Apple loses appeal; fined $1.2m for 'misleading' AppleCare customers

Apple loses appeal; fined $1.2m for 'misleading' AppleCare customers

Summary: Apple remains in hot water with the Italian antitrust authorities after it was found to be "misleading" customers on a one-year warranty, when consumers should have been given two.

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TOPICS: Apple
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Apple today lost its appeal in an Italian court, after it was found to have misled consumers into shelling out for AppleCare extended warranty when it was not necessary.

In December, Apple was fined €900,000 ($1.2m) by Italian antitrust authorities after it had failed to inform its customers of their legal consumer rights.

The fruit-named technology retailer said it would appeal. That appeal fell through and Apple walks away with a meagre fine and a slap on the wrist.

Under Italian law, products bought are given two years warranty by default. But Apple knowingly provided a one-year warranty for its Macs and iOS devices, including iPhones and iPads, whilst pushing its additional year of extended warranty in form of a premium service.

Apple added disclosures to its Italian online store as per the first court's order, after the company was found not to have adequately informed its customers of their legal right.

The news comes hot off the heels of 11 European consumer groups complaining that AppleCare warranties violate EU law. A formal notice was issued by the European Consumers' Organisation requesting the company no longer sells products with a one-year warranty.

The minimum warranty for products sold in the EU is two years. Apple's stance on one-year warranties, as it pedals its extended warranty service, could ultimately be found to be breaking European law.

If that's the case and an antitrust inquiry is started, the company could face a fine of up to 10 percent of its global annual turnover. Seeing as the company recently closed at the $600 a share mark, Apple could face a fine of around $10--12 billion.

I bet it's wishing it held onto a bit more of its cash reserve now; just in case it gets sued or fined.

Image source: Apple.

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Topic: Apple

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33 comments
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  • This is excellent news

    Congratulations Italy. It is good of you to look after your consumers.

    Shame on Apple for this behavior. I'm only sorry that $1.2 million is about 12 hours of interest if Apple's cash stockpile was earning 1% a year. This is no incentive for Apple to change anything.
    toddbottom3
    • You are missing the "ouch"

      This gives EU groups the go-ahead that it is a situation to pursue (I think they are already filing) and opens the door for an EU investigation.
      One outcome of an investigation of this type could result in a fine of 10% of global sales (about 10-12 billion $$$$).
      That, would hurt.
      rhonin
    • The question is...

      ...would you have said the same thing if had been MS instead of Apple?
      John L. Ries
      • Oh no, Toddy-fauty would

        have been in an uproar saying MS was being treated unfairly, and that Apple always gets away with everything; and that it's a sick market and we all lose, All tablet makers should just give up and stop making tablets because Apple will own the tablet market for the next 20 years, blah, blah, whine, whine, sniffle, sniff....(Did I miss anything?)

        It is amazing how the EU seems to think it should have special priv over the US. First making MS have to give an option upfront to users to select a different browser, and now having an extended warranty on electronics? WOW!!
        T-Wrench
      • @T-Wrench

        What is a shame is that the US don't have the balls to try to protect it's people in the same manner. IMHO

        If that's what they are required to do to sell their product there, they know that going in.

        Just sayin.
        rtshort
  • Hmm

    I thought this was standard in the European Union so why wouldn't Apple know that a 2 year warranty was mandatory?
    slickjim
    • Hmm

      They knew. But Apple tought they were untouchable. Money wil not save them this time. The EC directive was voted in 1999 and became law in lots of Europeans countries in 2005. It's rather a complicated law because it's the seller that's responsible for warranty. But then Apple became a retailer - stores and online. And they just ignored these local laws. Lot's of customers in Europe thought they were covered through the EC warranty directive and didn't buy Applecare. I was one of them. My 2000 euro october 2007 Imac broke down in 2008. Just some months out of the normal 1 year warranty periode. They charged 1200 euros to repair the thing. After a month arguing, Apple gave in. Eventualy they repaired the box for free after me threatening to go to court. The old Applecare is dead now. Surely, they can sell Applecare for a 3rd year but they can never ever charge 249 euros (Mac Book Air) for 1 year extra warranty. As a sidenote : it's also a good thing for the independent Apple-retailer. They knew - if they didn't sell Applecare - they were NOT covered for warranty repairs by Apple for the 2nd year.
      OVerbies
      • Lets settle for 1% and get it over with quick.

        I'm sure we'd be happy with some dough in the coffers and move on. LOL... couldn't happen to a nicer, more open company. A billion sounds good to me ! (I use Apple products but hate the elitist culture, and holier than thou attitude)
        pjmckay
  • So, there is a mandatory 2 year minimum warranty on bread, tomatoes, etc.

    hmmmm ?
    whatagenda
    • Ever think that there's a difference between durable goods and perishable

      goods?

      Food and hardware/appliances, would come under different laws for protection of the citizenry.
      adornoe
  • $1.2 million? LOL!!!!

    In the time it took me to type this Apple just recouped it with interest.
    http404
  • Well then good.... Every organization once it grows too big

    and grows too fast can get and or develop an attitude and I think judgements like this occasionally will be healthy for Apple like a fat man going on a diet and getting off the couch and actually walking again:P Once in a while even Apple requires a "twap" on the head:)

    Pagan jim
    James Quinn
  • I realize I'm a day late

    But it's peddles, not pedals here.

    "The minimum warranty for products sold in the EU is two years. Apple???s stance on one-year warranties, as it pedals its extended warranty service"
    Aerowind
  • Whatever...

    Call me when they're fined a not-pointless number of dollars for killing people in China.
    Naryan
    • Yeah. Whatever...

      Man, GIVE UP on that bull. People in China are dying TO GET JOBS at Foxconn because their standard of living in rural China (where many of them come from) is subpar to that of urban areas. Also, by contrast to what they subsist on back home, they make good dough. If you feel that it's wrong that their new labour situation is not the same as our much more matured North American or European labour conditions, and you wish to ignore the difference in their cost of living compared to our (way more expensive) cost of living, and you don't like the working situation in these factories subcontracted by Apple (and Dell and DOZENS of other multi-nationals), complain to THE CHINESE GOVERNMENT about the inequities in their economy that creates this contrast in the first place.

      As for the deaths? These factories employ and house hundreds of thousands of workers. They are literally cities in their own right. Like anyone anywhere moving from a "bare-hut", agrarian rural environment to a heavily urbanized one, I am sure there's a good level of culture shock -- even when relocating like that within THEIR OWN COUNTRY (which, of course, is gigantic). Despite that, despite the hundreds of thousands of workers, the suicide rate at these factories IS BELOW China's national average.

      Inaccurate complaints such as yours are getting quite tiring.
      dropzone@...
      • huh?

        Back this up - "These factories employ and house hundreds of thousands of workers."
        gwartnet
      • Really!?

        @gwartnet
        http://www.Lmgtfy.com/?q=foxconn+number+of+workers

        Of particular note:
        Foxconn's largest factory worldwide is in Longhua, Shenzhen, where hundreds of thousands of workers (varying counts include 230,000, 300,000, and 450,000) are employed at the Longhua Science & Technology Park, a walled campus sometimes referred to as "Foxconn City" or "iPod City". Covering about 1.16 square miles (3 square km) it includes 15 factories, worker dormitories, a swimming pool, a fire brigade, its own television network (Foxconn TV) and a downtown complete with a grocery store, bank, restaurants, bookstore, and hospital. While some workers live in surrounding towns and villages, others live and work inside the complex; a quarter of the employees live in the dormitories, and many of them work 12-hour days for 6 days each week.

        Before that last line gets you all worked up. This is for a single plant. FoxConn has over a dozen in China. They also have other factories in other countries, including Brazil, Malaysia, India, Mexico, and Europe.
        You couldn't find this out yourself?!?
        .DeusExMachina.
      • Why can't people appreciate that smarter people know what's good for them?

        Based on this way of thinking Abraham Lincoln was wrong and 600,000+ died needlessly in the U.S. civil war because after all besides the little inconvenience of being slaves living conditions and provisions were much better then in Africa.

        I try not to stereotype people based on mundane things like their tech preferences and was at first dismissive of the elitism charges as sour grapes by jealous fans of other companies. And I still think the average purchaser of Apple products are not elitist and I don't hate people because they are wealthy. But I'm sorry that particular company has a large hard core following that are elitist. I can't think of a better post that defines it then the one above.

        The facts the poster presented are not wrong it is the posters belief that it is ok. Apple and all of these companies that became rich because of America and then went going overseas and destroyed the US labor market are moral traitors. Back in the olden times US companies going overseas made it their point to help the locals. The US got a nice little empire out of it and companies created PROFITABLE new markets for themselves. The empire is still here but it is being held together by economic band aids and mercenary armies.
        edkollin
    • "killing" and lies for profit....

      Mike Daisey, the man who spread most of these stories about Apple and China, has been discovered to be a LIAR. Look it up. I have no desire to defend China but I don't support lies and LIARS, either.

      Daisey told exactly the kind of "socially conscious" lies many people love to hear these days - "corporations and capitalism are EVIL!" - and his credulous NPR-type audience ate it up.

      Start here: http://www.nytimes.com/2012/03/19/business/media/theater-disguised-up-as-real-journalism.html
      SgtSpork
      • Liar

        Well did Apple tell you this or did someone reliable tell you this as just because someone writes something it's not always true. Apple is so good they can't do nothing wrong, come on wake up and smell the core!
        Rocketboiy