The Australian distributors of a $2,000 cult kitchen gadget, Thermomix in Australia (TIA), have been fined $4,608,500 for misleading consumers after the lid on the upmarket blender failed and several people were burned.
The Australian Consumer and Competition Commission (ACCC) launched legal action against TIA, which has local sales estimated to be worth around $60 million, alleging the company broke consumer law on several fronts, including misleading consumers, failing to comply with mandatory reporting requirements when people were injured using the appliance and attempting to stifle criticism by making users sign non-disclosure agreements.
The Federal Court in Melbourne today found that TIA broke Australian Consumer Law (ACL) on several fronts over its actions after discovering in 2014 that the mixing bowl lid on its TM31 product had the potential to lift while it was being used.
Justice Murphy found that TIA was “engaged in misleading or deceptive conduct and/or conduct liable to mislead the public” over several weeks to 23 September, 2014, by not alerting consumers and potential buyers of the problem, saying the product was not was fit for purpose and safe to use.
The company subsequently issued a recall but continued to maintain its product was safe, which the court found misled consumers again.
And on 14 occasions between June 2012 and July 2016, TIA again broke Australian Consumer Law by failing to give written notice to the federal government minister within two days of becoming aware that a person has suffered serious injury while using a Thermomix.
The business further compounded its breaches when dealing with an unhappy customer, known to the Court as MV, when she applied for a refund by insisting she sign a settlement agreement that prevented her from disclosing the terms of the settlement and commenting negatively about TIA or the product. TIA also misled other Thermomix owners by telling them a refund and/or replacements was not available, again in breach of ACL.
ACCC Commissioner Sarah Court said Thermomix placed the safety of consumers at risk by failing to notify them of the problems and then misled them over refunds.
“Thermomix’s penalties should serve as a reminder to all businesses that consumers have rights in relation to faulty products which businesses cannot restrict, alter, or remove,” she said.
“When a consumer is entitled to a refund or replacement under the ACL, businesses cannot place conditions on that right to a refund or replacement and customers certainly shouldn’t have to sign non-disclosure agreements.”
Justice Murphy said contravention was serious and exposed a large number of people to the risk.
The Court also held that Thermomix caused false or misleading statements to be made in the media in March 2016 about the nature of the October 2014 recall of the TM31.
The ACCC says Thermomix co-operated with them in resolving these proceedings.
More than 100,000 TM31 models are believed to have been sold in the Australian market.
After people reported suffering second degree burns when the machine malfunctioned consumer lobby group Choice launched a “mass incident report” campaign in March 2016 and reported its findings to the ACCC.
Choice had 87 Thermomix owners report a problem with their machine, with 45 saying they were injured, and 18 saying they received medical treatment.
TIA admitted during court case that it knew nine women and a child has suffered burns before it issued a public safety recall.
In a comprehensive victory for the ACCC, TIA must also pay the consumer watchdog’s $230,000 legal bill and publish a correct statement pledging to not mislead or deceive consumers on its homepage and Facebook for 90 days.
Last night, the business is believed to have emailed its customers saying, “As you may be aware, Thermomix in Australia has reached a proposed resolution in relation to the proceedings brought against us by the Australian Competition and Consumer Commission.”
CHOICE head of campaigns Sarah Agar welcomed today’s decision.
“This case shows that if you sell a product that puts people in hospital, you cannot keep that secret and expect to get away with it,” she said.
“We are delighted Thermomix has been called to account for its actions and we’d now like to see Australian Consumer Law strengthened so companies that breach the law are hit with even bigger penalties in the future.
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