The Australian consumer watchdog, the Competition and Consumer Commission has filed proceedings in the Federal Court against Fisher & Paykel Customer Services and Domestic & General for making allegedly false or misleading representations concerning consumers rights under the statutory guarantee regime in the course of offering an extended warranty.
“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,” ACCC Chairman Rod Sims said.
“Shoppers should realise that under the Australian Consumer Law (ACL) they may have a right to a repair, replacement or refund beyond the time period covered by the manufacturer’s warranty. While some extended warranties may offer protection over and above that provided by the ACL, they do not replace the underlying consumer guarantees.”
The ACCC alleges that Fisher & Paykel and/or Domestic & General, either on its own behalf or acting as an agent of Fisher & Paykel, sent letters to consumers who had purchased a Fisher & Paykel appliance, encouraging owners to purchase an extended warranty.
There are allegations that the letters sent out contained a number of false or misleading representations about consumers statutory rights, including, for example, 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.
“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,” Mr Sims said.
The ACCC’s position is that the conduct of Fisher & Paykel and Domestic & General breached sections of the ACL and is seeking pecuniary penalties, declarations, injunctions, orders for compliance programs, and costs.
The proceedings also involve alternative allegations under the consumer protection provisions of the ASIC Act, on the basis that the extended warranty plan offered may constitute a financial product and that, by offering the plan, Fisher & Paykel and/or Domestic & General were offering to provide financial services. This point is interesting as, in the UK as well, these service plans appear to be completely unregulated at present.
Within the industry and, from UK government, similar criticism has been drawn over this sort of marketing by manufacturers and warranty providers ans especially over the repair & protect scheme that was recently featureed on BBC Television. The extended warranty industry is said to generate over £1 billion in revenues annually. As yet none of the regulatory bodies in the UK have taken any action.
It is also not the only problem experienced lately by Domestic & General as it came under fire recently for continuing to collect warranty payments, as reported by The Guardian last month in a story about how a Domestic & General warranty cost £3000.
No comment has been made by either company on the matter at this time.