Apple to pay AU$9m for misleading iPhone and iPad consumers

Apple has been held responsible for the conduct of its Australian subsidiary, which told local customers they were not entitled for a repair or replacement of iPhones and iPads if they had used a third-party repairer.
Written by Corinne Reichert, Contributor

Apple is set to pay AU$9 million in penalties after the Australian Federal Court found that it made false or misleading representations to customers on their warranty rights under Australian Consumer Law (ACL).

The case, initiated by the Australian Competition and Consumer Commission (ACCC) in April last year, concerned users of iPhones and iPads who complained about "error 53", which bricked some devices after they updated their iOS.

Via its US website, customer service calls, and Apple Australia in-store staffers, the tech giant had then told at least 275 customers between February 2015 and February 2016 that they were ineligible to remedies if their phone or tablet had been repaired by a third-party store.

"The court declared the mere fact that an iPhone or iPad had been repaired by someone other than Apple did not, and could not, result in the consumer guarantees ceasing to apply, or the consumer's right to a remedy being extinguished," ACCC Commissioner Sarah Court said.

"If a product is faulty, customers are legally entitled to a repair or a replacement under the Australian Consumer Law, and sometimes even a refund. Apple's representations led customers to believe they'd be denied a remedy for their faulty device because they used a third-party repairer."

Apple has already reached out to compensate around 5,000 customers, also offering a court-enforceable undertaking to train staff on how to deal with warranty matters and ACL compliance, as well as updating the policies on its website.

It has also said it will provide new devices as replacements for iPhones and iPads that have suffered a major failure, rather than refurbished ones.

Prior to the decision, Federal Court judge Mark Moshinsky had referred Apple and the ACCC to mediation over the matter in November.

The case also followed the ACCC accepting a court-enforceable undertaking from Apple back in 2014, following an investigation into the iPhone maker's consumer guarantees policies and practices, and representations about consumers' rights under ACL.

Last month, Apple Sales New Zealand was similarly issued a warning by the Commerce Commission over "likely" breaching the Consumer Guarantees Act (CGA) by misleading consumers on their right to a replacement device.

Apple had misled consumers by telling them that products are only covered by consumer law for two years, New Zealand Commerce Commissioner Anna Rawlings said.

"They apply for a reasonable period," Rawlings said. "What is reasonable depends on the nature of the goods, any statements made about the goods, and how the consumer, in fact, uses the goods.

"Although businesses may form a view about how long a product should generally last, they must assess each reported fault on its own merits. They should not base decisions solely on how long a consumer has owned a product. The reasonable lifespan of a product will depend very much on what the product is," Rawlings added.

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