TECHNOLOGY giant Apple will be forced to pay $9 million in fines after the Federal Court found the company misled hundreds of Australian customers by 'bricking' their iPhones and iPads in a software update and then denying them repairs.
The unprecedented action against the multibillion-dollar US company and its Australian arm could also have further ramifications too, after the Court found Australians were legally allowed to get third-party repairs without voiding warranties, and could request brand new replacement devices rather than refurbished models.
The penalty follows a bitter battle between Apple and the Australian Competition and Consumer Commission in which the consumer watchdog was scolded for using potentially "deceptive techniques" to gather evidence by having a senior investigator pose as a customer seeking an iPhone repair.
Despite the reprimand, the Court accepted the damning evidence and ordered Apple to pay $9 million for misleading "at least" 275 Australian consumers, denying them repairs or replacements for faulty devices.
The problems occurred between February 2015 and February 2016, when Apple issued a software update that disabled or "bricked" iPhones and iPads that it detected had been repaired by a third party.
The devices could no longer be used, potentially making their photos, documents, messages, and other data irretrievable.
At the time, Apple issued a statement calling Error 53 "the result of security checks designed to protect our customers," and encouraged consumers to approach Apple Support for assistance.
But ACCC Commissioner Sarah Court said Apple's US website, staff in its Australian stores, and phone support staff informed customers they were no longer entitled to a repair because they had used a third party to fix their devices.
"If a product is faulty, customers are legally entitled to a repair or replacement under the Australian Consumer Law and sometimes even a refund," she said.
"The Court declared the mere fact that an iPhone or iPad had been repaired by someone other than Apple did not, and could not, result in the consumer guarantees ceasing to apply, or the consumer's right to a remedy being extinguished."
In addition to paying the $9 million fine, Apple has agreed to compensate affected customers, check the warranty information on its websites, and improve staff training, warranty systems and procedures.
Despite the strong defence of its actions in court, Apple had launched an "Error 53 Outreach Program" to fix or replace affected devices a year after they were bricked, in February 2016, and issued new software.
The Australian case against Apple succeeded despite the failure of similar lawsuits in the US over Error 53, with a Californian judge finding prosecutors were unable to prove Apple knew the software update would disable its own products.
In addition to paving the way for more Apple third-party repairs, the Federal Court found Australian Apple customers could request a brand new replacement device rather than a repair or a refurbished model if their Apple product suffered a "major failure".
"If customers would prefer a replacement, they are entitled to a new device as opposed to refurbished, if one is available," Ms Court said.