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Australian Regulator Files Lawsuit against Apple Inc. (NASDAQ:AAPL)

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The Australian Competition and Consumer Commission (ACCC) has filed a lawsuit against Apple Inc. (NASDAQ:AAPL) in the Federal Court. The suit alleges that the iPhone maker made false, misleading, or deceptive representations about consumers’ rights under the Australian Consumer Law.

The commission said in a statement that it commenced an investigation following reports relating to ‘Error 53,’ which disabled some consumers’ iPads or iPhones after downloading an update to Apple’s iOS operating system. Many consumers who experienced error 53 had previously had their devices repaired by a third party.

The ACCC said it found that Apple has refused to service consumers’ defective devices if a consumer had previously had the device repaired by a third party repairer, even where that repair was unrelated to the fault.

Under the Australian Consumer Law, there are a number of “consumer guarantees” regarding the quality, suitability for purpose and other characteristics of goods and services. Consumers are entitled to certain remedies at no cost where goods and services do not comply with the consumer guarantees.

According to the ACCC, Apple Inc. (NASDAQ:AAPL) represented to consumers with faulty products that they were not entitled to a free remedy if their Apple device had previously been repaired by the third party, “unauthorized repairers”.

However, having a component of the Apple device serviced, repaired, or replaced by someone other than Apple cannot, by itself, extinguish the consumer’s right to a remedy for non-compliance with the consumer guarantees, the ACCC said.

“Consumer guarantee rights under the Australian Consumer Law exist independently of any manufacturer’s warranty and are not extinguished simply because a consumer has goods repaired by a third party,“ ACCC Chairman Rod Sims said.

“Denying a consumer their consumer guarantee rights simply because they had chosen a third party repairer not only impacts those consumers but can dissuade other customers from making informed choices about their repair options including where they may be offered at the lower cost than the manufacturer,” Sims added.

He continued: “As consumer goods become increasingly complex, businesses also need to remember that consumer rights extend to any software or software updates loaded onto those goods. Faults with software or software updates may entitle consumers to a free remedy under the Australian Consumer Law.”

The commission is seeking pecuniary penalties, injunctions, declarations, compliance program orders, corrective notices, and costs.

Shares of Apple Inc. (NASDAQ:AAPL) closed down 0.52% on Wednesday. The stock is up over 24% for the year. During the last 12 months, AAPL has surged nearly 31%.

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