Apple has been fined $9 million by an Australian court for breaches of competition law over false or misleading representations to customers with faulty iPhones and iPads.
The Australian Consumer and Competition Commission (ACCC) launched legal action against Apple US and Apple Pty Ltd (Apple Australia) after complaints about an “error 53” that disabled some iPhones and iPads after operating system updates in 2015.
The company told at least 275 Australian customers with the error 53 problem over 12 months from February 2015 that they weren’t eligible for refunds if the device had been repaired by a third party, in breach of Australian Consumer Law.
The advice came from the Apple US website, Apple Australia staff in-store and on customer service phone calls.
The Federal Court handed down the $9 million penalty, concluding that if someone other than Apple repaired an iPhone or iPad, consumer guarantees and rights under Australian law still applied.
After the ACCC began investigating, Apple launched an outreach program to compensate people with devices made inoperable by error 53, involving around 5,000 consumers.
As part of the court decision Apple Australia pledged to improve staff training, audit information about warranties to comply with Australian Consumer Law.
The company will also address allegations that it was providing refurbished goods as replacements, following major failures with a promise to replace it with a brand new product.
ACCC Commissioner Sarah Court said if you buy an iPhone or iPad from Apple and it suffers a major failure, you’re entitled to a refund, or if you want a replacement, you’re entitled to a new device rather than a refurbished one.
“The Court’s declarations hold Apple US, a multinational parent company, responsible for the conduct of its Australian subsidiary,” she said.
“Global companies must ensure their returns policies are compliant with the Australian Consumer Law, or they will face ACCC action.”