Apple hit with $9M fine

The Federal Court has ordered Apple to pay $9 million in penalties for making false or misleading representations to customers with faulty iPhones and iPads about their rights under Australian consumer law.

The Australian Competition and Consumer Commission (ACCC) took action against Apple US and Apple Australia following an investigation of complaints relating to ‘error 53’. This error disabled some iPhones and iPads after owners downloaded an update to Apple’s iOS operating system.

Apple US has admitted that it had represented to at least 275 Australian customers affected by the error that they were no longer eligible for a remedy if their device had be repaired by a third party.

These representations were made from February 2015 to February 2016 on Apple’s US website by Apple Australia’s staff in-store and on its customer service phone calls.

ACCC commissioner, Sarah Court said if a product is faulty, customers are legally entitled to a repair or a replacement under Australian Consumer Law, and sometimes even a refund.

“Apple’s representations led customers to believe they’d be denied a remedy for their faulty device because they used a third party repairer,” Court said.

“The Court declared the mere fact that an iPhone or iPad had been repaired by someone other than Apple did not, and could not, result in the consumer guarantees ceasing to apply, or the consumer’s right to a remedy being extinguished.”

“The Court’s declarations hold Apple US, a multinational parent company, responsible for the conduct of its Australian subsidiary. Global companies must ensure returns policies are compliant with the Australian Consumer Law or they will face ACCC action,” Court said.

Apple has implemented an outreach program to compensate individual consumers whose devices were made inoperable by error 53; the program was extended to around 5,000 consumers.

The tech giant has also offered a court enforceable undertaking to improve staff training, audit information about warranties and detail Australian consumer law on its website, as well as improve its systems and procedures to ensure future compliance.

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Follow Byron Connolly on Twitter: @ByronConnolly