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Harvey Norman franchisees fined AU$86,000 for misleading customers

The ACCC's legal battle with Harvey Norman has stepped up with four franchisees facing AU$86,000 worth of fines for misleading customers. The retailer's franchisees have now been slugged with more than AU$230,000 in penalties for staff behaviour.

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Image by Bloomsberries, CC BY-ND 2.0

The penalties were handed down by the Federal Court after franchisee staff were found to be "making false or misleading representations regarding consumer guarantee rights". The penalties are part of an extended legal battle that began in 2013 and has so far seen nine Harvey Norman franchisees lumped with a total of AU$234,000 in fines.

In each of the cases, the Federal Court found that Harvey Norman sales staff or store managers misled customers about their post-purchase consumer rights.

According to the ACCC, these misrepresentations included assertions that franchisees had "no obligation to provide a remedy" if the product was still under warranty or if the product was bought more than three months prior.

Under Harvey Norman's franchisee system, a single brick and mortar store is not necessarily run by one franchisee, but rather several operators responsible for different categories such as electrical appliances, computing or furniture.

The most recent raft of penalties apply to franchisees in Oxley, Queensland (AU$26,000); Gordon, New South Wales (AU$25,000); Mandurah, Western Australia ($25,000); and Albury, Western Australia ($10,000). The Mandurah and Albury franchisees ceased trading in May 2013.

Importantly, the fines were ordered even though the claims made by the sales staff were only made orally.

ACCC Deputy Chair Dr Michael Schaper said the legal action was a reminder that consumers had inviolable rights in Australian retail stores.

"These judgements imposing penalties are a clear message to all suppliers, no matter how big or small, that they must not mislead consumers about their rights under the Australian Consumer Law," he said.