On 5 June 2020, the Federal Court in ACCC v Sony Interactive Entertainment Network Europe Limited (Sony) [2020] FCA 787 ordered Sony to pay $3.5 million in pecuniary penalties because, amongst other conduct, its call centres made misleading representations to five consumers about their rights to obtain a refund in relation to digital game purchases.
What you need to know
This case (and a spate of recent similar decisions) reinforces a critical issue for companies that have call centres or complaints divisions - do they know what they can and cannot say under the Australian Consumer Law (ACL)? One false or misleading statement to even one consumer could result in ACCC action, penalties and costly compliance programs.
As consumers increasingly interact with companies online or via chat or telephone (especially in light of the current health pandemic), compliance training and legally approved scripts for call centres and complaints divisions are crucial to minimise risk. This is particularly the case given the significant penalties for saying the wrong thing about consumer rights, the high turnover rate of call centre teams and the ACCC's continued preparedness to take these cases to court without requiring evidence of loss or damage.
The Sony decision
Sony admitted to making the following false or misleading representations to consumers in respect of their rights under the ACL:
- via the Terms of Service for accessing the PlayStation Network (PSN), that PSN users did not have certain guarantees for purchased digital games - when under the ACL, certain guarantees are implied into consumer transactions;
- via a statement made at the time of purchase in an email to customers, that PSN users could not obtain a refund of money added to their PSN virtual wallet (used to purchase products from the PlayStation Store) - when under the ACL, consumers have rights to refunds in certain circumstances; and
- via verbal statements made by PlayStation Support Centre staff,
that:
- refunds for faulty games could only be made if the customer obtained authorisation for the refund from the game publisher or developer;
- Sony was not required to provide refunds for faulty games after 14 days of purchase or if the game had been downloaded; and
- Sony was not required to provide refunds for faulty games in
any form other than a credit to the customer's PSN
wallet,
when under the ACL, consumers are entitled to a refund directly from Sony, there is no 14-day limit for refunds, and consumers have rights to refunds in certain circumstances.
Evidence of the number of times that each of the written representations were made was neither provided nor required. In terms of the call centre representations, some of these were only made to one customer throughout its dealings with, presumably, one staff member.
In addition to the $3.5 million pecuniary penalty, the Court ordered that Sony pay $100,000 towards the ACCC's costs and publish an Australian consumer rights notice on its website.
Earlier decisions
ACCC v Jetstar Airways Pty Ltd [2019] FCA 797
In 2018, the ACCC brought proceedings against Jetstar for false or misleading representations made in relation to application of the consumer guarantees in respect of flight purchases on its website. In particular, Jetstar admitted that it represented:
- via various statements and graphics, that certain fares were not refundable and that refunds were only available for bundled fare purchases at an additional cost; and
- via the Conditions of Carriage, that:
- flight services were not subject to any statutory guarantees or warranties, including the consumer guarantees, and
- where the consumer guarantees applied, Jetstar's liability was limited to either resupplying the flight service or paying the cost of resupplying the service, at its discretion.
Under the ACL, customers were entitled to a refund for all fares in the event of a major failure to comply with the consumer guarantees or one that was not remedied within a reasonable time, for example, an unreasonable flight delay or cancelled service. Further, remedies for a breach of the consumer guarantees were not limited in the manner Jetstar may have suggested.
There was no evidence that Jetstar's conduct misled customers or caused loss or damage
The Court ordered Jetstar to pay $1.95 million in pecuniary penalties and by consent, to contribute $50,000 to the ACCC's costs.
ACCC v LG Electronics Australia Pty Ltd [2018] FCAFC 96
In 2015, the ACCC brought proceedings against LG for making various false or misleading representations to consumers, retailers and repairers as to their rights under the ACL. Although the ACCC was initially unsuccessful, on appeal, the Full Court found that LG's customer call centre made two false representations that the consumer guarantees did not exist for televisions which became faulty outside of the LG warranty period. LG falsely represented to two customers that there was nothing LG could do in respect of the fault, adding in one instance, that the customer had to pay for the repairs themselves. Under the ACL however, consumers had rights to certain remedies in certain circumstances.
Such representations were made to two customers by four call centre representatives, which were described as "low-level customer service agents". However, there was no evidence that either of the two customers were misled (in fact, they were aware of their rights under the ACL) and neither customer suffered any loss or damage, as LG paid for the repairs in both instances.
The Court ordered LG to pay $160,000 in pecuniary penalties and 40% of the ACCC's costs.
ACCC v Valve Corporation (No 3) [2016] FCA 196
In 2014, the ACCC commenced proceedings against Valve Corporation, the operator of popular online computer game platform, 'Steam', for making nine misleading representations about consumer guarantees. The ACCC alleged that the representations were made via the Steam Subscriber Agreement, the Steam Refund Policies shown on the website, and separate online chat communications between Steam support staff and three consumers. Broadly, the representations related to customers not being able to obtain refunds for digitally downloaded video games purchased from Stream and the exclusion of certain statutory guarantees.
The Court found that Valve Corporation had made misleading representations in contravention of the ACL. Similar to the Jetstar decision, while there was no evidence of any loss or damage or consumers being misled, it was conceived that a loss might have arose if a consumer was deterred from seeking a refund, despite being entitled to do so.
The Court ordered Valve Corporation to pay $3 million in pecuniary penalties and 75% of the ACCC's costs, and to publish an Australian consumer rights notice on its website.
What you should do now
- Ensure your ACL compliance training materials are comprehensive and up to date especially in relation to consumer rights under the ACL;
- Ensure all phone and online chat scripts, email templates and other guidance for staff relating to customer complaints strictly comply with the ACL; and
- Ensure arrangements are in place to train new starters about compliance on induction.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
