Harvey Norman franchisees fined $116,000 for misleading consumers

Retail giant Harvey Norman’s franchises in Victoria and Tasmania have been fined a total of $116,000 for misleading customers on their consumer rights.

The fines come after consumer group CHOICE concluded 85% of the salespeople they surveyed in a secret shopper investigation misunderstood their Australian Consumer Law obligations.

The Federal Court ordered three franchises, located in Sale and Hoppers Crossing in Victoria and Moonah in Tasmania, to pay fines of $28,000 each, and a fourth franchise in Launceston to pay $32,000.

Following an investigation by the Australian Competition and Consumer Commission, it was revealed that staff at the franchise stores had told consumers they had no obligation to provide remedy for damaged goods unless notified within a short period of time, such as 14 days.

They also led customers to believe they had no obligation to provide an exchange or refund for faulty goods and that they had no legal requirement to provide a remedy independent of the relevant product manufacturer.

The Launceston store went a step further and stated on customer receipts that “no claims will be honoured on damaged goods unless notified within 24 hours of delivery or pick-up”.

Consumer law specialist and partner at law firm Hall & Wilcox, Ben Hamilton, told SmartCompany goods and services were protected under the ACL.

While the legislation doesn’t explicitly state terms for refunds or warranty, Hamilton said companies must be aware of their obligations “that the goods are of acceptable quality, and business can’t contract out of that”.

He says the supply of goods or services up to $40,000 worth are protected by consumer law, and that “regardless of value, any goods and services ordinarily acquired of a personal or domestic or household use” are protected.

Hamilton says businesses violating these obligations are doing so “at their own peril”.

An additional obligation retailers must now be aware of is their responsibility to offer consumers a refund or repair of all faulty big ticket purchases, regardless of the warranty conditions.

In 2011 the legislation changed which saw retailers responsible for major failures to big ticket purchases.

In these situations, the consumer gets the option to end the contract with the supplier and seek a replacement, repair of refund.

For a refresher on the obligations in the ACL, see the ACCC’s guidelines on guarantees.