Australian Competition and Consumer Commission v FitBit LLC [2023] FCA 1535

Federal Court of Australia

Australian Competition and Consumer Commission v FitBit LLC [2023] FCA 1535 File number(s): NSD 904 of 2022

Judgment of: WIGNEY J

Date of judgment: 12 December 2023

Date of publication: 13 December 2023

Catchwords: CONSUMER LAW – admitted civil contraventions of Australian Consumer Law ss 18 and 29(1)(m) – where respondent made false or misleading representations and engaged in misleading or deceptive conduct, or conduct likely to mislead or deceive, to 58 Australian consumers – where parties agree on proposed declarations, pecuniary penalty and other orders – whether appropriate for Court to make proposed orders – Court satisfied orders appropriate

Legislation: Competition and Consumer Act 2010 (Cth) sch 2, ss 18, 29(1)(m), 224 Federal Court of Australia Act 1976 (Cth)

Cases cited: Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union (2007) ATPR 42-140; [2006] FCA 1730

Division: General Division

Registry: New South Wales

National Practice Area: Commercial and Corporations

Sub-area: Regulator and Consumer Protection

Number of paragraphs: 48

Date of hearing: 12 December 2023

Counsel for applicant: Ms K Morgan SC with Mr J Stoller

Solicitor for applicant: DLA Piper Australia

Counsel for respondent: Dr R Higgins SC with Ms K Lindeman

Solicitor for respondent: King & Wood Mallesons

ORDERS NSD 904 of 2022

BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant

AND: FITBIT LLC Respondent

order made by: WIGNEY J DATE OF ORDER: 12 DECEMBER 2023

THE COURT DECLARES THAT:

1. From about 10 May 2020 to 22 February 2022, FitBit LLC, in trade or commerce, in connection with the promotion and supply of FitBit products to 18 Australian consumers: (a) engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18 of the Australian Consumer Law (ACL), being Schedule 2 to the Competition and Consumer Act 2010 (Cth); and (b) made false or misleading representations regarding the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy in contravention of s 29(1)(m) of the ACL, by representing to those Australian consumers, via its customer service representatives, that those 18 Australian consumers did not have a right to refunds unless the FitBit products those consumers had purchased were returned within 45 days from the date of purchase, when in fact, those consumers' right to reject products with a major failure, outside of 45 days from the date of purchase but within a reasonable time, and to seek a refund persisted, by virtue of the following: (c) ss 54 and 55 of the ACL provide for consumer guarantees; and (d) having regard to ss 64 and 276 of the ACL, FitBit LLC could not exclude, restrict or modify the availability of the consumer guarantees or a consumer's entitlement to exercise the rights to a remedy for goods that do not comply with the consumer guarantees. 2. From about 20 November 2020 to 14 February 2022, FitBit LLC, in trade or commerce, in connection with the promotion and supply of FitBit products to 40 Australian consumers: (a) engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18 of the ACL; and (b) made false or misleading representations regarding the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy in contravention of s 29(1)(m) of the ACL, by representing to those Australian consumers, via its customer service representatives, in the course of communications with those 40 Australian consumers (of which, 39 who reported a problem with a replacement FitBit device and 1 reported a problem with an original FitBit device), that those consumers did not have a right to replacement products because the "warranty period" of two years offered on FitBit devices had expired, with the applicable "warranty period" in the case of the 39 consumers who reported a problem with a replacement FitBit device being the two year warranty period for the original device, when in fact, those consumers may have had a right to reject the FitBit device and obtain a refund or replacement regardless of whether the 2-year warranty period for their device had expired, by virtue of the following: (c) ss 54 and 55 of the ACL provide for consumer guarantees; and (d) having regard to ss 64 and 276 of the ACL, FitBit LLC could not exclude, restrict or modify the availability of the consumer guarantees or a consumer's entitlement to exercise the rights to a remedy for goods that do not comply with the consumer guarantees. AND THE COURT ORDERS THAT: 3. Within 45 days, FitBit LLC pay to the Commonwealth a pecuniary penalty of $11,000,000 in respect of its conduct declared to be contraventions of s 29(1)(m) of the ACL. 4. Pursuant to s 246(2)(b) of the ACL and s 23 of the Federal Court of Australia Act 1976 (Cth), FitBit LLC at its own expense: (a) within 30 days of the date of this Order, appoint a suitably qualified compliance professional with expertise in consumer law who is independent of FitBit LLC and its related bodies corporate and has not previously been engaged by FitBit LLC (Reviewer) to review the efficacy of: (i) FitBit LLC's compliance program(s) insofar as they are designed to minimise the risk of contraventions of the ACL (Compliance Program); and (ii) FitBit LLC's implementation of the Compliance Program. (b) instruct the Reviewer to prepare a written report to FitBit LLC within a period of 3 months of the date of their appointment that makes recommendations which identify: (i) any revisions to FitBit LLC's Compliance Program, and FitBit LLC's implementation of that program, that are reasonably necessary to limit the risk of future contraventions of the ACL of the nature of those the subject of this proceeding; and (ii) any material deficiencies in the Compliance Program or FitBit LLC's implementation of that program that are reasonably necessary to be rectified, and should be rectified, to limit the risk of future contraventions of the ACL of the nature of those the subject of this proceeding. (c) use best endeavours to provide the Reviewer with access to all sources of information in FitBit LLC's possession, power or control that is relevant to the Reviewer's review; (d) within 30 business days of receiving the Reviewer's written report, provide a copy of that report to the Applicant; and (e) use best endeavours to implement with due diligence any recommendations made by the Reviewer. 5. FitBit LLC provide to the Applicant: (a) written confirmation verifying that it has carried out its obligations under paragraph 4(b) above, within 10 days of FitBit LLC appointing the Reviewer; and (b) written confirmation verifying that it has carried out its obligations under paragraph 4(e) above, within 6 months of the date of the Reviewer's written report. 6. Within 45 days, FitBit LLC pay a contribution of $200,000 to the Applicant's costs of, and incidental to the proceeding. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.