ACCC calls foul on Fisher & Paykel’s promotion of extended warranties

Recent proceedings brought against appliance giant Fisher & Paykel by the Australian Competition and Consumer Commission (ACCC) offer businesses a timely reminder to consider whether their communications around extended warranties are in compliance with the policies enshrined in the Australian Consumer Law (ACL).

On 12 November 2013, the ACCC announced that it had filed proceedings in the Federal Court against Fisher & Paykel Customer Services Pty Ltd (Fisher & Paykel) and Domestic & General Services Pty Ltd (Domestic & General) for allegedly making false or misleading representations concerning consumers’ rights under the statutory guarantee regime in the course of offering an extended warranty.

The ACCC alleges that Fisher & Paykel or Domestic & General, either on its own behalf or acting as an agent of Fisher & Paykel (or both), sent letters to consumers who had recently purchased a Fisher & Paykel appliance, inviting them to also purchase an extended warranty.

Extended warranties typically offer additional protection over and above the statutory warranties contained in the ACL and are an additional charge to the item’s retail price. However, extended warranties do not replace the guarantees contained in the ACL.

There are a number of guarantees contained in the ACL, including that products and services:

• must be of acceptable quality
• match descriptions made by the salesperson and in promotions or advertising
• match any demonstration model or sample you asked for
• be fit for the purpose the business told you it would be fit for and for any purpose that you made known to the business before purchasing
• not carry any hidden debts or extra charges
• meet any extra promises made about performance, condition and quality, such as lifetime guarantees and money back offers.

The ACCC alleged that the letters sent by Fisher & Paykel, or Domestic & General, contained a number of false or misleading representations about consumers’ statutory rights, including, for example, that the consumer would not be protected for repair costs to the appliance after the expiry of the manufacturer’s warranty unless the consumer purchased an extended warranty.

The proceedings against Fisher & Paykel also involve alternative allegations by the ACCC that under the consumer protection provisions of the ASIC Act, the extended warranty plan offered may have constituted a financial product and that, by offering the plan, Fisher & Paykel or Domestic & General were offering to provide financial services in breach of the ASIC Act.

The ACCC is seeking pecuniary penalties, declarations, injunctions, orders for compliance programs, and costs.

This action follows the announcement by the ACCC of its national consumer awareness-raising campaign called ‘If it’s not right, use your rights. Repair, replace, refund’, and highlights the ACCC’s continuing focus on the protection of consumer rights.

This serves as a timely reminder that businesses should be cautious when offering extended warranties to consumers. Businesses should avoid misrepresenting or understating consumers’ statutory rights under the ACL, or overstating the value of additional rights (if any) provided by the extended warranties.

Businesses providing goods or services to consumers should consider whether their terms and conditions are in compliance with the ACL, and, if they offer extended warranties to consumers, that communications about these also comply with the ACL.

If you would like help reviewing your terms and conditions or warranties, or require any further information, please contact David Grace or Charles Sweeney.