Record fines for breaching the product safety laws have been ordered in the Federal Court. Findings showed Thermomix’s clear disregard for consumer safety and the law. Well done to the Australian Competition and Consumer Commission for taking this enforcement action.
Thermomix In Australia Pty Ltd has been ordered to pay more than $4.6 million for breaching not one, or two, but three different parts of the Australian Consumer Law.
Selling and promoting unsafe products
Although Australia does not (yet) have a law against knowingly selling unsafe goods, the ACCC used the ACL’s prohibition from making false and misleading statements to charge Thermomix. The court found Thermomix had misled consumers (through silence) by continuing to sell its product even after it was aware it was unsafe. This is only the second time a court has ruled on this provision in a product safety context, following the Woolworths case in 2016.
Failing to report known injuries
Whenever a company finds out that a product it has sold was associated with an injury, the ACL requires that it report to the ACCC. The court found that Thermomix failed to report on 14 separate injuries that they had been made aware of.
Misleading statements about the safety recall
The recall had taken place in 2014. However, misleading statements were made to the media by the company in 2016, telling customers its products “were absolutely safe” and had not been subject to safety recall action.
Misrepresenting consumer rights
The ACL gives rights to consumers in the form of guarantees that products will perform. For products that don’t perform as expected (including safety), a customer has the right to redress. This might be replacement, repair or refund.
The court found that Thermomix had told certain customers that refunds and replacements were not available. It also tried to make the remedy for one customer conditional on signing a non-disclosure agreement.
These tactics are exactly what the consumer guarantees are designed to stop and it is hard to fathom why Thermomix thought it was OK to act this way.
Highest ever fines
$4.6 million is substantially higher than the previous record penalties (awarded against Dimmeys in 2013 and Woolworths in 2016).
The ACCC and Thermomix in Australia made a joint submission on the penalties to be levied:
- Implied safety representations: $2.5 million
- Recall representations: $1 million
- No refund representation: $1 million
- Failure to make mandatory reports: $108,500
- Total; $4,608,500
Thermomix was also ordered to pay the ACCC’s legal costs of $230,000.
The fines are high, but it would be interesting to know what proportion of sales they represent. It seems like a case of not wanting safety to get in the way of profit. My colleague Steve Hather at The Recall Institute will no doubt blog about brand and reputation damage in this case.
I’m compiling a list of notable product safety cases. This one will be filed under wilful failure to properly address a known hazard.
A class action product liability case has been canvassed and injured consumers may be able to take the company to court. The ACCC’s action under the ACL may add weight to their claims.