HP, ACCC reach agreement on warranty case

HP and the ACCC have struck an out-of-court agreement in a legal battle over consumer rights that could see the vendor pay $3 miillion in penalties for contravening Australian Consumer Law.  

The agreement requires the approval of the Federal Court, which must also rule on the ACCC's demands for declarations, injunctions, and payment of costs.

The proposed penalty amounts to $500,000 for each of six contraventions of the law. The legal maximum penalty for each contravention is $1.1 million.

The consumer watchdog launched legal action against the PC giant in October last year, claiming the company infringed the Australian Consumer Law by giving misleading information to customers about product repairs and warranties. 

HP allegedly told customers:

• they could not get replacements for products until those products had been repaired multiple times.
• returns would only be provided at HP’s discretion, and
• the warranty period for products was limited to an “express” period, after which customers would have to pay for repairs.

The vendor was also accused of not honouring repairs and exchanges for its online store. 

In a hearing yesterday in the Federal Court, HP admitted to having breached consumer law but said the extent of the damage to customers could not be quantified, in an attempt to dissuade Justice Robert Buchanan from ruling HP pay the maximum legal penalty.

Lawyers for the ACCC said the evidence from consumers showed the issue was of a systemic, rather than case-by-case, nature. 

But HP’s lawyers argued the representations at issue were not made to all customers, were not HP common practice, and that the conduct was not deliberate.

“Although the conduct was deliberate in the sense that the representations weren’t made by accident, the evidence doesn’t establish it was done in knowing contravention of Australian Consumer Law,” HP's counsel argued.

“The point I’m seeking to make is not a large point, but what was said was HP would only provide a replacement product once a product which had failed had been repaired three times. That’s the type of thing that was said.

“We’ve admitted it was a misleading representation and we held to that admission, but I’m trying to persuade your Honour it wasn’t known to be misleading, [despite being] misleading.

"HP has taken significant steps to ensure its staff are properly trained in compliance with Australian Consumer Law, and we’ve agreed to the proposed penalty and accepted it's in the appropriate range.”

Justice Buchanan said "it’s a little difficult for me to accept now in light of the agreed positions that the respondent didn’t know what it was doing.”

He ordered documents revealing the amount of customer complaints as well as HP’s sales data to be made confidential until June 2016, and indicated he will make a final ruling on the case in the near future.