LG Australia, who deliberately misled consumers over the energy ratings of two of their refrigerators, has escaped a multimillion dollar fine because the offence took place prior to the introduction of new consumer laws earlier this year, claims the Chairman of the Australian Competition and Consumer Commission.
New trading conditions stipulated by the ACCC could push up the price of all LG TVs, washing machines, air conditioners and dryers in the future say consumer experts.
The Korean company, who was reported to the ACCC by consumer magazine Choice, would have faced potential fines of $1.1 million for each offence if the ACCC had taken action under new consumer laws that were introduced in Australia earlier this year.
“Because the offences took place earlier than the introduction of the new consumer laws in July 2010, we would have had to bring a case that was more a class action with each and every individual who felt they had a claim presenting their case” said Graeme Samuel, the Chairman of the ACCC.
“When Choice came to us with the allegations I don’t think they knew about the new legislation, said Samuel.
Described by Choice Magazine as a serial offender that deserved harsher penalties, LG Australia has entered into a series of undertakings where they have to submit each new LG model including TVs, washing machines, dryers, dishwashers and air conditioners for independent energy use testing.
In addition all current models must be re tested and re labelled with Choice tipped to be the organisation who will conduct the work.
Under other conditions stipulated by the ACCC the company has to continue compensating consumers who purchased their shonky goods or give them the rights to a total refund.
To date LG, who last year only made $13K profit on $968 Million dollars turnover, has paid out over $500K in compensation.
This is not the first time that LG has fallen foul of Australian consumer laws.
In 2004, LG claimed that some of its washing machines had 4A Ratings but was not certified by the Water Services Association. In 2006, it had to repay $3 million after the ACCC found that the company inflated the energy-efficiency star rating of some of its air conditioners.
Following a six-month investigation into the claims, which were initially raised by Choice in March, the Australian Competition and Consumer Commission ruled yesterday that LG apparently misrepresented the energy consumption of two models of refrigerators.
Since the offence was discovered by Choice, LG has sacked both their Managing Director and Marketing Director.
Earlier this week we revealed that LG had appointed Nick Gibson, former Electrolux Marketing Director, as their new Marketing Director for Australia.