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Monday, 15 March 2010 09:31

ACCC to tighten up mobile industry's handset warranties

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The ACCC is hoping to put in place an industry-wide agreement with mobile industry players to prevent service providers and retailers misrepresenting to consumers' their statutory rights when their handset develops a fault.

It is also hoping to get the industry to follow VHA's lead in offering 24 month warranties instead of the standard 12 month - a move that would provide warranty cover for the whole of the usual mobile service contract period.

The move was announced by ACCC chairman, Graeme Samuel, in his speech to Atug's annual conference on March 12. He said the agreement would follow a similar scheme developed to curb the mobile industry's over-zealous use of terms such as "unlimited" in its advertising.

It also follows the ACCC receiving court enforceable undertakings from two mobile service providers in the past 12 months - M2 in April 2009 and the 3 arm of VHA in January 2010 for breaching the statutory warranty provisions of the Trade Practices Act.

Samuel said: "Both M2 and Hutchison (prior to its merger with Vodafone) had represented that consumers with a faulty mobile phone could only have it repaired, when statutory rights in some cases entitle a consumer to a refund from a retailer, and this cannot be excluded."

M2 had also claimed, erroneously, that pre-installed software would not compromise the phone's compatibility with other networks and that phones would work on any network when in fact they were not compatible with Next G.

Samuel added: "Significantly, VHA agreed in the undertaking to introduce a voluntary 24 month warranty on mobile phones it supplies - with an exception in relation to Apple iPhones. The 24 month timeframe is important because it now means that consumers' mobile phones will be covered by a warranty for the entire length of a standard service contract.

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"Current industry practice is that, despite consumers being tied into 24 month contracts, the mobile phone handset supplied with the contract is normally only covered by a 12 month warranty."

The industry wide agreement foreshadowed by Samuel would be similar to court enforceable undertakings covering advertising practices given to the ACCC by the three majors - Telstra, Optus and VHA - in August 2009.

Samuel told the Atug conference that the three "have agreed to take reasonable steps to ensure that this commitment will extend to any other players with whom they have commercial agreements which allow them to control the advertising and promotion of goods or services. Furthermore the undertaking provides a fast track process for dealing with any ongoing concerns in this area."

Since receiving the undertakings, Samuel said the ACC had conducted 'truth in advertising' workshops with second tier industry participants. "This now means that providers serving 90 percent of the telecommunications industry have been directly advised of the ACCC's concerns and proposed action, and can be considered to be on notice as to the ACCC's position on truth in advertising."

He claimed that these initiatives had been highly effective. "It would not be overstating the consequences of this sectoral approach to observe that, of recent times, consumer complaints warranting enforcement action in this area have dropped off to insignificant levels."

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