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EXCLUSIVE: Harvey Norman Franchisees Face Similar Fines To HP, ACCC Investigates Other Brands

By David Richards | Sunday | 07/07/2013

Eleven Harvey Norman franchisees, who saw a massive $3M fine handed out to Hewlett Packard on Friday for misleading consumers, face the prospect of similar $1.1M fines from the Federal Court after being linked to the HP case by the Australian Competition & Consumer Commission.

Shortly before ACCC investigators started to investigate the actions of Hewlett Packard, the ACCC had started an investigation into the actions of several Harvey Norman retailers, who they claim engaged in similar practices to Hewlett Packard.   

The ACCC alleges that between May 2011 and June 2012, sales representatives at the Harvey Norman franchisees made misleading representations to specific consumers about the existence or effect of their consumer guarantee rights. ChannelNews understands that some of these claims relate to warranty claims involving Hewlett Packard computers.

Recently, the ACCC laid several charges against the 11 Harvey Norman franchises. 

ChannelNews understands that several other manufacturers and distributors of IT and consumer electronic goods are currently under investigation in Australia, with the real prospect they will also face ACCC charges.

The ACCC has told ChannelNews that it is conducting investigations similar to those into Hewlett Packard, into other large manufacturers and retailers, and that several manufacturers are in their sights over warranty claims.

Adrian Kuti and Matthew Battersby, lawyers for Australian legal practice Clayton Utz, claim that the ACCC's proceedings against Hewlett Packard and the Harvey Norman franchisees are by no means the end of the drama over warranties for manufacturers and retailers alike.

They claim that further enforcement proceedings appear inevitable, particularly given the ACCC's stated intention to take on more cases, even where the outcomes may be less certain.

In a note to clients, the lawyers write: "It is interesting that the ACCC chose to commence pecuniary penalty proceeds against the Harvey Norman franchisees, where in the past, it may have instead issued infringement notices for this type of conduct. This is a sign that the ACCC is stepping up its focus on ACL compliance and is becoming more proactive in commencing proceedings against manufacturers and retailers for alleged ACL contraventions."

They claim that the allegations in the proceedings against Hewlett Packard and the 11 Harvey Norman franchisees highlight practical issues about the relationship between warranty claims and ACL claims and how they are communicated to customers by retail and call centre staff.

In a direct warning to manufacturers and retailers, the lawyers claim it's important to ensure customer-facing staff are properly trained and do not, for example, confuse the requirements which apply to the return of defective products with those that apply for "change of mind" returns. 

The nature of manufacturers' warranties and in-store returns policies as being additional to, rather than in place of, consumers' rights under the ACL consumer guarantees regime is another key distinction that businesses must ensure their staff understand.

ACCC Chairman Rod Sims said: "Consumers have rights to certain remedies from retailers and manufacturers when goods fail to comply with the consumer guarantee provisions, including that goods are of acceptable quality and fit for the purpose for which they were sold. These rights cannot be excluded, restricted or modified."
Nine of the Harvey Norman franchisees are:

Avitalb Pty Limited, located in Albany, Western Australia
Bunavit Pty Limited, located in Bundall, Queensland
Camavit Pty Limited, located in Campbelltown, New South Wales
HP Superstore Pty Limited, located in Hoppers Crossing, Victoria
Launceston Superstore Pty Limited, located in Launceston, Tasmania
Mandurvit Pty Limited, located in Mandurah, Western Australia
Moonah Superstore Pty Limited, located in Moonah, Tasmania
Oxteha Pty Limited, located in Oxley, Queensland; and
Salecomp Pty Limited, located in Sale, Victoria.

"While the ACCC does not allege that Harvey Norman Holdings Limited is involved in making of these representations, the fact that the allegations made by the ACCC relate to a number of its stores in widespread locations across Australia is of great concern to the ACCC, and I expect to Harvey Norman too," Mr Sims said.

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