News & Insights

On 11 April 2018, Thermomix in Australia Pty Ltd (Thermomix) was ordered by the Federal Court of Australia to pay penalties totalling $4.6 million for making false or misleading representations and misleading the public in relation to its kitchen appliances. The penalties follow the ACCC’s proceedings in 2017 against the company for supplying its kitchen appliances despite knowing of its potential risk of injury to users.

Background

Between 7 July 2014 and 23 September 2014 (the relevant period), Thermomix supplied and promoted its TM31 model despite being aware of a potential safety issue. Its users were at risk of injury by the model’s lid lifting and its hot contents escaping from the mixing bowl.

The company first notified its customers of the safety issue on 23 September 2014 by way of a Facebook post, followed by an email sent out to the customers of the TM31s on 25 September 2014. A voluntary recall notice was published on the ACCC’s Product Safety website on 7 October 2014, following notification by Vorwerk Elektowerke GmbH & Co. KG, the manufacturer of Thermomix appliances.

The recall consisted of replacing the original grey lid sealing ring with a new green sealing ring for all affected TM31 appliances, as well as providing revised safety operating instructions. As part of the recall process, Thermomix told certain customers either that:

• refunds or replacements were not available; or
• in the case of one customer, that their entitlement to a refund or remedy was subject to the customer signing a non-disclosure agreement (conditional refund).

ACCC proceedings

The ACCC initiated proceedings against Thermomix in June 2017. At a hearing on 11 April 2018, Justice Murphy held Thermomix contravened the Australian Consumer Law (ACL) for the following conduct:

• not disclosing known product safety issues to customers during the relevant period amounted to an implied representation to customers that Thermomix was not aware of the safety risks prior to 23 September 2014;
• failure on 14 occasions between June 2012 and July 2016 to lodge the required ‘mandatory report’ to the ACCC within two days of becoming aware that a customer suffered serious injury caused by the use or foreseeable misuse of a product;
• representing to a customer of their right to a conditional refund;
• representing to customers that they were not entitled to refunds or replacements in respect of their TM31 and TM5 products; and
• making a Recall Statement on 4 March 2016 representing the TM 31 had never been the subject of a product recall, that it was absolutely safe, and that there was no safety issue involving the seal of the TM31 that required consumer action, where the TM31 was subject of a voluntary recall action under the ACL.

Implications

The penalty serves as an important reminder to businesses that failure to notify customers of product safety issues amounts to making misleading representations. The ACL also provides consumer rights in relation to faulty products which cannot be restricted, altered or removed.

Macpherson Kelley has significant experience and expertise in product recalls. We understand the importance of a well-considered recall strategy, carefully constructed to satisfy both your legal obligations and protect your business reputation. Acting for clients in product recalls on a frequent basis, we have relationships with public relations and media experts to provide assistance as required. For more information, please contact us.

This article was written by Jason Han, Lawyer – Litigation and Dispute Resolution.