Fitbit settles with ACCC for misleading consumers
Competition & Consumer Protection June 1, 2018 2:32 pm By Cat Fredenburgh | Melbourne

Fitbit has agreed to settle with the ACCC after misleading customers about their guarantee rights under the Australian Consumer Law, another win for the regulator as its fights a recent court ruling over the extent of companies’ obligations to disclose remedies available under the law.

The Australian Competition and Consumer Commission said it had received over 100 complaints about the fitness tracking device company’s misrepresentations about consumers’ rights.

Fitbit told customers between November 2016 and March 2017 that its warranty against faulty products was only available for a year and that it would only replace faulty products for the rest of the calendar year or 30 days, whichever was longer. Under the ACL, retailers are required to provide remedies for faulty products regardless of when the requests are lodged.

“If a business offers its own limited express warranty, they must make it clear that the warranty is in addition to the remedies available under the Australian Consumer Law consumer guarantees, not instead of them,” ACCC Commissioner Sarah Court said.

“The Australian Consumer Law provides automatic rights that cannot be excluded, restricted or modified. If goods you purchase fail to meet a consumer guarantee, you are entitled to remedies which include repair, replacement or refund depending on the circumstances.”

The ACCC has an impressive track record of netting undertakings from big fish for misrepresentations to consumers about the relief available under the ACL. In recent months, it has won agreements from Netgear and Belkin.

Despite these recent wins, however, courts are not settled on whether companies are required by law to proactively inform purchasers of faulty goods of their rights under the ACL.

The ACCC is facing off against consumer electronics giant LG in an appeal that could clarify the issue. The Full Court heard arguments in the case in May.

The consumer regulator said LG violated the law by misleading consumers who brought LG products that broke down after their warranty had expired. LG led these customers to believe the warranty was their only recourse, without expressly mentioning their rights under the consumer law, the ACCC alleged.

In a September 1 ruling, Federal Court Justice Middleton sided with LG, ruling that the company was not obligated to inform consumers of remedies available to them under the ACL.

The judge said there was “no direct evidence that any of the consumers asked to be advised of their rights generally.”

In announcing that it would appeal the ruling, ACCC Deputy Chair Delia Rickard said more clarity was needed on the obligations of companies to notify customers of defective products of their rights under the law.

“The ACCC has appealed this decision in order to seek clarity from the Full Federal Court. In particular, this appeal is about the extent to which manufacturers should inform people seeking a remedy for a faulty product about their consumer guarantee rights,” Rickard said.

The ACCC is represented in the appeal by Norton Rose Fulbright. LG is represented by Bird & Bird.

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Cat Fredenburgh

Cat Fredenburgh has been covering legal news for 12 years. She was previously Editor-in-Chief at US legal news publication Law360. She is the Co-Founder of Lawyerly.