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28 November 2014

Refurbished iPhone not adequate replacement

Consumer member uses Disputes Tribunal to get refund.

Consumer member Milton Cassidy has won a $1400 refund for a faulty iPhone 5 after taking the retailer to the Disputes Tribunal.

Milton bought the phone from iStore in Takapuna, Auckland. Less than a year later, the phone started losing power rapidly after it was charged. A fault with the battery was later diagnosed.

iStore advised Milton it could arrange for the phone to be replaced or he could deal direct with Apple, using its replacement service. The store said going direct to Apple was likely to be faster.

Milton opted for Apple’s service and understood the replacement phone he’d get would be a new phone. He later found it would be a “refurbished” model.

Refurbished phones are usually phones returned to the manufacturer – either because they were faulty or weren't wanted – and "refreshed" for resale at a lower price. iStore described the phone Milton would get as a “service unit”, assembled with new parts and parts that had been tested to be equivalent to new.

We’ve previously stated retailers should provide a new phone, not a refurbished one, when faulty models are replaced. This is what the Consumer Guarantees Act (CGA) requires: it states a replacement has to be “identical”.

Milton told iStore the service unit wasn’t acceptable and requested a refund instead. When the store declined, he lodged a claim with the Disputes Tribunal. The tribunal referee agreed the refurbished phone didn’t meet the requirements of the CGA and found Milton was entitled to a full refund.

iStore, which didn’t attend the tribunal hearing, applied twice for a rehearing. It was rejected on both occasions.

Repair, replace or refund

The Consumer Guarantees Act requires goods to be of acceptable quality. When a product has a minor fault, the retailer can choose to repair or replace it, or provide a refund. If a replacement is provided, it must be identical. In our view, refurbished phones or service units don’t meet this legal test.

If the fault is major, you can opt for either a refund or replacement. It’s your choice.

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