The Australian Competition and Consumer Commission has taken
Fisher & Paykel Customer Services Pty Ltd (Fisher &
Paykel) and Domestic & General Services Pty Ltd
(Domestic & General) to Court for allegedly
making false or misleading representations about consumers'
rights under the statutory guarantee regime in the course of
offering an extended warranty.
The ACCC alleges that the companies breached sections 18
(misleading or deceptive conduct) and 29 (false or misleading
representations) of the Australian Consumer Law
(ACL). As well as penalties and injunctions, the
ACCC is also asking the Court to order the companies to implement
appropriate compliance programs in relation to the ACL.
The letters were sent to consumers who had purchased a Fisher
& Paykel appliance, inviting them to purchase an extended
warranty. Those letters allegedly contained a number of false or
misleading representations about consumers' statutory rights,
including that the consumer would not be protected against repair
costs for the appliance after the expiry of the manufacturer's
warranty, unless the consumer purchased an extended warranty.
This action follows the ACCC's national consumer
awareness-raising campaign called 'If it's not right,
use your rights. Repair, replace, refund'. It highlights
the ACCC's continuing focus on the protection of consumer
rights. What is the problem with offering extended warranties?
Under the ACL, consumers may have a right to a
repair, replacement or refund which extends beyond the time period
covered by the manufacturer's warranty. This is a fact that
some businesses seemingly either don't understand, or don't
want to admit to consumers.
If you are offering consumers an extended warranty (either in
your own right or as an agent for someone else), it is crucial that
you are offering protection over and above that provided by the
ACL, rather than simply attempting to replace the underlying
consumer guarantees in the ACL. Under the ACL it is an offence,
with penalties of up to $1.1 million per offence, to make a false
or misleading representation concerning:
the existence, exclusion or effect of any condition, warranty,
guarantee, right or remedy (including those under the ACL) or
a requirement to pay for a contractual right (such as an
extended warranty) that is wholly or partly equivalent to any
condition, warranty, guarantee or right or remedy the person has
under any Australian legislation (including the ACL).
In other words, if you are going to offer an extended warranty,
you need a very good understanding of exactly what rights the
consumer has under any Commonwealth, State or Territory legislation
and how your extended warranty differs from that. If you don't
understand these matters, you are at serious risk of breaching the
Statutory Guarantees under the ACL
The Australian Consumer Law gives consumers a set of rights
called statutory guarantees for all goods purchased after 1 January
2011 including that:
goods will be of acceptable quality (i.e. fit for all purposes
for which goods of that kind are commonly supplied, acceptable in
appearance and finish, free from defects, safe and durable);
goods will be fit for any disclosed purpose;
goods will match any description under which they are
goods will match any demonstration model or sample shown
goods will have spare parts available for a reasonable period
of time; services will be provided with due care and skill, will be
fit for any particular purpose specified and will be provided
within a reasonable time and
all express warranties offered will be honoured.
Where these guarantees are not met, the consumer has various
rights against the seller as well as the manufacturer or importer
of the goods. Depending on the issue and its seriousness, these
rights include repair, replacement or refund of the goods. What
does this mean for you?
This serves as a timely reminder that businesses should be
cautious when offering extended warranties. It is essential that
you avoid misrepresenting or understating consumers' statutory
rights under the ACL, or overstating the value of additional rights
(if any) provided by the extended warranties.
This is an area where it does not matter that you did not intend
to mislead – all the ACCC and the Court will look at is the
effect of your conduct. When in doubt, businesses should seek
assistance from advisors who are well experienced in dealing with
statutory guarantee issues under the ACL.
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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