Eleven Harvey Norman franchisees are face fines of up to $1.1 million for giving misleading information to customers who were sold faulty products about their right to claim a refund or replacement.
Consumers who purchased faulty mobile phones, laptops, refrigerators and espresso machine were told they had to pay for repairs or wait for manufacturers to provide a refund, according to documents lodged with the Federal Court in NSW.
One store, in Bundall, Queensland, allegedly told a customer trying to replace a faulty laptop worth $1200 that Harvey Norman could not do anything until it was contacted by the Australian Competition and Consumer Commission (ACCC).
Other consumers were told Harvey Norman does not give refunds, or only exchanges products worth less than $300, or that they would only get refunds if Harvey Norman received the money from the manufacturer first.
However, the Australia's Competition and Consumer Act applies to the retailer, Harvey Norman.
The ACCC launched legal action on Monday against the owners of Harvey Norman stores in Launceston, Albany, Hoppers Crossing, Mandurah, Bundall, Sale, Ipswich, Oxley, Campbelltown and Moonah.
One woman who purchased a faulty Panasonic digital camera worth $159 from Harvey Norman Superstore Mandurah was told she could not pick up the repaired camera until she paid $88. The employees claimed this was a charge from Panasonic to cover postage and handling and said: "You could phone Panasonic to see if you can get them to waive the charges, or you could lodge a complaint with the ACCC."
Another consumer, who purchased a DeLonghi coffee machine from Harvey Norman Moonah, was told the faulty machine would only be repaired or replaced after it was sent to DeLonghi for assessment.
"It is DeLonghi's policy to assess the item and decide whether to repair it or provide a refund or replacement. It is up to DeLonghi, not Harvey Norman, to determine if the machine will be replaced," the consumer was told, according to court documents. A second coffee machine was also faulty, but the Harvey Norman store denied it had an obligation to replace or repair the machine.
The ACCC alleges these stores breached consumer law by providing false and misleading information about the customer's right to a refund or replacement. Each contravention carries a potential infringement notice fine of $6600 or penalty of $1.1 million. Australian consumers have the right to ask for repairs, replacement or a refund if goods are faulty, unsafe, look unacceptable or do not do what they are supposed to do.