The Federal Court has ordered Hewlett-Packard Australia (HP) to pay a $3 million civil penalty for making false or misleading claims to customers and retailers regarding consumer guarantee rights, according to a statement from Australian Competition and Consumer Commission (ACCC).

The ACCC began legal proceedings against HP in October 2012, following which ACCC and HP came to an agreed settlement on the matter.

The Court has found HP made misleading representations to consumers about their consumer guarantee rights. These guarantees included:

  • Remedies available to consumers were limited to the remedies available at HP's discretion.
  • Consumers were required to have their product repaired multiple times before they were entitled to a replacement.
  • The warranty period for HP products was limited to a specified express warranty period.
  • Consumers were required to pay for remedies outside the express warranty period.
  • Products purchased online could only be returned to HP at HP's sole discretion.

In addition to the $3 million penalty, the Court also made orders that include declarations; injunctions; a contribution towards the ACCC's costs of $200,000; consumer redress orders; public disclosure orders; corrective advertising orders; and orders to implement a compliance program. The orders also include a requirement that HP set up a consumer redress process for affected consumers.

The Court also found that HP told retailers that it was not liable to indemnify the retailer if it failed to obtain authorisation from HP before giving a consumer a refund or replacement. Those instructions were made by HP staff working at call centres located around the world, as set out in HP's internal guidelines and scripts.

In his judgement, Justice Buchannan said the penalty was appropriate and reflected an acknowledgement of the seriousness of the respondent's conduct according to a statement from ACCC.

In the statement, ACCC Chairman, Rod Sims, said, "This was an important case to the ACCC. The misconduct was widespread and systemic from a very large multi-national firm.

"The ACCC believes that this penalty sends a strong message to all companies, particularly large multi-national companies, that the Australian Consumer Law is not negotiable. This result also shows that the Court is not afraid to impose significant penalties for serious contraventions of the ACL."

"All businesses operating in Australia require robust mechanisms to comply with the consumer guarantees provisions under the Australian Consumer Law.

ACCC added that, in general, for 'goods' purchased on or after 1 January 2011, that may have developed a major fault, consumers have a right to a replacement or refund from the supplier of the good.

For goods that develop a minor fault, a consumer has a right to have the goods remedied (at the suppliers discretion) within a reasonable time. If the supplier doesn't do so, the consumer can either reject the goods and get a refund or have the problem fixed and recover reasonable costs of doing so from the supplier.