Commerce Commission warns Apple for misleading consumers

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Wellington, May 30, 2018
The Commission Commerce has warned Apple Sales New Zealand (Apple) after it likely misled consumers about their Consumer Guarantees Act (CGA) rights and about its replacement products being new.
The CGA provides consumers with a range of guarantees about the goods that they buy for personal use. These include guarantees that goods are of an acceptable quality and that spare parts and repair facilities will be available for a reasonable time, unless the manufacturer tells them otherwise.
Fair Trading Act
In the Commission’s view, Apple is likely to have breached the Fair Trading Act in a number of ways including by:

telling consumers that products are only covered by a guarantee for two years referring

consumers exclusively to the manufacturer of non-Apple branded products and excluding Apple’s liability for those products.

Commissioner Anna Rawlings said that Apple told some customers that their products were only covered by consumer law for two years and the Commission considered that this was misleading as the guarantees in the CGA do not expire after a legally prescribed period of time.
“They apply for a reasonable period. What is reasonable depends on the nature of the goods, any statements made about the goods and how the consumer, in fact, uses the goods. Although businesses may form a view about how long a product should generally last, they must assess each reported fault on its own merits. They should not base decisions solely on how long a consumer has owned a product. The reasonable lifespan of a product will depend very much on what the product is,” she said.

Consumers misled?
The Commission investigation also found Apple was likely to have misled consumers by trying to exclude its liability for non-Apple branded products when Apple is responsible, as a retailer, for compliance with the consumer guarantees applying to all products it sells, even if it is not the manufacturer.
“It is natural that many retailers may wish to liaise with manufacturers to assess and remedy product defects but they must not point blank refuse to address consumer complaints and refer consumers exclusively to manufacturers for attention,” Ms Rawlings said.
Other Issues
The Commission also warned Apple in relation to: (a) telling consumers that they must accept a defined number of replacement goods before an alternative remedy would be made available when the CGA imposes no such limits on available remedies (b) excluding liability for consequential losses when consumers might be entitled to compensation for some losses of that kind under the CGA, depending on the circumstances (c) providing conflicting information on Apple’s website about whether spare parts and repairs would, or would not, be available for some products (d) leading consumers to believe that their faulty Apple products were being replaced with new products when they were in fact supplied with re-manufactured products.

Consumer Guarantees Act
The Commerce Commission does not enforce the Consumer Guarantees Act (CGA) but it has a role to play when businesses mislead consumers about their rights because this breaches the Fair Trading Act. Manufacturers and retailers of consumer goods cannot opt out of their obligations under the CGA. Consumers can seek a remedy from the supplier who sold them the goods under the CGA whether or not they also seek a remedy under the CGA from the manufacturer.
If guarantees are breached, consumers may be entitled to have their goods repaired or replaced, depending on the nature of the problem, and they may also be entitled to compensation in some cases.
Warning letter to Apple
You can read a copy of the Commission’s warning letter to Apple on enforcement response register.

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