Repair, replacement or refund - who decides?

In 2013 six different Samsung products were recalled due to the discovery of an electrical fault that could lead to the products catching fire.

As a consequence of the recall, Samsung was obliged, under the Australian Consumer Law (ACL), to replace the recalled products or provide a full refund.

The ACCC is investigating reports that Samsung breached its obligations under the ACL by only offering to repair certain washing machines which were the subject of the recall.   

If these reports are found to be true, Samsung will have violated the ACL, which provides that a consumer who purchases a product that is the subject of a “major failure”, the consumer may elect to have the product replaced or repaired or may insist on a full refund of the purchase price.  This entitlement applies to goods purchased by consumers on or after 1 January 2011, ensure.  It ensures that consumers who purchase products with significant quality defects, like those in the Samsung washing machines, are afforded the opportunity to select the remedy they consider appropriate.

Even if the products had been manufactured and sold prior to 1 January 2011, it is likely that the machines would have been subject to an implied warranty of merchantable quality, which would still have afforded consumers the right to seek a replacement machine or a refund of the purchase price.

If the ACCC uncovers evidence that the reports are correct it may take further action against the multi-national for breaches of the ACL.

It is essential that all manufacturers and suppliers understand their obligations and the rights of consumers to avoid breaches of the ACL.  In short:

• If a consumer has a minor problem with a product or service, the manufacturer/supplier can choose to give the consumer a free repair instead of a replacement or refund.
   
• When a consumer has a major problem with a product or service, the consumer has the right to ask for their choice of a replacement or refund.

Watch this space on the Samsung matter and, if you would like more information regarding the consumer guarantees, or rights and obligations under the Australian Consumer Law generally, please contact:

Joanne D'Andrea
Principal
Harwood Andrews
T: 03 5226 8567
E: jdandrea@harwoodandrews.com.au

Alasdair Woodford
Lawyer
Harwood Andrews
T: 03 5225 5217
E: awoodford@harwoodandrews.com.au