Hewlett-Packard ordered to pay $3 million Civil Penalty for breaching the Australian Consumer Law
Australian Competition and Consumer Commission v Hewlett-Packard Australia Pty Ltd  FCA 653
In an agreed settlement of Federal Court proceedings brought by the Australian Competition and Consumer Commission, the Federal Court of Australia has ordered Hewlett-Packard Australia Pty Ltd to pay a $3 million civil penalty for making false or misleading representations. On 5 July 2013, by consent, the Federal Court also made declarations and ordered injunctions, corrective advertising and HPA to implement a consumer redress policy and compliance program.
The ACCC commenced proceedings against HPA as part of its current national consumer awareness campaign which seeks to educate consumers and industry about consumers’ rights under the Australian Consumer Law. You can read about this in our article on the ACCC’s action against Harvey Norman.
Australian Competition and Consumer Commission’s action against Hewlett-Packard Australia Pty Ltd
On 16 October 2012, the ACCC commenced proceedings in the Federal Court against HPA alleging that HPA had contravened sections 18 and 29 of the ACL by making false or misleading representations to customers and retailers in relation to their rights under the Australian Consumer Law. The parties agreed to settle the ACCC’s action after the ACCC filed its evidence in support of its claims but before HPA had filed its evidence. As part of the settlement terms, HPA agreed to the Court making declarations of its liability and ordering that it undertake certain remedial activities. On 5 July 2013, the Court approved the orders agreed by the parties and published short written reasons for that approval.
Hewlett-Packard Australia’s false and misleading representations
Based on a set of facts agreed by the parties, HPA admitted that it had made the following false or misleading representations:
- HPA had, through internal policies, guidelines and scripts developed by HPA and implemented by the staff employed at help desks around the world (to deal with customer service enquiries and complaints), represented to consumers that:
- the remedies available to consumers regarding HPA computer products were limited to remedies available from HPA at its discretion;
- HPA computer products that were not of merchantable or acceptable quality had to be repaired by HPA multiple times before consumers were entitled to a replacement product;
- the warranty period for HPA computer products was limited to a specified express warranty period; and
- after the expiry of the express warranty period, HPA would only repair HPA computer products that were not of merchantable or acceptable quality if consumers paid for the repairs.
- HPA would not indemnify retail suppliers if they provided consumers with a refund or replacement without HPA’s prior authorisation.
- Computer products purchased through HPA’s online store that were not of acceptable quality could not be returned or exchanged unless otherwise agreed by HPA, at HPA’s sole discretion.
Pecuniary penalty and remedial relief
In addition to the $3 million civil penalty HPA agreed to pay, the Orders sought by the parties (and ultimately made by the Court) included:
- injunctions preventing HPA from making the same false or misleading representations;
- public disclosures, including publication of a notice on HPA’s website and online store outlining consumers’ rights under the ACL;
- adverse publicity orders, including publication of a notice on HPA’s website and online store and in 10 Australian newspapers, which describes the ACCC’s action against HPA and the declarations made by the Court that HPA had made false or misleading representations;
- implementation of a consumer redress policy to deal with consumer complaints in relation to statutory consumer rights;
- implementation of a compliance program for a period of three years for HPA employees and others involved in HPA’s business. The compliance program (and supplementary written policy) is designed to minimise HPA’s risk of future contraventions of the ACL; and
- payment of the ACCC’s costs in the amount of $200,000.
When assessing the appropriateness of the $3 million civil penalty, Justice Buchanan was satisfied that “the penalty is sufficient to mark the Court’s disapproval of [HPA’s] conduct and to satisfy the requirements of general and specific deterrence”.1
Breadth of orders for contraventions of the Australian Consumer Law
This case highlights the broad nature of the orders the Court may make when a party is found to have contravened the ACL, especially where there are serious contraventions which require deterrence and public awareness. It also demonstrates the types of orders the ACCC is likely to seek when pursuing businesses for contravention of the ACL.
The ACCC’s continuing warfare on industry
This case is part of the ACCC’s continuing crackdown on contraventions of the ACL and part of a wider policy to raise awareness among consumers and retailers regarding statutory consumer guarantees.
As part of that campaign, the ACCC’s action against Harvey Norman (as detailed in our earlier article) continues with the ACCC being ordered to separate the original November 2012 proceedings against 11 Harvey Norman franchisees into 9 separate actions. In that case, the ACCC is seeking orders including penalties, declarations, injunctions and costs against each franchisee in relation to misrepresentations concerning remedies for damaged goods.2
In another high profile case, the ACCC commenced proceedings on 3 July 2013 against online deal site Scoopon for misleading and deceptive conduct and making false representations to businesses and consumers. The ACCC alleges that Scoopon misled consumers regarding redemption of vouchers, refund rights and the price of some goods. The ACCC also alleges that Scoopon misled businesses by claiming that 20% to 30% of vouchers would never be redeemed, when that was not the case. Scoopon also allegedly represented to businesses that there was no cost involved in running a deal with Scoopon, when in fact there was. The ACCC is also seeking declarations, injunctions, community service orders, pecuniary penalties and costs against Scoopon.3
These cases highlight the need for businesses to be vigilant in ensuring their refund and other policies do not conflict with their obligations to consumers and other businesses under the ACL, and demonstrate the ACCC’s willingness to take action to enforce those obligations.
- Australian Competition and Consumer Commission v Hewlett-Packard Australia Pty Ltd  FCA 653 .