By Mike Cherney 

SYDNEY-- Apple Inc. was fined in Australia for refusing to offer free fixes for iPhones and iPads that were previously serviced by non-Apple stores, the latest episode in a global dispute between companies and consumers about the right to repair.

A court ordered Apple to pay a penalty of 9 million Australian dollars ($6.7 million), after it told consumers it wouldn't offer free repairs for devices that had become inoperable due to a glitch known as "Error 53." The fault had occurred after consumers downloaded an update to Apple's operating system.

Apple told at least 275 Australian customers affected by Error 53 that they weren't entitled to a remedy because their devices had been previously serviced at non-Apple stores, effectively voiding guarantees. The customers were told this between February 2015 and February 2016 and the information was provided on Apple's website, by Apple's Australia in-store staff and on customer-service phone calls.

Under Australian law, customers are entitled to a repair or replacement, and sometimes a refund, if a product is faulty, according to the Australian Competition and Consumer Commission, which sued Apple. Some Apple customers saw Error 53 as part of a general effort to prevent users from going to non-Apple stores for repairs.

Commissioner Sarah Court said Tuesday the Federal Court of Australia ruled Apple couldn't cease consumer guarantees because an iPhone or iPad had been repaired by someone other than Apple. Apple didn't immediately respond to a request for comment.

Conflict about where consumers can get their products repaired has intensified in recent years as consumer devices get increasingly complex.

In the U.S., the Repair Association has lobbied for state laws to require manufacturers to share information that independent repair shops need to fix their products. Others, though, have raised concerns unauthorized repairs could jeopardize the security of data held on the devices.

Apple previously said Error 53 can happen after "an unauthorized or faulty screen replacement" and was needed to protect customers if a fraudulent fingerprint sensor was used. It later said it was a mistake and designed to be a factory test. Apple apologized and posted instructions on its website for consumers to fix the problem.

After Apple was notified of the Australian regulator's investigation, the company reached out to some 5,000 customers who were affected by Error 53 to compensate them, the regulator said.

Apple also agreed to improve staff training, as well as beef up its internal systems and procedures to make sure it is complying with Australian consumer laws, the regulator said. Under that agreement, Apple also committed to providing new replacement devices, not just refurbished ones, if a product is faulty.

Consumers are likely to be the major beneficiaries from the court ruling because third-party repairers typically charge lower prices, said James Thomson, senior industry analyst at IBISWorld. Apple and other major companies may have to reduce repair costs to retain business, he said.

"While the financial penalties are relatively insignificant to a company of Apple's size, the publicity surrounding the misrepresentations are likely to have a greater influence on the company and wider industry," he said.

Write to Mike Cherney at mike.cherney@wsj.com

 

(END) Dow Jones Newswires

June 19, 2018 05:30 ET (09:30 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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