Business Franchise Australia


Harvey Norman franchisee pays for misleading consumers

The Federal Court has ordered another Harvey Norman franchisee to pay $32,000 in civil pecuniary penalties for making false or misleading representations regarding consumer guarantee rights.

The Court found that Camavit Pty Ltd (Camavit), which is located in Campbelltown, New South Wales, made a number of false or misleading representations to consumers about their consumer guarantee rights. Examples of the misrepresentations made by Camavit include representations that:  

  • the franchisee had no obligation to provide a refund for faulty goods supplied;
  • the franchisee had no obligation to provide a remedy other than an exchange or credit that had to be finalised within a few weeks; and
  • the franchisee had no obligation to provide a remedy independently of the relevant product manufacturer.

The above representations were made orally by sales representatives or store managers over a period of several months in 2012.

“As with last Friday’s penalties against four other Harvey Norman franchisees, this penalty sends a message to all businesses that they must not mislead consumers about their rights to repair, replacement or refund for faulty goods under the Australian Consumer Law,” ACCC Chairman Rod Sims said.

“Complaints about consumer guarantees represent a quarter of the consumer protection complaints that the ACCC receives each year. Misleading conduct in relation to consumer guarantees remains an enforcement priority for the ACCC.”  

In addition to penalties, the Court also made orders including declarations and injunctions. Camavit Pty Ltd will also be required to display in-store corrective notices and implement a consumer law compliance program.

Proceedings were issued against Camavit on 13 June 2013. Subsequently, the ACCC and Camavit came to an agreed settlement on the matter, with agreed orders put to the Court for consideration. 

The judgment follows Federal Court orders on 6 December 2013 against four other Harvey Norman franchisees, requiring them to pay civil pecuniary penalties totalling $116,000 for each making false or misleading representations to customers about their consumer guarantee rights.

The ACCC is awaiting judgment in proceedings against another five Harvey Norman franchisees for similar conduct, where the ACCC is seeking court orders including penalties, declarations, injunctions, corrective notices and compliance training. 

The Australian Consumer Law gives consumers a set of rights called consumer guarantees for all goods purchased after 1 January 2011. These guarantees include a guarantee that:

  • goods will be of acceptable quality;
  • goods will be fit for any disclosed purpose;
  • goods will match any description under which it is sold;
  • goods will have spare parts available for a reasonable time; and
  • all express warranties offered will be honoured.

For goods purchased on or after 1 January 2011, where a good develops a major fault, consumers have a right to a replacement or refund from the supplier of the good. For goods that develop a minor fault, a consumer has a right to have the good remedied (at the suppliers discretion) within a reasonable time. If the supplier doesn’t do so, the consumer can either reject the goods and get a refund or have the problem fixed and recover reasonable costs of doing so from the supplier.