Anne from Queensland contacted us recently after being told that her Nokia N97 has water damage. It’s less than one year old so she’s not happy. We've heard from many readers who have similar stories about mobile phone warranty claims being denied because of "water damage".
On the one hand, manufacturers are entitled to set their own warranty terms, but, on the other hand, they must abide by consumer law when it comes to devices being ‘fit for purpose’. In this case, it looks like consumers are being denied their warranty provisions if the phone malfunctions through normal use, and it’s to be expected that this would include moisture from hands or face reaching the phone through a normal amount of talking or texting.
The question is who’s going to look at this issue for both consumer and manufacturer to determine what the law should cover? It won’t be properly answered until Fair Trading and/or the Australian Competition and Consumer Commission (ACCC) has enough complaints to take action. If you’re in this situation, lodge a complaint. Ring the ACCC Infocentre on 1300 302 502 or register a complaint with the Office of Fair Trading in your state or territory via its website or over the phone.
In the mean time, we put some questions to the ACCC about the issue of water damage. The responses are below.
Can a phone manufacturer exclude certain things, such as water damage, from a warranty?
Manufacturers are able to set their own warranty terms; however, these terms cannot exclude or limit rights under the consumer guarantees which are part of the Australian Consumer Law. These terms must also not mislead consumers about their rights under the consumer guarantees. The consumer guarantees are a set of rights that consumers receive automatically when they purchase, lease or hire a good, or buy a service. For example, goods must be of acceptable quality, fit for any disclosed purpose and match any description given, sample or demonstration model shown to the consumer prior to purchase.
Does a retailer/manufacturer have to advertise, in advance of someone signing a contract or buying a handset, that it excludes water damage?
Retailers and manufacturers must not mislead or deceive consumers about any terms and conditions in their contracts or surrounding the sale of goods. Retailers and manufacturers should make their contract terms clear to minimise the risk misleading consumers.
Should such a condition need to be independently verified as causing a phone malfunction?
The Australian Consumer Law does not require that faults be tested in a certain way or that independent testing must be carried out. However, businesses are likely to test the product to identify how serious the problem is and what caused the problem. Consumers are also entitled to independently test the product to identify the likely cause of the problem.
It is important to remember that the consumer guarantees are not limitless, if a consumer causes damage to a good, misuses it or doesn't explain what they wanted prior to purchase, they may not be entitled to a remedy under the consumer guarantees.
Does water damage through normal use render a mobile phone not fit for purpose under the new consumer laws?
The consumer guarantees apply broadly to all goods and services across all industries. As such, the ACCC cannot provide definitive advice on when a good will or will not be fit for its purpose. Whether a business has met their obligations under the consumer guarantees will depend on the specific fact circumstances of each case, including how the good was used.
Will the ACCC look into the issue and take action to stop manufacturers/retailers from imposing their own conditions on warranties?
Manufactures and retailer are able to impose their own conditions on warranties provided they don't exclude or limit rights which are provided by the law and don't mislead consumers about their rights under the ACL or about the warranty itself.
The ACCC has taken action in the past about misleading warranty terms and conditions, and also in relation to warranties for mobile phone handsets that are attached to 24-month contracts are provided with handset warranties for the duration of the contract.
The ACCC is [to] closely monitor business implementation of the Australian Consumer Law (ACL) and will take enforcement action where necessary to protect consumers and to ensure that the level playing field the ACL established for businesses nationally is maintained.
What can a consumer do if they believe that water damage from normal use should be covered by warranty and its being refused from a manufacturer/retailer?
If a consumer feels that a guarantee has not been met, they should contact the retailer or manufacturer to discuss the problem and an appropriate remedy. It is a good idea to formally put the concerns in writing. Consumers can also contact the ACCC or their local consumer protection agency to make a complaint or seek further guidance. The ACCC Infocentre can be contacted on 1300 302 502.
The course of action consumers can take is set out in the ACCC's guidelines on consumer guarantees, including an example letter of complaint. The consumer guarantees guide can be accessed here.