Questions raised over ACCC’s tactics in Apple “Error 53” legal challenge

Questions raised over ACCC’s tactics in Apple “Error 53” legal challenge

The court ultimately sided with the ACCC over the matter

An Australian Federal Court judge has raised questions over some of the tactics employed by the nation’s consumer watchdog in its preparation for the legal case it launched against Apple last year.

The Australian Competition and Consumer Commission (ACCC)’s Federal Court case against Apple came after an investigation following reports relating to an error, dubbed ‘Error 53’, which disabled some users’ iPads or iPhones after downloading an update to Apple’s ‘iOS’ operating system.

Many Australian customers who experienced ‘Error 53’ had previously had their Apple device repaired by a third party; usually replacing a cracked screen, the ACCC said at the time.

In April last year, the consumer watchdog instituted proceedings in the Federal Court against Apple’s local business and its US-based parent company alleging that Apple had represented to consumers with faulty products that they were not entitled to a free remedy if their Apple device had previously been repaired by third party.

Ultimately, the ACCC alleged that Apple engaged in misleading or deceptive conduct and made false or misleading statements to consumers about the availability of remedies for non-compliance with the consumer guarantees under Australian Consumer Law.

“Having a component of the Apple device serviced, repaired, or replaced by someone other than Apple cannot, by itself, extinguish the consumer’s right to a remedy for non-compliance with the consumer guarantees,” the ACCC said at the time.

Since then, the case has gone into mediation.

However, a ruling handed down by Australian Federal Court judge Justice Michael Lee on 8 May appears to question some of the tactics employed by the ACCC while gathering evidence to bring the case against Apple together.

Specifically, Lee said he had “disquiet” about an ACCC senior investigator calling Apple stores while pretending to be a consumer with a defective iPhone.

It is understood that ACCC investigator’s affidavit to the court in relation to the case against Apple gave evidence of making 13 telephone calls to Apple stores in the presence of another investigator employed by the ACCC.

The relevant calls were placed to Apple Australia stores located in the Australian Capital Territory, South Australia, New South Wales, Victoria, Western Australia and Queensland in June 2016 and were a subset of a larger number of calls from other ACCC offices at the time.

“It suffices, for present purposes, to note that in each of these calls [the investigator] had discussions with staff apparently employed by Apple Australia based on a series of fictions. In particular, a ruse was employed by [the investigator] by pretending to be a consumer saddled with a defective iPhone,” Justice Lee said.

The judge’s comments come after Apple called on the court to throw out the affidavits provided for the case by the ACCC investigator, with Apple objecting to the affidavit in its entirety, claiming that the admissions within it were obtained improperly.

Apple argued that, to the extent the affidavit records representations that are admissions, they were made during questioning in circumstances where the investigator knowingly made false statements and knew, or ought to have known, that making false statements was likely to cause the person being questioned to make an admission.

More broadly, Apple argued, the evidence was obtained improperly or in consequence of an impropriety.

As such, the evidence should be the subject of discretionary exclusion because the probative value of the evidence is substantially outweighed by the danger that it might be unfairly prejudicial to Apple, the tech giant argued.

According to Justice Lee, this is of significance because the ACCC case rests entirely upon this evidence and, if the evidence was to be excluded, the ACCC conceded in its written submissions that this aspect of its case would be dismissed.

It should be stressed that Justice Lee’s ruling ultimately allowed the affidavit in question to be used in the case, but not before the Judge expressed some measure of concern over the covert nature of the ACCC investigator’s methods.

“Although I have disquiet about what has occurred and some surprise that a tighter rein is not kept within the ACCC to ensure that covert activity is not engaged in unless it is strictly necessary, in the particular circumstances, I do not believe that this conduct is of sufficient seriousness such that the rejection of the evidence should be used as some way of vindicating the contravention of what I regard to be the appropriate standards of conduct,” Justice Lee said.

“This ruling can be stated simply as allowing the affidavit to be read,” he said.

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