Harvey Norman franchises under ACCC fire


Posted By on 4/02/16 at 11:40 AM

Since 2013, the ACCC has successfully prosecuted nine Harvey Norman franchisees across the country in relation to false and misleading representations regarding the consumer guarantees provisions under the Australian Consumer Law.

And it has just claimed its 10th scalp.

The Federal Court found that Bunavit Pty Ltd, a former Harvey Norman franchisee located in Queensland, made ten false or misleading representations regarding consumers’ rights in relation to remedies for faulty goods.

Specifically, the court found Bunavit falsely represented to consumers that it:

  • Was not obliged to provide a remedy for the sale of faulty goods, and that the consumer would have to take their claim directly to the manufacturer; and
  • Was not able to assist unless the consumer paid to part or all of the cost of repair.

In Australia, consumers are protected by the consumer guarantees provisions under the Australian Consumer Law. In a nutshell:

  • Goods must be of acceptable quality – they must be free from defects, reasonably durable and safe to use.
  • Manufacturers can stipulate a warranty period, however the consumer guarantee of ‘acceptable quality’ is in addition to the manufacturer’s warranty and will often exceed it. For example, if you buy a fridge with a 12 month manufacturer’s warranty, it’s likely that ‘acceptable quality’ for an item of this type and value would exceed 12 months.
  • If an item is not of acceptable quality, then consumers are entitled to refund, repair or replacement, at no cost to them.
  • Consumers can choose to deal with either the seller or manufacturer of a faulty good – the seller cannot direct a consumer to deal directly with the manufacturer.

Bunavit was ordered to pay penalties totalling $52,000. Cases against the other 9 franchisees have netted fines of over $200,000, with orders also made for corrective advertising and compliance training. Bunavit has since ceased trading.

These cases are a clear reminder that businesses must be aware of their obligations regarding consumer law compliance.

If you think your consumer law compliance is not quite up to scratch, we provide interactive training programs tailored to your industry. Call us now for an obligation free chat – we’d be pleased to help you.

Naomi Stephens Paralegal

Naomi is a paralegal in the Competition Law & Regulatory Compliance team, focusing on marketing activations, advertising review and trade promotions compliance.  She joined KHQ after having spent... Read More