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consumer

Faulty software updates that break your phone: CGA rights

Key Takeaway

If a faulty software update renders a phone unusable, New Zealand consumer law may provide remedies. The Consumer Guarantees Act 1993 ensures goods are of acceptable quality, while the Fair Trading Act 1986 prohibits misleading conduct. Consumers may be entitled to repair, replacement, refund, or compensation for losses.

Consumer Rights for Faulty Software Updates that Break a Phone

When a phone becomes inoperable due to a faulty software update, New Zealand consumer law provides protections and remedies for consumers. The primary legislation governing such situations includes the Consumer Guarantees Act 1993 (CGA) and the Fair Trading Act 1986 (FTA).

What is a 'Good' and 'Consumer' under NZ Law?

Under the Consumer Guarantees Act 1993, a consumer is an individual who acquires goods or services of a kind ordinarily acquired for personal, domestic, or household use or consumption [Source: Consumer Guarantees Act 1993, s 2]. A phone is generally considered a good, which includes goods of any kind [Source: Consumer Guarantees Act 1993, s 2]. When software is pre-installed on a phone, or is an update provided by the phone's supplier, it is typically considered part of the good itself.

The Consumer Guarantees Act 1993 (CGA)

The CGA sets out guarantees that goods and services must meet when supplied in trade. These guarantees apply automatically, regardless of any manufacturer's warranty.

Guarantee of Acceptable Quality

A critical guarantee for goods is that they must be of acceptable quality [Source: Consumer Guarantees Act 1993, s 6]. This means the goods must:

  • Be fit for all purposes for which goods of that type are commonly supplied [Source: Consumer Guarantees Act 1993, s 6(a)].
  • Be acceptable in appearance and finish [Source: Consumer Guarantees Act 1993, s 6(b)].
  • Be free from minor defects [Source: Consumer Guarantees Act 1993, s 6(c)].
  • Be safe [Source: Consumer Guarantees Act 1993, s 6(d)].
  • Be durable [Source: Consumer Guarantees Act 1993, s 6(e)].

If a software update renders a phone inoperable or significantly impairs its functions, it is highly likely that the phone no longer meets the guarantee of acceptable quality, particularly regarding its fitness for purpose, safety, and being free from defects. The supplier, who is a person who supplies goods in trade, including the retailer or manufacturer, is responsible for ensuring this guarantee is met [Source: Consumer Guarantees Act 1993, s 2].

Remedies for Breaches of Guarantees

If a good fails to comply with a guarantee, the consumer has specific remedies, which depend on whether the failure is minor or substantial.

  • Minor Failure: If the failure can be remedied, the consumer may require the supplier to remedy the failure within a reasonable time. If the supplier fails to do so, or refuses to do so, the consumer may have the failure remedied by someone else and recover the reasonable costs from the supplier, or reject the goods [Source: Consumer Guarantees Act 1993, s 18(2)].

  • Substantial Failure: A failure is of a substantial character if, among other things, the goods would not have been acquired by a reasonable consumer fully aware of the nature and extent of the failure, or they are unfit for a common purpose and cannot easily be remedied to make them fit [Source: Consumer Guarantees Act 1993, s 21]. A phone being rendered unusable by a software update would typically constitute a substantial failure. In such cases, the consumer may choose to reject the goods and demand either a replacement or a full refund for the goods [Source: Consumer Guarantees Act 1993, s 18(3)].

Consequential Loss

In addition to remedies for the good itself, a consumer may also obtain damages from the supplier for any consequential loss or damage resulting from the failure, provided that the loss or damage was reasonably foreseeable [Source: Consumer Guarantees Act 1993, s 18(4)]. This could potentially include recovery for data loss if it can be demonstrated that such loss was a foreseeable consequence of the faulty software update.

The Fair Trading Act 1986 (FTA)

The FTA prohibits misleading and deceptive conduct and false representations in trade. While the CGA addresses product quality, the FTA can provide additional recourse if the circumstances around the software update involved misleading information.

Misleading or Deceptive Conduct

No person in trade shall engage in conduct that is misleading or deceptive or is likely to mislead or deceive [Source: Fair Trading Act 1986, s 9]. If, for example, a software update was promoted with claims of improved performance or security, but instead caused critical failures, this might constitute misleading conduct. Similarly, if a mandatory update was pushed without adequate warning about potential risks, this could also be examined under this section.

False or Misleading Representations

The FTA also prohibits making false or misleading representations concerning goods or services [Source: Fair Trading Act 1986, s 13]. This includes representations about the nature, quality, characteristics, suitability for a particular purpose, or performance history of goods. If claims were made about the update's benefits that proved to be false and directly led to the phone breaking, this section could be relevant.

Applying the Law to Faulty Software Updates

When a phone breaks due to a faulty software update, the primary responsibility generally lies with the original supplier of the phone (e.g., the retailer or manufacturer) because the phone, as a good, no longer meets the guarantee of acceptable quality. The supplier is obligated to provide a remedy under the CGA. If there were misleading claims or omissions regarding the update, the FTA may also apply, allowing for claims for damages suffered as a result of that misleading conduct.

When to Seek Independent Legal Advice

Individuals experiencing issues with faulty software updates that render their phone unusable should consider seeking independent legal advice. Information on consumer rights is available from government agencies, and free legal assistance may be available through organisations like Community Law Centres (https://communitylaw.org.nz/). Consumers can also contact the Commerce Commission for information on their rights under the Fair Trading Act or the Ministry of Business, Innovation and Employment (MBIE) for information on the Consumer Guarantees Act.

Key Resources