Australia Court Orders Apple to Pay Penalty for Service Breach
June 18 2018 - 9:05PM
Dow Jones News
By Mike Cherney
SYDNEY--An Australian court ordered Apple Inc. (AAPL) to pay a
penalty equivalent to $6.7 million after the tech giant "bricked"
iPhones and iPads and didn't offer to fix them because they had
been previously serviced by third-party providers.
At issue was "Error 53," which shut down the devices after
consumers downloaded updates. The Australian Competition and
Consumer Commission sued Apple last year, alleging the tech giant
violated Australian law by telling customers it wouldn't fix the
devices for free because they had previously been serviced by
stores outside Apple's network.
The Federal Court of Australia "declared the mere fact that an
iPhone or iPad had been repaired by someone other than Apple did
not, and could not, result in the consumer guarantees ceasing to
apply," Commissioner Sarah Court said in a statement Tuesday.
If a product is faulty, customers are entitled to a repair or a
replacement, and sometimes a refund, Ms. Court said. The
regulator's lawsuit was seen as a broad challenge to Apple
requiring customers to pay for repairs to defective components if
their device was previously serviced by a third party.
Apple didn't immediately reply to a request for comment.
Some saw Error 53 as part of a general effort to prevent
customers from going to non-Apple stores for repairs. Apple
initially said Error 53 was necessary to protect customers if a
fraudulent fingerprint sensor was used, but it later said the error
was a mistake that was designed to be a factory test and
apologized.
The Australian regulator said Apple told at least 275 Australian
customers impacted by Error 53 that they weren't entitled to a
remedy. The customers were told this between February 2015 and
February 2016 and the information was provided on Apple's U.S.
website, by Apple's Australia in-store staff and on
customer-service phone calls.
After Apple was notified of the Australian regulator's
investigation, the company reached out to some 5,000 customers who
were impacted 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's complying
with Australian consumer laws, the regulator said. Under that
agreement, Apple committed to providing new replacement devices if
a product is faulty, not just refurbished ones.
-Write to Mike Cherney at mike.cherney@wsj.com
(END) Dow Jones Newswires
June 18, 2018 20:50 ET (00:50 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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