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Furniture and homewares retailer Koala & Tree Pty Ltd, trading as Koala Living, has paid penalties of $56,340 after the ACCC issued it with three infringement notices for making false or misleading statements about consumers’ rights to remedies for faulty products.
The ACCC was concerned, after being alerted by numerous consumers, that Koala Living had wrongly stated that consumer rights to remedies for faulty products were limited to a 72-hour period or the period of the manufacturer’s warranty, and that Koala Living could choose the type of remedy for minor and major faults.
Koala Living also wrongly informed consumers that delivery charges were not refundable, when in fact consumers have a legal right to compensation for any foreseeable loss or damage they suffer because of the failure to comply with a consumer guarantee. This could include reimbursing delivery charges.
In a court-enforceable undertaking given to the ACCC, Koala Living has admitted that its conduct likely contravened the Australian Consumer Law.
Consumer guarantee rights are automatic rights under the Australian Consumer Law which apply to most consumer goods and services bought from a business, irrespective of the warranty offered by the business. The guarantees include that goods will be of acceptable quality, match their description and be fit for any disclosed purpose.
“Under the Australian Consumer Law, consumers can ask for a repair, refund or replacement for faulty goods, even after the warranty has expired. If a good has a major problem, consumers have a right to choose either a replacement or a refund, and the refund should be the full amount the consumer paid,” ACCC Commissioner Liza Carver said.
Koala Living’s undertaking to provide compensation to consumers
Koala Living has undertaken to provide compensation to consumers to whom Koala Living represented that a consumer’s right to seek remedies for faulty products was limited to 72 hours, and who have not yet received a full refund, repair or replacement from the company.
Compensation will amount to 20 per cent of the purchase price, and is separate and in addition to any remedies consumers may be entitled to under the consumer guarantees in relation to faulty products.
“We are pleased that Koala Living has undertaken to compensate consumers affected by its false and misleading advice,” Ms Carver said.
For further information on the compensation program, consumers should refer to the corrective notice published on Koala Living’s website.
As part of the court-enforceable undertaking, Koala Living has committed to reviewing its policies and procedures, including its complaints handling procedures, to ensure staff understand the business’s consumer law obligations. It will also inform customers that its previous representations on its website were misleading and deceptive through corrective notices published on its website and social media channels.
Koala Living has removed the incorrect statements about consumer rights from its website and admitted that its internal Australian Consumer Law training for staff and consumer complaints handling processes were inadequate.
“We are continuing to review the returns policies of many businesses for terms that are likely misleading, including time limits for consumers wishing to return a faulty good, and we will take appropriate action,” Ms Carver said.
“Businesses are on notice that they must have appropriate systems in place to ensure they do not mislead consumers about their rights and comply with their consumer guarantee obligations.”
“Consumer guarantees apply for a period of time that is considered reasonable having regard to the nature of the goods or services, including the price paid. In many cases this will be longer than the period of any warranty provided by a retailer or manufacturer,” Ms Carver said.
Earlier this year, the ACCC informed consumers about common statements about consumer guarantees that might be misleading and reminded businesses that it is unlawful to give customers false or misleading information about their consumer guarantee rights. This included statements similar to those Koala Living made to its customers.
Further information about consumer rights is available on the ACCC website.
A copy of the undertaking is available at on the ACCC website.
Background
Koala Living is an Australian homewares and furniture retailer, which supplies goods and services to consumers across Australia through physical storefronts and an online store.
The ACCC has previously highlighted the issue of businesses placing restrictions on consumers’ access to remedies in relation to their consumer guarantees. If you are unsure what to do about a defective good or poorly performed service, your consumer guarantee rights may still apply.
Empowering consumers and improving industry compliance with consumer guarantees is one of the ACCC’s compliance and enforcement priorities in 2023-24 and 2024-25.
The ACCC continues to receive a significant number of reports from consumers about consumer guarantee related issues. Almost half of all contacts from consumers to the ACCC about the homewares and furniture sector were related to consumer guarantee issues in the first half of the 2024 calendar year.
The ACCC welcomes the government’s recent announcement that it would consider strengthening protections under the consumer guarantees and supplier indemnification provisions of the Australian Consumer Law, including imposing penalties for businesses that fail to comply with their obligations under these provisions.
The ACCC has regularly advocated for law reform to the consumer guarantees provisions that would make it illegal for businesses to fail to provide a remedy for consumer guarantees failures when they are legally required to do so, and for manufacturers to fail to reimburse suppliers for consumer guarantees failures that the manufacturers are responsible for.
Note
Koala Living is not affiliated with the mattress and furniture retailer Koala Sleep Pty Ltd (ACN 605 237 090).
The payment of a penalty specified in an infringement notice is not an admission of a contravention of the Australian Consumer Law. The Australian Consumer Law sets the penalty amount.
The ACCC can issue an infringement notice when it has reasonable grounds to believe a person or business has contravened certain consumer protection provisions in the Australian Consumer Law.
