The Federal Court Sydney today accepted undertakings from childrens toy retailer Toys R Us (Australia) Pty Ltd which resolve civil proceedings brought by the Australian Competition and Consumer Commission in October 1997 as part of a pre-Christmas crackdown on misleading NO REFUND signs.
The ACCC alleged that Toys R Us misrepresented consumers warranty rights relating to refunds for video games and computer software. The alleged misrepresentations were made on signs in Toys R Us stores and on stickers attached to video games and computer software packaging.
Justice Foster in the Federal Court Sydney accepted undertakings from Toys R Us that it will:
- refrain from displaying misleading 'NO REFUND' signage in its retail outlets; and
- up to, and through the Christmas period, apologise to its customers through in-store signage for engaging in alleged misleading and deceptive conduct in respect of warranty claims.
Justice Foster also noted that Toys R Us:
- acknowledges its statutory obligation to provide refunds to those consumers who can claim to have been misled; and
- has provided an enforceable undertaking to the ACCC that it will implement a comprehensive trade practices compliance program for its management and staff.
- Toys R Us was ordered to pay the ACCCs legal expenses of $16,000 as agreed.
In commenting on the decision, ACCC Chairman, Professor Allan Fels, said today The signs and stickers told customers they would only be given a refund on computer software and video games that were returned in a sealed, unopened package. I can understand how retailers feel vulnerable to false or fraudulent refund claims over such goods. But this policy by Toys R Us effectively led consumers to believe that they had no right to a full cash refund where goods are faulty, do not match description, or are not fit for the purpose made known.
With a few exceptions relating to purchases by businesses, consumer warranty rights under the Trade Practices Act cannot be excluded or modified. Importantly, they apply in addition to any voluntary express warranty, Professor Fels said. Further, businesses who make false or misleading representations to consumers about their warranty rights run the risk of litigation, involving loss of time and legal costs, and possibly monetary penalties.
Professor Fels said, I welcome the settlement of this matter as it has avoided the necessity for a costly trial and means that staff of the ACCC can turn their attention to other matters.
Further information: Professor Allan Fels, Chairman, (03) 9290 1812 Alana Woods, Acting Director, Public Relations (02) 6264 2808