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Commerce Commission warns Apple over likely breaches of Fair Trading Act

Wednesday 30th May 2018

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The Commerce Commission has issued a warning to Apple that it likely has breached New Zealand's Fair Trading Act with misleading statements about the rights of its customers under the Consumer Guarantees Act (CGA) and replacements for faulty products.

The eight-page warning letter, addressed to Apple Sales New Zealand c/o law firm Simpson Grierson in Auckland says the regulator investigated complaints from consumers who had sought remedies for faulty Apple products, information on Apple's website, sales and refund terms and conditions for online Apple Store purchases, and documents provided with replacement products.

The commission said Apple is likely to have breached the Fair Trading Act in a number of ways including by telling consumers that products are only covered by a guarantee for two years and referring consumers exclusively to the manufacturer of non-Apple branded products and excluding Apple’s liability for those products.

Apple had told some customers that their products were only covered by consumer law for two years and the commission considered that this was misleading "as the guarantees in the CGA do not expire after a legally prescribed period of time."

“They apply for a reasonable period," commissioner Anna Rawlings said. "What is reasonable depends on the nature of the goods, any statements made about the goods and how the consumer, in fact, uses the goods."

The commission also said Apple was likely to have misled consumers by trying to exclude its liability for non-Apple branded products "when Apple is responsible, as a retailer, for compliance with the consumer guarantees applying to all products it sells, even if it is not the manufacturer."   

“It is natural that many retailers may wish to liaise with manufacturers to assess and remedy product defects but they must not point blank refuse to address consumer complaints and refer consumers exclusively to manufacturers for attention,” Rawlings said.

It also looked into a complaint from a customer after three iPhone 6 Plus devices failed in different ways and was told by an Apple representative that Apple had a policy of providing four replacements before considering an alternative remedy when the CGA contains no requirement on a set number of faults.

The commission also found Apple provided conflicting information about the availability of spare parts and repairs and in making misleading statements that replacement products were new "when they were in fact remanufactured products."

The commission said Apple had cooperated during the investigation. The warning letter was intended "to assist Apple in meeting its statutory obligations."


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