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http://www.macnn.com/articles/12/03/22/fine.of.12.million.upheld/

Apple loses appeal in Italian AppleCare case

updated 07:30 pm EDT, Thu March 22, 2012

 

Fine of $1.2 million upheld


Apple has lost an appeal in Italy over the terminology used in its AppleCare agreements sold in that country, and will face fines totalling $1.2 million for what the Italian Antitrust Authority deemed "bad commercial policies" and not properly informing buyers of differences between Italian warranty law and Apple's preferred policies. Manufacturer warranties in Italy are required to last two years, a fact Apple has ignored in promoting its AppleCare warranties, the agency found.

Apple's policy on most of the hardware products it sells is a one-year warranty, which can be supplemented with a paid warranty extension known as AppleCare (which also imparts some other benefits, such as extended telephone support). The AppleCare plan extends the warranty by another two years, for a total of three years warranty protection.

Italian law requires manufacturers to warranty their products for two years, leaving Apple with the option of either offering AppleCare for only one additional year (which would likely force the company to offer it at a much lower price) or to offer up to four years total coverage under AppleCare, something the company would likely find unprofitable and could open the door to additional liability in most other EU countries.

Apple appealed the original ruling of the Antitrust Authority in December, when the agency said that Apple had been deliberately "unclear" about the extension of the original warranty in Italy when promoting AppleCare. Losing the appeal will likely force the company to change warranty terms in Italy to make it clearer that it will honor the original warranty for two years. It is possible, though unlikely, that Apple may decide not to offer AppleCare in Italy as an extension of the warranty.

AppleCare has occasionally not been available for consumers to purchase in some US states when the company had disagreements with the state's consumer-protection laws. The product was not available in Florida, for example, for several years in the early 2000s due to that state's regulations which offered additional return options in light of the area's large population of seniors, and was not offered to buyers at different times in Wyoming and Washington state for various reasons as well. [via la Republicca]



by MacNN Staff

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Comments

  1. imNat-imadouche

    Fresh-Faced Recruit

    Joined: Apr 2011

    +5
    03/22, 09:03pm | report spam | Reply |

    Good stuff

    A win for consumers. Tells Apple that they are not above the law.

    I would be surprised if fanboys thinks this is a stupid ruling. Who in their right mind would prefer a 1 year Apple warranty as opposed to 2 years?

  1. SwissMac

    Fresh-Faced Recruit

    Joined: Aug 2006

    +8
    03/22, 10:14pm | report spam | Reply |

    Apple sometimes disappoints me

    Apple really need to keep up with what is happening outside of the US. It's almost as if they think the rest of the world is just like America: it isn't. Why they appealed this - or even let it get to court - when this law is so clear is beyond me.

    Still, Apple does have a history of poor decisions in their legal department - remember the lawyer's letter to the nine year old girl? They focussed on stuff like that instead of Trademarking product names beginning with an i followed by a Capital letter.

    Oh well, I'll just have to hope the new iP5 arrives soon. And with a decent warranty...

  1. chas_m

    Moderator

    Joined: Aug 2001

    +1
    03/22, 10:19pm | report spam | (1 reply) Reply |

    Missing the point

    I think you miss the point, Nat. Yes, I certainly do like the idea of a minimum two-year warranty on Apple stuff, and wish we had that here ... but that's not what the ruling is really about.

    For many logical, sound reasons, Apple doesn't want to offer a total of four years warranty coverage, as it would significantly raise the cost of providing AppleCare and thus raise the price, making it unattractive to consumers.

    On the other hand, who would buy ONE extra year of warranty, even if the price wasn't quite as much as AppleCare is now? The way the real world works is that most factory defects (what is covered by AppleCare) happen in the first year, and after that damage is mostly done by users and of course time (the latter of which including dust, rust, environmental factors and perhaps even the average mean life of things like hard drives).

    Three years is about the max a company can or should warranty the products and continue to profitably do so. If it was JUST Italy maybe Apple would shrug and call it the cost of doing business there, but this is likely to change the game throughout Europe.

    You're absolutely right its a win (in some respects) for consumers. It might also turn out to be a longer-term lose, however.

  1. macmediausa

    Fresh-Faced Recruit

    Joined: Feb 2005

    +3
    03/22, 11:43pm | report spam | Reply |

    Actually a bad thing for Italian consumers

    If Apple is required to give the 2 year warranty - it just means Apple builds it into the final price to the consumer. Nice to have a 2 year coverage but it should be up to the customer whether or not they want to pay for it. Have you ever seen Apple's pricing in Italy? The prices are at least 30% or higher compared to the US.

    A noble idea from the Italian government but it ends up hurting the consumer. It's requiring the consumer to pay for a 2 year warranty even if you prefer to pay for 1.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    -2
    03/23, 02:40pm | report spam | Reply |

    Re: Actually a bad thing for Italian consumers

    If Apple is required to give the 2 year warranty - it just means Apple builds it into the final price to the consumer. Nice to have a 2 year coverage but it should be up to the customer whether or not they want to pay for it. Have you ever seen Apple's pricing in Italy? The prices are at least 30% or higher compared to the US.

    That's not the point.

    First, Apple IS required to give 2 years of coverage. That's the law.

    Second, ALL companies have to give 2 years of coverage. As such, all products have, as you state, added that to the price of the product. As such, Apple not offering it means they are getting an advantage over all the other manufacturers who are abiding by the law. This just puts apple back on a "level" playing field with the competition.

    A noble idea from the Italian government but it ends up hurting the consumer. It's requiring the consumer to pay for a 2 year warranty even if you prefer to pay for 1.

    That's a different story. The law might be a bad law, but it needs to be evenly enforced. And the people could repeal it if they desire.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    -3
    03/23, 02:44pm | report spam | Reply |

    Re: Missing the point

    On the other hand, who would buy ONE extra year of warranty, even if the price wasn't quite as much as AppleCare is now? The way the real world works is that most factory defects (what is covered by AppleCare) happen in the first year, and after that damage is mostly done by users and of course time (the latter of which including dust, rust, environmental factors and perhaps even the average mean life of things like hard drives).

    Then isn't this a double-bonus for consumers? Not only do they get two years, they then will feel less compelled to get the extended warranty at all. I know with my recent mac purchases (last 8 years or so) I've ALWAYS got AppleCare on the laptops and the G5 tower (not on any mini, not worth it). Because I didn't trust that problems would be found in the first year (and I was right, my G5 tower died 2.5 years into existence, my iBook had two sets of issues, my MacBookPro had its issue at 2 years, etc).

  1. testudo

    Forum Regular

    Joined: Aug 2001

    -1
    03/23, 02:50pm | report spam | Reply |

    The good ol' days

    Anyone here old enough to remember the good ol' days when your mac came with a three year warranty by default? Then again, those were the good ol' days, back when Apple truly had exceptional quality. I remember in the 90s when people would talk about customer service with various computer makers, and I would truthfully say "I have no idea how good or bad Apple's customer service is. I've never had a problem with my Macs that required calling them!" (Well, we did have issues with some component on our 128K upgraded to Fat Mac that kept causing the screen to turn to a vertical line - but damn if you couldn't sometimes fix it by slapping the right-side of the Mac!).

    Long warranties usually show a faith by a company that their product will actually last that long. Some companies will give long warranties because of a consumer image that their products aren't going to last, but they only do that once they feel confident they've addressed the issues (otherwise they will lose a ton of money).

    It's no surprise Apple's quality started to drop when their warranty period dropped.

  1. facebook_Eduardo

    Via Facebook

    Joined: Apr 2012

    +1
    04/10, 10:02am | report spam | Reply |

    Misinformed

    I assume it's to be expected but the story is not quite this.

    "2-year warranty" is a gross oversimplification that manages to miss the actual problem with EU warranty law.

    Simplifying: When you buy a product the manufacturer is expected to have a 2-year warranty on it. This warranty covers any manufacturing problems during those 2 years. So far it sounds like every other warranty out there.

    The catch is that the first 6 months of those 2-years don't require a "burden of proof" of the defect from the consumer. You say the product was broken and likely the manufacturer has to believe you or run their own expert assessment, something none are willing to do (bad PR and likely to end up with the same result as if they just accept the customer's say-so).

    After the 6 months expire the manufacturer is obligated to fix or change the goods as long as the consumer provides proof of the defect. This proof, also, needs to be done by a proper expert and, usually, would run you around 500 EUR.

    Warranty law in EU sucks, don't you believe otherwise. It screws the consumer and has been reviled because of it.

    Warranty law in EU is SO BAD that companies like Apple, Dell, Toshiba and Acer go beyond what the law requires and DOUBLE the minimum required of them, providing a full year of warranty without forcing the customer to assume the burden of proof.

    What does AppleCare do? It's an extended warranty, where "extended" means "beyond what the law requires", forfeiting the right to demand burden of proof from the customer and extending the customer "rights" a full year.

    Yes, Apple is providing warranty above what the law requires and is charging only for what the law doesn't provide for for the second year. It's not "Apple out to s**** the customer".

    Now, you may ask, how come they lose an appeal and have to pay a fine? Easy: The lawsuit comes from people who fundamentally misunderstand what the "warranty" provides, but is "defended" by people who know it by heart. "Apple is required by law to provide 2 years of warranty but says it's one year" is a gross misrepresentation of the following:

    "EU Law states that a warranty puts the burden of proof on the manufacturer for the first six months and on the customer for the remainder of the two years, but Apple extends those six months to provide a full year of FULL warranty, assuming the burden of proof themselves and charges applecare to extend full warranty rights to the following two years for a total of three"

    The fine will NOT make apple change anything, as the lawsuit doesn't attack their practices but their documentation. Apple will now have to make it clear that AppleCare extends the customers legally-asigned warranty to cover for burden of proof.

    As such, apple has done so already: http://www.apple.com/uk/legal/statutory-warranty/

    Of course, Apple is no angel. They were consciously taking advantage of wording in the same way the lawsuit did. But let's understand and report this like it is. All comments and most of the post are so far off it warrants (heh) this lengthy explanation.

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