Court hits Hewlett Packard with $3 million fine for misleading public

Hewlett Packard Australia has been forced to hand over $3 million for misleading customers and retailers.

A Federal Court ruling on Friday declared the computer company must pay the civil pecuniary penalty due to false or misleading representations regarding consumer guarantee rights.

The consumer watchdog, the Australian Competition and Consumer Commission, launched proceedings against HP in October 2012. The ACCC and HP later came to an agreed settlement on the matter.

The court found that HP had been unclear regarding consumer’s rights when it came to product returns and replacements.

Information judged misleading included:

• consumers were required to have their product repaired multiple times before they were entitled to a replacement;
• the warranty period for HP products was limited to a specified express warranty period;
• consumers were required to pay for remedies outside the express warranty period;
• and products purchased online could only be returned to HP at HP’s sole discretion.

HP also represented to its retailers that if the retailer did not get authorisation from HP to provide a consumer refund or replacement, HP was not liable to indemnify the retailer.

These regulations were contained in HP guidelines and were relayed to consumers and retailers by HP call centre staff working in international locations.

Justice Buchanan stated the penalty was appropriate and that it “reflects an acknowledgment of the seriousness of the respondent’s conduct”.

ACCC chairman Rod Sims said in a statement the “misconduct was widespread and systemic from a very large multi-national firm”.

“The ACCC believes that this penalty sends a strong message to all companies, particularly large multi-national companies, that the Australian Consumer Law is not negotiable.”

In addition to the penalty, the court ordered HP pay a contribution towards the ACCC’s costs of $200,000. HP was ordered to implement a consumer redress program, as well as perform declarations, injunctions, public disclosure orders, corrective advertising and a compliance program.

King & Wood Mallesons special counsel Melissa Monks told SmartCompany the case is the highest penalty awarded to date for a breach of Australian Consumer Law penalty-related provisions.

“It clearly reflects the court’s disapproval of what appears to be systemic and deliberate conduct in breach of the ACL,” Monks says. “This decision represents a high watermark for the ACCC in relation to consumer guarantee-related misrepresentations.”

Monks says the ACCC will be “buoyed by this decision” and “given also that consumer guarantees is a stated priority for it, I expect that we will see a lot more action from them in this space”.

In recent times the ACCC launched action against Coles supermarkets as it keeps an eye on big name companies.

Hewlett Packard released a statement in response to the decision, which said that individual, corporate and government customer satisfaction is key to its business.

“We deeply regret that in the instances identified by the ACCC, HP fell short of our core commitment to high standards of service for Australian consumers who purchased our HP-branded desktop computers, notebooks/laptops and printers and of our duties under Australian consumer laws.”

It said the company had committed to reviewing its warranty and support practices under Australian Consumer Law, and to implement a robust program to monitor and achieve ongoing compliance.

This story was updated on 12/7/2013 to include Hewlett Packard’s response.