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 agreements
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 recommendation
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 examples.

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 ensure:

  • 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.