Director of Consumer Affairs unsuccessful in misleading and deceptive conduct case

By Jack Newton, Lawyer, MST Lawyers

On 3 February 2016, the Director of Consumer Affairs Victoria lost court proceedings against the Good Guys after the Director claimed staff at the Good Guys had made inaccurate statements about rights under the Australian Consumer Law (“ACL”).

Facts

The Director argued the Good Guys’ salespeople had made inaccurate statements about the position the customer would be in if a product failed or was faulty after the expiry of the manufacturer’s warranty. The Director claimed that the Good Guys failed to refer to the consumer guarantees and related remedies in the ACL when discussing warranties with prospective customers.

The Director’s case was based on five store visits to the Good Guys’ stores and on each occasion when Consumer Affairs Victoria (“CAV”) Inspectors visited a store, they posed as customers interested in purchasing a television.

The Inspectors engaged the salesperson or staff member in a conversation about the merits of different television brands and then asked some questions about warranties. The Inspectors had covertly recorded the conversations.

The type of claims the Director argued was misleading and deceptive were:

• Implications that if a customer does not get the Good Guys’ Extended Warranty product, he or she would not be covered if the power source develops a fault or defect whereas he or she may have a remedy or rights under the ACL;
• Implications that without the extended warranty, a customer would have no remedy or rights against the Good Guys, whereas he or she may have a remedy or rights under the ACL;
• Implications that a customer has no recourse to the Good Guys if they develop a problem with the television and should not bother to call The Good Guys, whereas the ACL impose obligations on suppliers as to consumer guarantees and remedies; and
• Implications that the Good Guys represented that retailers are not obliged to provide refunds for defective consumer goods, whereas in some circumstances retailers as suppliers of consumer goods are obliged to provide refunds to consumers for defective consumer goods under the consumer guarantee and remedies provisions of the ACL.

Judgment

In this case, the claims were dismissed against the Good Guys.

The words used in the recorded conversations (both in the questions and the answers) were found to be vague and general, making it difficult to conclude that the statements were an inaccurate description of the customer’s rights.

In providing a vague and general answer, it was hard to say that the Good Guys salespeople were being misleading and deceptive.

In addition, the Good Guys made warranty information booklets available at each store and by offering these booklets to the customers, this was seen by the court as an attempt to clarify confusion in relation to the warranties.

Lessons for business

It is very important to have your staff well versed in all aspects of sales. This includes training in respect of the ACL and other consumer rights.

In this scenario, the salespeople were not clear and concise about the processes and outcomes in relation to warranties and exchanges. By giving vague and general answers, they were acting in a way that could be considered to be misleading or deceptive in business, but was not on this occasion.

These types of cases largely depend on the specific words used and implications and inferences that can be reasonable drawn from those words.

The provision of clear and concise warranty information in booklets and brochures around the store assisted the Good Guys’ defence. Having this information easily accessible provides support for staff members who are not entirely clear on policies (as often in the case in retail industries).

This is not an invitation to begin describing warranties or rights in vague and general ways only. That is a risky path that will likely attract CAV or Australian Competition & Consumer Commission scrutiny. Instead, it is a timely reminder to ensure any staff who deal with customers (or make decisions in relation to customers) are trained in relation to the ACL and consumer rights.

For more information or to discuss your regulatory and compliance concerns (including consumer law seminars), please contact our Corporate Advisory team by email at corporate@mst.com.au or by telephone +61 3 8540 0200.