court also made orders including:
– declarations;
– injunctions;
– a contribution towards the ACCC’s costs of $200,000;
– consumer redress orders;
– public disclosure orders;
– corrective advertising orders; and
– orders to implement a compliance program.

The Court’s orders include a requirement that HP set up a consumer redress process for affected consumers.

For goods purchased on or after January 1, 2011, where a product develops a major fault, consumers have a right to a replacement or refund from the supplier of the product. For products that develop a minor fault, a consumer has a right to have the products fixed (at the supplier’s 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.

These rights can extend beyond the manufacturers 12-month warranty.

Added July 10:

HP Statement on Settlement with the ACCC

HP issued the below statement following the settlement with the Australian Competition and Consumer Commission (ACCC):

Individual, corporate and government customer satisfaction is the cornerstone of HP’s business. We deeply regret that in the instances identified by the ACCC, HP fell short of our core commitment to high standards of service for Australian consumers who purchased our HP-branded desktop computers, notebooks/laptops and printers and of our duties under Australian consumer laws.

Through discussions with the ACCC with a view to resolving the legal proceedings brought against HP, HP has voluntarily consented to Federal Court orders. Under the orders, we have committed to, among other things, review our warranty and support practices against the Australian Consumer Law and implement a robust program to monitor and achieve ongoing compliance.

HP is dedicated to honouring our obligations to Australian consumers under the Australian Consumer Law. We will provide customer support to assist consumers in resolving concerns with HP products in accordance with the Australian Consumer Law and have established a specific consumer redress program (involving a customer contact centre) to help with past concerns relating to HP-branded desktop computers, notebooks/laptops and printers.

We have also taken steps to adjust our consumer policies and practices and re-train our Printing and Personal Systems team members. HP will continue to design products distinguished for their outstanding quality, reliability and ease of use and looks forward to delivering high-quality service to our Australian customers.


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