iMislead: Apple fined more than $2 million over 4G claim

22/06/2012 - Apple has been fined more than $2 million for deliberately misleading the public with claims the latest iPad is compatible with the 4G broadband network. Daniel Fogarty

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The technology giant breached Australian consumer law in marketing that implied the "iPad with WiFi + 4G" could connect directly to the Telstra LTE mobile data network in Australia, which it could not, Federal Court Justice Mordy Bromberg found.

Apple placed its desire for global marketing uniformity ahead of its obligations to comply with Australian consumer law, he said.

Justice Bromberg fined Apple $2.25 million and ordered it pay $300,000 in costs.

He said the most concerning aspect of Apple's contravention of consumer law was the deliberate nature of its conduct.

"The conduct concerned was deliberate and very serious," Justice Bromberg said.

"It exposed a significant proportion of Australian consumers of tablet devices to a misleading representation."

The same campaign "iPad with WiFi + 4G" was used worldwide, the judgment released on Thursday said.

Justice Bromberg said Apple was first told the device was not compatible with the Telstra 4G network on March 8 this year.

The risk of contravention of Australian consumer law would have been "reasonably obvious" to those at Apple familiar with the Australian market's understanding of the term 4G, he said.

"In that context, and in the absence of any other explanation, the facts to which I have just referred, suggest that Apple's desire for global uniformity was given a greater priority than the need to ensure compliance with the Australian consumer law," Justice Bromberg said.

"Conduct of that kind is serious and unacceptable."

Justice Bromberg said while he harboured concerns that the financial strength of Apple diminished the meaning of the penalty, he did not believe any further transgressions from Apple were likely.

"The fact of the litigation and the media attention which it has drawn, will no doubt be a sober reminder to Apple, and others who rely on their brand image that, as well as a penalty, there will likely be an intangible cost involved in a contravention of the Australian consumer law," he said.

In a statement Apple said it had decided to use "Wi-Fi + Cellular" to describe the high-speed networks supported by the new iPad.

"The new iPad supports many high-speed networks around the world, including LTE in the US and Canada and HSPA+ and DC-HSDPA in many countries," the statement said.

"Carriers do not all refer to their high-speed networks with the same terminology, therefore we've decided to use `Wi-Fi + Cellular' as a simple term which describes all the high-speed networks supported by the new iPad.

"The advanced wireless features of the new iPad have not changed."

The Australian Competition and Consumer Commission (ACCC), which brought the action, welcomed the penalty and said it was a warning to other companies.

"The $2.25 million penalty reflects the seriousness of a company the size of Apple refusing to change its advertising when it has been put on notice that it is likely to be misleading consumers," ACCC chairman Rod Sims said in a statement.

"The Federal Court has again recognised the need to protect consumers from misleading advertising in the telecommunications and related sectors.

"This decision should act as a renewed warning that the ACCC will continue to take action against traders who take risks in their advertising, regardless of their size."

Source: AAP

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Have your say...

Kermit | 22/06/2012 12:22 1

Will the ACCC make the same effort to pursue Microsoft for deceiving the public with the Surface that is a ripoff of the iPad with a substandard copycat product. I suggest this is not so much a case of deception by Apple but a marketing ploy by Microsoft using political muscle to maintain or grab back it's diminishing market share. Microsoft Surface even copied the Apple iPad release presentation: http://www.youtube.com/watch?v=aSj8GUZDuac.... to make sure they got it right!

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