Apple Inc. (NASDAQ:AAPL), which had received some negative headlines in the past due to questionable customer service in foreign countries, now is getting the attention of the European Union’s justice commissioner over its advertised warranties, which may imply a violation of EU regulations. Certainly any more attention Apple gets in a negative light may not be ignored by investors like billionaire fund manager David Einhorn of Greenlight Capital.
In the wake of the iPhone 5 explosion in the market, Apple Inc. (NASDAQ:AAPL) has been encouraging EU customers to take advantage of a one-year warranty on Apple Inc. (AAPL) devices. However, all of the advertising raised flags in the office of EU Justice Commissioner Vivane Reding , who sent a letter to state ministers to ensure that Apple is informing customers that they are entitled to free two-year warranty plans and are not required to pay for a one-year warranty.
A Bloomberg report states that Reding’s letter discussed how Apple Inc. (NASDAQ:AAPL) “prominently” advertises its one-year warranty but does not appear to be publicly announcing that under EU law customers are required to have access to two-year warranties at no cost. Reding expressed concern that customers may be buying more expensive warranty plans instead of taking advantage of the free, longer warranties. “These are unacceptable marketing practices,” Reding wrote.
This letter comes about a year after Apple Inc. (NASDAQ:AAPL) received a $1.2 million fine from the Italian Antitrust Authority for providing misleading information regarding warranties. While EU law requires a two-year warranty, there is no indication from Apple Inc. (NASDAQ:AAPL) – even on its Web site – that it provides two-year warranties for any of its products, even those sold in Europe. A Web site that is separate from Apple’s states, “When you purchase Apple products, European Union consumer law provides statutory warranty rights in addition to the coverage you receive from the Apple One-Year Limited Warranty and the optional AppleCare Protection Plan.”