Godfreys fined $58k over lack of information in extended warranties

Monday 19th December 2016

New Zealand Vacuum Cleaner Co, which runs the Godfreys vacuum cleaner retail chain, has been fined $58,000 in the Manukau District Court after pleading guilty to 10 charges under the Fair Trading Act (FTA) over failure to disclose customer rights in extended warranty agreements.

Between June 2014 and September 2015, Godfreys sold more than 3,000 extended warranty agreements which didn't include information it has to disclose to customers, the Commerce Commission said in a statement.

Five of the charges related to the retailer's failure to provide written advice to customers of their rights under the Consumer Guarantees Act (CGA) and the right of customers to cancel extended warranties within five days, while the other five charges related to Godfreys’ failure to verbally advise consumers about their cancellation rights before they entered into the extended warranty agreement, the commission said.

"The law aims to give consumers the information that they need to help decide if the additional protection offered by the extended warranty represents value for money when compared with rights that they already have under the Consumer Guarantees Act," commissioner Anna Rawlings said. "It is essential that businesses selling extended warranties comply with these requirements and consumers remember that the Consumer Guarantees Act offers some protection whether or not they choose to purchase an extended warranty as well."

The case was the first prosecution under FTA provisions which impose specific obligations on companies selling extended warranty agreements, which came into force in 2014, the regulator has previously said. Under the provisions, the warrantor must explain some guarantees are already provided to consumers under the CGA, and provide comparative information on CGA guarantees and the protections being sold under the warranty.

NZ Vacuum Cleaner Co is owned by Australian Vacuum Cleaner Co, which also operates the Godfreys chain in Australia. It has 31 stores in New Zealand, where it has operated for about 15 years.

BusinessDesk.co.nz

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