Case Studies - Faults (network & hardware issues)

TDR Case Note T012600 (2013)


Faults - faulty mobile telephones


The customer purchased a new smartphone handset on a 24 month plan from the Scheme Member Provider (Provider). The "home" button on his phone stopped working completely after 30 months. The phone also started dropping calls intermittently. In March 2013, the Customer took his handset into the Provider's store to get it fixed, as he expected that an expensive smartphone handset should last around five years. The sales representative advised him that as his phone sat outside the 24 month warranty period, the Provider would send it to their service agent for non-warranty repairs, but that the Customer would have to pay for this service.

The Customer responded that his handset should be repaired at free of charge. The Customer's request was initially declined by the Provider's call centre. However, the Provider later offered to waive the standard assessment fee but required the Customer to pay for the non-warranty repair, being $370.00. The Customer argued that the Consumer Guarantees Act (CGA) requires goods to be "durable" and free from "failure of a substantial character" in line with s 6 and s 7 of the CGA, given that the phone cost $1,000 while the cost of fixing it was $370.00. The Customer also complained that the Provider misled him about his rights under the CGA, which was a breach of s 9 of the Fair Trading Act (FTA). The Customer therefore requested the Provider to cover all costs associated with assessing and repairing his faulty handset or to provide a replacement.

The Provider responded that it had agreed to cover the assessment fee but that the Customer would be liable for all repair costs. The Provider advised that there was no set expectation of how long a cell phone should last and it was unable to replace the Customer's handset for free.

Adjudicator's decision

The Adjudicator noted that the warranty provided by the Provider will typically set out a fixed period within which the consumer will have the protections of having the manufacturer or Provider standing behind the product. The CGA sets out a range of protections of having the manufacturer or Provider standing behind the product. The CGA sets out a range of protections which will automatically apply to a sale of a product, including that the product is of acceptable quality and fir for purpose. The Adjudicator noted that a provider's warranty does not replace the protections available under the CGA.

The Adjudicator did not consider that it was possible to determine what life span should be expected from a mobile phone. Such consideration would depend on the build quality of the product, and how it was treated. The Adjudicator noted for example, that the Consumers' Institute indicated a mobile phone should last for about 5 years. Moreover, the Adjudicator did not consider there was any ability for the Provider to require the payment from a Customer of a fee prior to assessing the damage.

With regard to the Customer's complaint that the Provider breached the FTA, the Adjudicator did not find any conduct on the part of the Proivder that was either misleading or deceptive.

In terms of the CGA, the Adjudicator considered that if a product does not live up to the guarantees found in the CGA, the provider was liable to remedy the breach. The issue in this complaint was whether or not the Customer's handset should reasonably be expected to be fault-free after 30 months, taking into consideration the age of the phone, the value and quality of the phone, the use of the phone, and the nature of the fault. The Adjudicator found that the faults with the Customer's handset which required a repair cost of $390.00 to fix, was substantial when compared with its original value of $1,000.00 and being used for 30 months.

Final outcome

The Adjudicator upheld the Customer's position anc concluded that the fault with the Customer's handset amounted to a breach of the guarantee of acceptable quality in that it is not durable, and the Provider had to pay for the cost of repair to the Customer's phone.