Do you sell goods or services? Do you provide extended warranties? Then you need to read this important article to ensure you are on top of the new consumer law regime in relation to this area.
As an aside, we refer to these laws as “new” even though they have now been around for years – our experience has been that businesses are still often oblivious to the impact of some of this legislation, and so whilst the law itself isn’t strictly new, the impact of the law is still “new” to many.
In this article we are focussing on Fisher & Paykel who have landed in hot water with the ACCC for making allegedly false and misleading representations to consumers in relation to extended warranties and their statutory rights under the new consumer laws.
Their tale of woe paints a useful picture of what you should aim to avoid.
The conduct in this case that brought Fisher & Paykel into the sights of the ACCC was an advertising letter that they sent to customers who had purchased their products in the past, attempting to sell them an extended warranty. In the letter, Fisher & Paykel said that after the 2 year period (of the original “manufacturer’s warranty” they had provided with their products) had expired, the customer wouldn’t be protected against repair costs unless they purchased extra protection. Fisher & Paykel then offered protection against repair costs for a further 2 years with an extended warranty at a cost of $199.
ACCC argued (and the court agreed) that the statements made by Fisher & Paykel were misleading. Any warranty provided by a manufacturer against defects is in addition to any rights the consumer may have under the Australian Consumer Laws (ACL), in which a consumer may be entitled to a refund, repair or replacement. These “consumer guarantees” may extend for a longer period of time than the manufacturer’s warranty. Additionally, these rights cannot be excluded, restricted or modified, so any attempt by an organisation to do that in their terms and conditions might then be deemed to be misleading.
The important point is that a warranty against defects is in addition to the consumer guarantees. It can’t limit or replace them. After the warranty period has expired, a consumer might still be able to claim a remedy under the consumer guarantees.
The chairman of ACCC, Rod Sims said, “This is an important case for the ACCC as the allegations involve false or misleading representations by businesses about consumers’ statutory rights in the context of offering extended warranties.”
“Businesses should exercise caution when offering extended warranties to consumers, and must avoid misrepresenting or understating consumers’ statutory rights under the ACL consumer guarantees, as well as overstating the value or additional rights (if any) provided to consumers by the extended warranties being offered.”
“Shoppers should realise that under the Australian Consumer Law they may have a right to a repair, replacement or refund beyond the time period covered by the manufacturer’s warranty.”
For breaching sections 18 and 29 of the ACL, the ACCC is seeking pecuniary penalties, declarations, injunctions, orders for compliance programs, and costs.
So the important lesson? Take extreme care when making representations about your extended warranties – and ensure that you have had your customer warranties and any customer terms and condition documents reviewed recently.
If you’ve missed our earlier article about the consumer guarantees you can find it here.
If you would like to ensure that your terms and conditions and/or warranties are compliant with the ACL, send us an email enquiry to [email protected] and we will organise a time to talk with you.
Disclaimer: The material contained on this website is provided for general information purposes only and does not constitute legal advice. You should not depend upon any information appearing on this website without seeking legal advice. We do not guarantee that the contents of this website will be accurate, complete or up-to-date.