The Commerce Commission has published an extended warranties fact sheet to help you
comply with changes to the Fair Trading Act which take effect from
17 June 2014.
Summary - changes required to extended warranty
As of 17 June extended warranty agreements must include a summary
of the consumer's existing rights and remedies under the
Consumer Guarantees Act and clearly set out the additional benefits
provided under the extended warranty. An extended warranty
agreement must also include a summary of the consumer's rights
to cancel the agreement under the Fair Trading Act.
Risk reduction - fact sheet examples and
The fact sheet contains example wording and layout which if
followed should reduce the risk of non-compliance with the new
extended warranty requirements. We recommend comparing any proposed
amendments to your extended warranty agreements with those
That comparison should include not only a content review but
also consider the layout and language used in your agreements. This
is to ensure compliance with the clear presentation and Plain
English requirements of the amended Fair Trading Act.
Further actions - processes
In addition to changes to your agreements you should be looking at
your processes to ensure these also comply with the amended
requirements for extended warranties. In particular you need to
You have educated staff on their need to inform consumers that
they have a right to cancel the agreement within 5 working days of
receiving a copy of the agreement before the consumer enters into
the agreement (where practicable); and
You have processes in place to ensure this happens, and you
have a process in place for receiving notification of cancellation
and refunding of the cost of the warranty.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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