Apple fined $2.25m for '4G' deception

Apple fined $2.25m for '4G' deception

Summary: The Federal Court has ruled that Apple pay a $2.25 million fine for misleading consumers that its latest iPad was compatible with Australia's long-term evolution "4G" broadband networks.

TOPICS: Apple, iPad

The Federal Court has ruled that Apple pay a $2.25 million fine for misleading consumers that its latest iPad was compatible with Australia's long-term evolution "4G" broadband networks.

In a judgment delivered today, Federal Court Justice Mordy Bromberg said that the company had engaged in conduct liable to mislead the public and contravened Australian consumer law, fining it $2.25 million and ordering it pay $300,000 in costs.

Apple and the Australian Competition and Consumer Commission (ACCC), which brought the case against the global technology company, had agreed on the $2.25 million fine two weeks ago, however, Justice Bromberg had adjourned the matter to consider whether the fine was appropriate.

Justice Bromberg said that the most concerning aspect of Apple's contravention of consumer law was the deliberate nature of its conduct.

"Apple does not seek to deny the deliberateness of its conduct, and there are no facts before me which seek to excuse or explain the conduct, other than that the conduct occurred at the behest of Apple's parent company ... Apple Inc," he said.

The same campaign, "iPad with WiFi + 4G", was used worldwide, the judgment noted.

Justice Bromberg said that Apple was first told the device was not compatible with the Telstra 4G network on 8 March this year, the day of the new iPad's launch in Australia.

The risk of contravention of Australian consumer law would have been "reasonably obvious" to those at Apple that are familiar with the Australian market's understanding of the term 4G, he said.

"In that context, and in the absence of any other explanation, the facts to which I have just referred, suggest that Apple's desire for global uniformity was given a greater priority, than the need to ensure compliance with the Australian consumer law," Justice Bromberg said.

"Conduct of that kind is serious and unacceptable."

The reach of Apple's conduct was extensive, he said, with the "4G" term exposed to hundreds of thousands of customers. He said that the number of iPad cellular models sold during the period where Apple had displayed the misleading advertising was "substantial". The court was provided with sales numbers, but did not disclose them publicly for reasons of confidentiality.

"It is not possible to say, with any certainty, how many Australian consumers were misled by Apple's use of the term '4G'," he said. Although it also wasn't possible to discern how disappointed customers would have been when they didn't receive a device that had 4G speeds, he believed that they would have felt cheated.

"I have no doubt that, given the promotion by Telstra of the superiority of its 4G network, many purchasers will have felt decidedly short-changed, despite the fact that only a small percentage of them took up the opportunity of a refund, offered by Apple on 28 March 2012, as part of the undertakings given to the Court."

He took into account, however, the action Apple had taken to remedy the situation — Apple put signage in its stores and advised those that had bought the "4G" model that it was, indeed, not 4G compatible, offering a refund. He felt that this, and the media coverage of the issue, would have reduced the likelihood that consumers were misled.

Since he felt that the proposed penalty from the parties were "neither manifestly inadequate, nor manifestly excessive", he decided to impose the $2.25 million penalty on the company.

Topics: Apple, iPad

Suzanne Tindal

About Suzanne Tindal

Suzanne Tindal cut her teeth at as the site's telecommunications reporter, a role that saw her break some of the biggest stories associated with the National Broadband Network process. She then turned her attention to all matters in government and corporate ICT circles. Now she's taking on the whole gamut as news editor for the site.

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  • Fortunately the ACCC have protected us from the big bad Apple.
    Was there anyone buying an iPad in Australia who was not aware that the Government was a little slow on getting the 700mhz spectrum sorted.
    Was there anyone not aware that Telstra were filling the gap using 1800mhz spectrum.
    Was there anyone who did not check what they were getting before handing over the cash to a sales rep?
    Did not all the media in Australia with all the pre release reviews point out that Australia's 700mhz network was not going to be ready for a few years.
    How many people were so mislead by Apple that they wanted to return the iPad because of un acceptable low speed on the Telstra network?
    OK, how many people think the ACCC needed a win and Apple was a big target that they could ping over a technicality.
    We are safe again and will have a good nights sleep.
    PS. Hands up if you thought TPG would give you unlimited internet for $29.95 if you did not have a telephone line to connect up the modem to. ACCC to the rescue again.