Electronics retailers found to be breaching consumer law, “85% of sales staff got it wrong”

An investigation by consumer group Choice has revealed 85% of sales staff at major electronics retailers were uncompliant with aspects of Australian Consumer Law.

Two Choice staff visited 80 Harvey Norman, The Good Guys and JB Hi-Fi stores across every Australian state and territory, posing as customers, and found sales staff either had limited or no understanding of their consumer law obligations.

The Choice employees asked the salespeople at each of the stores if they had any responsibility should a $2500 TV cease to function after the manufacturer’s one-year warranty.

The response by the vast majority of the salespeople was that the broken TV was out of the store’s hands, when in reality it was the store’s obligation to repair or refund the consumer.

TressCox Lawyers partner Alistair Little told SmartCompany the response of the sales staff would have been acceptable under the old consumer laws, but in 2011 the legislation changed.

“In 2011 a major change occurred in regard to warranties which meant that when a major failure of a good occurs, the consumer gets the choice of ending the contract with the supplier and seeking a replacement, repair or a refund,” he says.

“This concept of a major failure is still new and it’s causing confusion. It’s been defined as a failure where a reasonable consumer wouldn’t have purchased the goods had they been aware of the failure, or it was significantly different to the demonstration model they saw.”

Choice spokesperson Tom Godfrey said in a statement consumers need to be wary of warranty advice given in stores.

“The fact that 85% of sales staff got it wrong and 100% offered an extended warranty is very concerning,” he says.

“Consumers should not be fooled into purchasing extended warranties they don’t need and we’d like to see the ACCC and fair trading bodies investigate these breaches.”

After approaching the sales staff at the retailers, the Choice employees contacted the head offices of Harvey Norman and JB Hi-Fi and found both companies understood their obligations, despite their sales staff’s lack of awareness.

Little says the fact sales staff were unaware of their consumer law obligations was “not in the least surprising”.

“It’s very common, whether it be a case of wilful blindness or just a lack of knowledge of the current state of the law,” he says.

“What the act has done with the new provisions is to say if there is a major failure, consumer law, then the consumer is king and gets the right to determine what it is that they want. This can be contradictory to some of the terms of warranties.”

Little says sales staff would have been educated as to the terms of the warranties, but not what constitutes a major failure.

“This is something retailers are still coming to grips with… most are still not familiar with this concept,” he says.

“People have been working in the consumer sales industry for an extended period of time would have been compliant under the old act, so there needs to be training  of staff on the new legislation and people need to be aware of these rights because it is a day-to-day issue.”

Little says there are yet to be an Australian Competition and Consumer Commission cases pursuing this issue, but it’s only a matter of time.

“The day will come when the ACCC will start taking action against people.”