Apple sued by ACCC over 4G iPad claims

Apple sued by ACCC over 4G iPad claims

Summary: Apple is back in legal hot water, only this time it's with the Australian Competition and Consumer Commission (ACCC), which is looking to throw the book at the technology giant for its potentially misleading claims about the third-generation iPad's 4G capabilities.

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Apple is back in legal hot water, only this time it's with the Australian Competition and Consumer Commission (ACCC), which is looking to throw the book at the technology giant for its potentially misleading claims about the third-generation iPad's 4G capabilities.

New iPad event

Apple's new iPad event held earlier this month
(Credit: CNET)

Apple's new iPad comes with the capability to connect to a long-term evolution (LTE) or "4G" networks in the 700MHz or 2100MHz spectrum band. Australia's only LTE network is currently provided by Telstra, which uses its former 2G spectrum band of 1800MHz.

As a result, Apple's third-generation iPad is currently unable to connect to a LTE network in Australia, making it a particular sticking point for Australia's peak consumer watchdog.

"The ACCC alleges that Apple's recent promotion of the new "iPad with Wi-Fi + 4G" is misleading because it represents to Australian consumers that the product "iPad with Wi-Fi + 4G" can, with a SIM card, connect to a 4G mobile data network in Australia, when this is not the case," the ACCC said in a statement this evening.

The ACCC will initiate court action against Apple in the Melbourne branch of the Federal Court tomorrow morning for alleged contraventions of sections 18, 29(1)(a), 29(1)(g) and 33 of the Australian Consumer Law.

Section 18 covers misleading and deceptive conduct, section 29 covers false or misleading representations about goods or services and section 33 covers misleading conduct as to the nature of goods.

The outcome of the case may be more than a simple slap on the wrist for the Cupertino-based company, with the ACCC seeking final orders including financial penalties, corrective advertising measures and a possible injunction on the device.

"The ACCC is seeking urgent interlocutory relief to ensure consumers are made aware of the correct technical capabilities of this device," the ACCC said in a statement.

Some retailers are currently informing customers that the new iPad isn't capable of LTE connectivity by use of flyers in store, and some iPad boxes have stickers explaining that the LTE functionality will not work in Australia.

In the meantime, the ACCC is urging iPad buyers to make themselves aware of the device's local limitations.

"Consumers who have purchased or are considering purchasing an "iPad with WiFi + 4G" should ensure that they have a proper understanding of the mobile data networks which this iPad can directly access by a SIM card," the watchdog added.

Comment is being sought from Apple Australia.

Topics: Apple, Government, Government AU, Legal, Telcos

Luke Hopewell

About Luke Hopewell

A fresh recruit onto the tech journalism battlefield, Luke Hopewell is eager to see some action. After a tour of duty in the belly of the Telstra beast, he is keen to report big stories on the enterprise beat. Drawing on past experience in radio, print and magazine, he plans to ask all the tough questions you want answered.

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Talkback

26 comments
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  • Fair play to the ACCC.

    I can see this being repeated throughout the world, after-all the 4G chip only works on one USA network and 3 Canadian ones.

    Mind-you, what do Apple care? they can afford the fines and their customers punters will probably redirect their anger at the telcos rather than accept that Apple mislead them...
    imaginarynumber
    • The fine should be big enough to hurt Apple financially otherwise they will just keep pulling the same BS.

      It's not the first time Apple have mislead it's customers, in Italy Apple was telling it's customers they only had 1 year standard warranty in an effort to sell them their own Apple care warranty when Ittalian consumers actually by law have 2 years technical support. http://www.bbc.co.uk/news/technology-16339651

      The sad thing is that Apple fans are not the most intelligent bunch of people and will blame the telcos rather than Apple.
      Jingles-8366c
      • "a fine that is big enough to hurt..." - Sorry, that made me laugh..

        What? A couple of billion?

        In any event, the major issue here for apple is now brand damage. I remeber not long ago on morning TV that a 'study' came out that showing Apple in the list of 'most trusted' That is what hey are looking to avoid. With the wealth and resources available to them did not see this coming with the ways consumer laws are designed.. I even saw it when I bought my iPad online direct from apple..
        Smithe-13f2c
  • I don't know what the ACCC is smoking because Apple have made it perfectly clear the 4G compatibility doesn't apply to the Australian market. There is no intent to mislead as they've stated it from the very outset (international launch date).

    Apple have a global product designed to specific standards. If a country deviate from industry standard then it is that county's problem. Apples decision to not support Australia's 4G is a technical/design issue not of their making. So, Apple has done the right thing and told that market 4G isn't available.

    Instead of the ACCC wasting tax payer funds on a silly witch hunt, why didn't they just talk to Apple? Far cheaper, easier, and polite to ask Apple to put an explanatory sticker on iPad boxes. I'm sure Apple would be happy to do that rather than waste their time fighting some petty claim by a government agency.

    As for the anti-Apple people, put aside your biases and explain how this company has intentionally tried to deceive the Australian market. They have been up front since day one that Australia's choice of 4G frequencies isn't compatible with their product.

    The ACCC is smoking crack if they think they can win this one.
    Scott W-ef9ad
    • I bought the new iPad online directly from Apple, using the Australian web store. I didn't see any notification that it doesn't work with Australian 4G networks, and I had no idea that's the case. When I received the iPad, there was no sticker or note or anything at all indicating that it doesn't work on 4G networks in Australia. Sure, you can't blame Apple if local networks aren't compatible, but you can blame them for loudly promoting 4G capabilities on the Australian website when 4G capabilities aren't available here.

      Going back to the website now — http://www.apple.com/au/ipad/4g/ — I found a small note at the bottom stating that 4G is only available in the US and Canada. I didn't notice that, and I bet few people do. It's not sufficiently prominent, and it conflicts with the theme of the page which is all about 4G. The ACCC usually makes a big deal about the prominence of information — font size, position, colour. A tiny disclaimer in light grey text that's not even in the body of the page is simply not prominent enough.

      The ACCC will surely win the case: they have before. For example, last year TPG lost their case because a disclaimer wasn't prominent enough in the advertising — see http://www.zdnet.com.au/tpg-unlimited-ads-found-to-be-misleading-339325718.htm — and I'm pretty sure the TPG disclaimer was actually much more apparent than the Apple one. The ACCC rarely loses, and this won't be one of those rare times.
      gtch
      • How you could not be aware of such a widely discussed issue is beyond me. Nearly every media outlet that has mentioned the iPad3 has detailed this issue and, by your own admission, you failed to read information on their website.

        Yes, we could argue about font sizing, stickers etc but to ignore all the other media coverage which clearly discussed this suggests you failed to pay attention rather than Apple trying to mislead.
        Scott W-ef9ad
        • I don't know about you Scott, but I think you will find it was not as wildly publicised as you say it was. In fact, this weeks MediaWatch (ironically) did a segment on the very subject on how little the MSM did in highlighting the fact it would not work with Telstra's advertised 4g.

          You say "how can you not be aware" - well quite easily. You look at the current penetration of the iPad these days, they are used in schools now as teaching aids. Non-tech people use them. It is not unreasonable for someone who was not IT minded or across the subject to see the commercials Telstra are plugging for 4g and then see the 'old' apple site (I have screen shots of it because I knew it was going to cause apple problems) and say to themselves 1+1=2.

          The onus in this case should have been with Apple to better inform customers about the incompatibility of the device with '4g' on the Australian networks.

          In fact, Apple by alredy offering refunds for people that have may already been misled is an omission of guilt.
          Smithe-13f2c
  • Scott, you miss the point. Apple have and are promoting that this device can do something it can't. Not just here but globaly. As reported above only 4 networks globaly have 4G compatibility with the ipad3. Four! 4 out of hundreds of thousand global network providers. Only FOUR (4)
    Don't blame the (global) network providors for "using the wrong frequency". Apple choose and again choose wrong. 4 networks out of 100,000+ !! What were they thinking?
    The ACCC should force Apple to pull the ipad3 off the shelfs until the prpoblem is corrected. IE: it complies with known global standards. Not apple's standards.
    And not I'm not anti Apple. I eat several a day and I like Bananas too (to keep the doctor away).
    tonye56
    • Tony, I think you've missed the point. Apple are not promoting the iPad as doing something it can't. It can do 4G, just not in Australia. Apple have been very clear on that. To ignore Apple's open disclosure and argue it is misleading is in itself deceptive.

      I'm not blaming any network providers, they can only offer services that comply with local regulatory frameworks. In this case it is Australia's decision to use a different spectrum which limits the iPad 4G functionality. Apple has a product which won't work with Australia's 4G and have clearly stated that.

      Don't try tell me there are only four providers globally that support Apples 4G implementation and that the other 99,996 don't. It would be foolish to believe there are 'numerous' implementations of 4G and Apple just picked one. They would have chosen the most common implementation with the broadest market appeal, which I suspect would cover 90% of the existing 4G user base (and networks).

      What international standards exist for 4G (genuine question) and, is Apple's compliant with that or proprietary? You imply Apple dreamt up a proprietary 4G implementation that only selected providers agreed to support. I don't believe that is correct.

      Back to the original argument though: Apple have not attempted to mislead or decieve Australian buyers at all. They've been up front about it not working in Australia.
      Scott W-ef9ad
      • Scott are aware that Apple have decided to make 2 versions of the IPAD. One for the AT&T network and one for Verison. This is because they operate thier networks at different frequencies. I believe there are more than 30 different frequencies used for 4G.

        So it is not Australia's or other countries fault that Apple does not support 4G it is clearly Apple in thier one size or two size fits all mentality.
        chapo-90066
        • And how does that change the fact Apple have built a '4G' functionality for specific markets and clearly pointed out it doesn't work in others.

          Their product, their design, their choice. They've communicated the issue so everyone can stop burying their head in the sand and bleating about having a feature that simply isn't defined or readily available.

          There is a point where the buyer has to take responsibility for their choice of purchase.
          Scott W-ef9ad
          • Still cannot find a point of sale display that states the iPad 4G is not 4G compatible
            john-whorfin
  • This will turn into a sh!t flinging fight about what "4G" is I bet. The new iPad can handle HSPA+ which is marketed as "4G" in the USA. Whilst there's no "4G" networks here if you look at another definition that describes it as a LTE Advanced network. But also if you look at what IS being marketed as "4G" here in Australia the new iPad doesn't meet that definition. All in all it's just a huge marketing mess. There's no standard, in Australia or otherwise, as to what "4G" is. Logic would dictate that it's LTE networks, but in reality it's can mean completely different things.
    m00nh34d
    • Thanks for this info. If there isn't a defined standard then anyone can label their service how they want.

      If I define "4G" as two cans joined by string can I claim Apple mislead me, despite them repeatedly stating their 4G implementation is incompatible with mine?
      Scott W-ef9ad
      • Your such an Apple mouth...
        Ready to defend Apple at any turn, no matter what the case.
        If Apple want tochoose a frequency spectrum that only works in a select few countries like USA/Cananda, then that's upto them, but for you to defend them and bash the rest of the carriers where the iPad is not supported when many other handsets work on these carriers and say this isn't Apple's fault just shows downright fanboyism.
        djlobb01
  • If there's a WIFI-only version of the new iPad, that's the only one they should have on the shelves in Australia and other countries where the 4G version doesn't work, otherwise they are selling it under false pretences - pure and simple.
    stuart.elder
    • Or, Apple could change the way the marketing material is arranged to state clearly that the product is NOT compatible with the advertised 4G network that is currently in Aus, rather than rely on the fineprint

      I did a bit of a spot quiz today, and dropped into my local Telstra reseller, and asked if the iPad+4G was compatible with Telstras' 4G network (The one they advertise as 4G, not what the ITU define as 4G) and I got told that it would be able to access the 4G network with the right sim.
      Psychaotix
      • I agree with the first paragraph, Apple could improve their labelling if the great unwashed are unable to pay any attention to the media coverage, reviews, or Apple's own website. This is where the ACCC went wrong.

        The ACCC could easily have discussed the issue with Apple, perhaps agreeing to improved labelling for the ignorant, but instead launched into an immediate legal battle.

        If a Telstra reseller told you the iPad3 4G was compatible with their network, which they clearly implied it was, that is in breach of the Trade Practices Act. Apple can't be blamed for that.
        Scott W-ef9ad
        • If a Apple told you the iPad3 4G was compatible with 4G networks, which they clearly implied it was, that is in breach of the Trade Practices Act. Telstra can't be blamed for that.
          john-whorfin
    • That's a overly simplistic and flawed argument.

      Where's the false pretence when Apple are clearly pointing out that the iPad3 isn't compatible with our implementation of 4G?

      Are you suggesting we restrict the sale of any product that contains a feature that isn't compatible locally? Many products have market specific features and, will otherwise be suitable for their intended purposes within our market?
      Scott W-ef9ad