MSY fined for misleading warranty notices

By Liz Tay on Apr 18, 2011 4:23 PM
Filed under Sales & Marketing

Federal Court imposes $203,500 penalty.

Technology reseller MSY has been fined $203,500 for misleading customers about their warranty entitlements last year.

The company was found to have contravened Australia’sTrade Practices Act in a Federal Court decision, issued Friday.

Federal Court Justice Perram ruled in favour of the Australian Competition and Consumer Commission, which claimed that MSY misled consumers in promotional material last year.

Between July and October 2010, MSY had issued notices, pricelists, pamphlets and promotional material that disclaimed its legal warranty obligations.

One notice displayed in the company’s New South Wales stores stated “we do not carry any warranty claims after purchasing”, in contradiction to implied conditions and warranties in the Act.

MSY also failed to mention any legislated warranties in its advertisements for a “high priority” warranty service that it offered in partnership with National Warranty Services.

Justice Perram found MSY’s statements to have “purported to disclaim or exclude their responsibility for providing warranties to customers”.

The statements also “purported to restrict [MSY’s responsibility] for providing warranties to customers in various ways”, and suggested “that consumers were required to pay a fee for warranties beyond those provided by the manufacturer”.

All contravening notices, price lists and receipts were removed by 14 November, 2010 after “extensive correspondence” between MSY and the Consumer Commission since 19 March, 2010.

Although MSY initially failed to “grasp the seriousness of the matter”, Perram said it undertook a “vigorous, complete and adequate response” following commencement of court proceedings.

Further, he noted that MSY’s misleading conduct was “not deliberate”, and found there to be no evidence of prior contraventions.

Perram imposed penalties “at the lower end” of the range: $55,500 on MSY; $37,000 on MSY NSW; $18,500 on MSY QLD; $37,000 on MSY SA; and $55,500 on MSY WA.

According to Federal Court documents, the maximum penalty for MSY’s contraventions was $1,100,000.

 
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