By Patrick Avenell

Hewlett-Packard (HP) has been fined $3 million by the Federal Court after action by the ACCC exposed its deficient and misleading warranty and product guarantee practices.

These types of fines are called ‘civil pecuniary penalties’ and are intended to both punish the offending company and to deter other companies from engaging in similar activities.

The ACCC alleged, and the Court agreed, that HP had deceived consumers and retailers over a long period on several matters relating to warranties.

“The Court found, based on the parties’ agreed facts, that HP made a number of false or misleading representations to consumers about their consumer guarantee rights, including that:

  • 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;
  • Products purchased online could only be returned to HP at HP’s sole discretion.”

The Federal Court also found that HP misled retailers in relation to whether the retailer was protected (“indemnified”) from costs by accepting HP returns for refunds or replacements. These incorrect claims were made to retailers from HP staff in overseas call centres, the Court discovered, rather than local staff with an intimate knowledge of Australian Consumer Law (ACL).

“The ACCC believes that this penalty sends a strong message to all companies, particularly large multi-national companies, that the Australian Consumer Law is not negotiable,” said ACCC chairman Rod Sims. “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.”

HP Australia responded with the following statement:

“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."

The Australian Consumer Law sets out the following basic provisions for consumer goods (furnished by the ACCC):

  • 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.