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Apple fined $9 million by Federal Court after debilitating ‘Error 53’ system upgrade

Apple has been ordered to pay $9 million in penalties by the Federal Court after hundreds of users were caught by the company’s ‘Error 53’ upgrade back in 2016.

The error appeared after a system upgrade and disabled iPhones and iPads which had been repaired with non-Apple parts. The company admitted to the court it had told least 275 affected Australian customers that their devices could not be restored as they had been repaired by a third party.

In response to Apple’s actions, the Australian Consumer and Competition Commission took Apple to the Federal Court for making false or misleading representations to consumers.

ACCC commissioner Sarah Court said: “The Court 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, or the consumer’s right to a remedy being extinguished.”

“The Court’s declarations hold Apple US, a multinational parent company, responsible for the conduct of its Australian subsidiary. Global companies must ensure their returns policies are compliant with the Australian Consumer Law, or they will face ACCC action

“If a product is faulty, customers are legally entitled to a repair or a replacement under the Australian Consumer Law, and sometimes even a refund. Apple’s representations led customers to believe they’d be denied a remedy for their faulty device because they used a third party repairer.”

Following the ACCC notifying Apple about its investigation, Apple implemented an outreach program to compensate approximately 5,000 consumers who were affected by the Error 53 problem.

The company also told the court it would improve staff training, audit it information about warranties and the Australian Consumer Law on its website, as well as improve its systems and procedures to ensure it complies with law in future.

Apple also undertook to provide new, rather than refurbished, devices as replacements for defective units following the ACCC raising concerns about the company providing second hand items following a major failure.

“If people buy an iPhone or iPad from Apple and it suffers a major failure, they are entitled to a refund. If customers would prefer a replacement, they are entitled to a new device as opposed to refurbished, if one is available,” Court said.

An Apple spokesperson said in a statement: “Apple has been operating in Australia for over 35 years and we work hard to offer our customers the best possible service.

“We’re constantly looking for ways to enhance the service we deliver and we had very productive conversations with the ACCC about this. We will continue to do all we can to deliver excellent service to all of our customers in Australia.”

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