Computer Company Fined $200,000

  • No warranties provided for products
  • Only provided warranties in restricted circumstances
  • Fined over $200,000

The Federal Court in Sydney has imposed penalties totalling $203,500 against MSY Technology Pty Ltd and four of its related companies for making false and misleading consumer warranty representations.

The companies sell computers, computer parts, electronic goods and software to consumers from retail stores in Victoria, New South Wales, Queensland, South Australia and Western Australia.

Acting ACCC chairman Michael Schaper said this outcome serves as a timely reminder that the ACCC will take action against businesses which mislead consumers about their rights.

Under Australian Consumer Law (ACL) amendments which commenced on 15 April

2010, the ACCC can seek in civil proceedings penalties of up to $1.1 million against corporations and $220 000 against individuals for a contravention of various consumer protection provisions of the Trade Practices Act (now the Competition and Consumer Act 2010).

MSY made a range of false or misleading representations to consumers in relation to their statutory warranty rights, including that the companies:

  • do not provide any statutory warranties to consumers in relation to their products
  • will only provide statutory warranties to consumers in a restricted range of circumstances
  • require consumers to pay a fee to obtain a warranty beyond that provided by the manufacturer.

In his judgment in this proceeding, Justice Perram said: “It is appropriate that it should be made plain to retailers in the position of companies such as the respondents that misrepresenting to consumers what their warranty rights are is an unacceptable form of commercial conduct and illegal. It is appropriate, therefore, to encourage retailers not to give consumers the impression either that their statutory rights are curtailed or non-existent or that warranties can only be obtained through payment.”

The court also ordered that each of the MSY Technology Companies:

  • be restrained for a period of five years from making false or misleading representations about a consumer’s statutory warranty rights, including in relation to the new consumer guarantees introduced in the ACL on 1 January 2011;
  • implement a Trade Practices compliance program;
  • display corrective advertising in each of their stores;
  • publish a corrective notice on the MSY Technology website at www.msy.com.au; and
  • pay the ACCC’s costs.

"The ACCC will actively pursue businesses that misrepresent consumers’ rights under the new law," Dr Schaper said.

Consumer guarantees under the national ACL is a new set of rights consumers now have every time they purchase goods or services in Australia. These replace the statutory warranties and conditions in the Trade Practices Act 1974.

Schaper said retailers and manufacturers must be aware that consumer rights under the consumer guarantee provisions in the ACL cannot be excluded, restricted or modified by way of agreement between the parties.

The ACCC obtained the orders discussed in this media release against the following MSY Technology companies:

  • MSY Technology Pty Ltd (civil pecuniary penalty of $55,500)
  • MSY Technology (NSW) Pty Ltd (civil pecuniary penalty of $37,000)
  • MSY Technology (QLD) Pty Ltd (civil pecuniary penalty of $18,500)
  • MSY Technology (SA) Pty Ltd (civil pecuniary penalty of $37,000), and
  • MSY Technology (WA) Pty Ltd (civil pecuniary penalty of $55,500).

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