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US-based wearable fitness technology company Fitbit LLC has been ordered by the Australian Federal Court to pay penalties of $11 million for making false, misleading or deceptive representations to 58 customers who had sought replacements or refunds when devices proved faulty.
The case at hand is the second time a company within the Fitbit Group has come to the attention of regulators in relation to consumer guarantee rights, which by law mean that consumers are entitled to remedies including the replacement of goods if guarantees of acceptable quality are not met.
"In this case, consumers may have incurred additional expense and inconvenience paying for repairs or replacement products because they were told false and misleading information about their consumer guarantee rights," says Australian Competition and Consumer Commission (ACCC) acting chair Catriona Lowe.
"All products sold to consumers come with a guarantee that goods are of acceptable quality, and retailers must provide a remedy for faulty goods if this guarantee has not been met, which includes repair, replacement or refund, depending on the circumstances."
Fitbit admitted that between about November 2020 and February 2022, its customer service staff told 40 consumers they did not have a right to a replacement product because Fitbit’s two-year ‘warranty period’ had expired.
Of those 40 consumers, 39 had contacted Fitbit about a problem with a replacement product, but customer service staff had said the warranty was for the original device and had expired.
The Fitbit customer service representative agreed the new device was defective but informed the customer that they were not eligible for a replacement, saying: "Your device does not meet the requirements for a replacement…. based… on the original purchase date."
Fitbit - which was acquired by Google in January 2021 - also admitted that between May 2020 and February 2022 its staff had told 18 other consumers they did not have a right to a refund unless they returned the faulty product ‘within 45 days of purchase’.
Fitbit admitted that its representations were false or misleading, and that they constituted conduct that was misleading or deceptive conduct, or likely to mislead or deceive.
Fitbit apologised for its conduct and the Federal Court recognised that the compliance measures implemented under a 2018 court-enforceable undertaking by Fitbit (Australia) Pty Ltd - which manages the group's relationships with its third-party retailers in Australia, and Australian marketing and promotional activities - did not prevent the contraventions.
“We took this action as a reminder to Fitbit, and other businesses, that they must honour their customer’s consumer guarantee rights without restrictions and not mislead consumers about these rights,” says Lowe.
“We are pleased Fitbit admitted its misconduct, especially since this is the second time we have had to respond to a company in the Fitbit group with concerns about representations involving consumer guarantee rights.”
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