Australian competition watchdog takes Apple to court over 'error 53' claims

The ACCC is taking legal action against Apple following an investigation of "error 53" reports

Australian Competition and Consumer Commission (ACCC) has commenced proceedings in the Federal Court against Apple Australia and its U.S.-based parent company, Apple, for allegedly making “false, misleading, or deceptive representations” about consumers’ rights under the Australian Consumer Law.

It is seeking pecuniary penalties, injunctions, declarations, compliance program orders, corrective notices, and costs against Apple.

The Australian competition regulator and national consumer law champion started an investigation following reports relating to "error 53", an inaccuracy which disabled some consumers’ iPads or iPhones after downloading an iOS update.

Many consumers who encountered "error 53" had previously had their Apple device repaired by a third party, usually replacing a cracked screen.

What ACCC found was that Apple allegedly appeared to have routinely refused to look at or service consumers’ defective devices if a consumer had previously had the device repaired by a third party repairer, even where that repair was unrelated to the fault.

It stated that under the Australian Consumer Law, users are protected by a number of “consumer guarantees” in relation to the quality, suitability for purpose and other characteristics of goods and services.

In addition, the ACCC alleged that Apple represented to consumers faulty products that were not entitled to a free remedy if their Apple device had previously been repaired by third party, “unauthorised repairers”.

But, it mentioned that having a component of the Apple device serviced, repaired, or replaced by anyone besides Apple cannot, by itself, remove the consumer’s right to a remedy for non-compliance with consumer guarantees.

ACCC chairman, Rod Sims, said consumer guarantee rights under the Australian Consumer Law exist independently of any manufacturer’s warranty and are not extinguished because a consumer has goods repaired by a third party.

“Denying a consumer their consumer guarantee rights simply because they had chosen a third party repairer not only impacts those consumers but can dissuade other customers from making informed choices about their repair options including where they may be offered at lower cost than the manufacturer,” he said.

“As consumer goods become increasingly complex, businesses also need to remember that consumer rights extend to any software or software updates loaded onto those goods. Faults with software or software updates may entitle consumers to a free remedy under the Australian Consumer Law.”

This proceeding follows a court enforceable undertaking which the ACCC accepted from Apple in December 2013, following an investigation into Apple’s consumer guarantees policies and practices, and representations about consumers’ rights.

Apple was also recently involved in a case with the Commonwealth Bank of Australia, Westpac Banking Corporation, National Australia Bank, and Bendigo and Adelaide Bank in Australia, that collectively petitioned to the ACCC to reject Apple Pay.

Following the request, the ACCC denied their authorisation to collectively bargain with Apple and boycott Apple Pay.

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Hafizah Osman

Hafizah Osman

IDG News Service
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