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Retailer fined for non-compliant extended warranties

01 October 2018

The computing and IT retailer PB Tech has been fined $77,000 in the Auckland District Court after pleading guilty to 14 charges brought by the Commerce Commission for selling non-compliant extended warranties.

Between 11 May and 30 November 2017, PB Tech sold over 4,000 of its PB Care extended warranties without giving consumers information to enable them to make an informed choice about whether to buy the extended warranty.

The Commission says that, under the Fair Trading Act, consumers should have received information including:

*        A summary of consumers’ rights and remedies under the Consumer Guarantees Act (CGA).

*        A summarised comparison of consumers’ CGA rights and remedies and those provided by the extended warranty.

*        Written and verbal information about the right to cancel the extended warranty agreement and obtain a refund if customers changed their minds within five working days.

*        A written copy of the extended warranty at the time of purchase.

PB Tech failed to comply with these legal requirements.

In sentencing, Judge Thomas said there is a high need for a deterrent response.

“There is a significant public interest in ensuring that warranties and policies of that nature, renowned for their exclusions and limitations, are fairly provided or that disclosure relating to those is fairly provided to customers so that they can make an informed decision in investing a significant sum of money in that product,” he said.

PB Tech also sold AppleCare warranties for Apple products. When selling these, PB Tech did not give consumers a copy of the extended warranty agreement at the time of sale and did not inform consumers of their cancellation rights.

Commissioner Anna Rawlings says the law clearly sets out the information that businesses must give to their customers when selling extended warranties.

“That information reminds customers of their rights under the Consumer Guarantees Act and helps them to decide whether an extended warranty offers useful extra protections and is worth the additional cost.

“It also ensures that customers who make a decision on the spot know that they can reconsider within five working days, cancel the extended warranty and get their money back. All retailers selling extended warranties should take appropriate steps to make sure that their documentation is compliant and that their sales staff know what they need to do to comply with the law in store,” she says.

PB Care warranties were sold for between 10-15% of the value of the good, depending on the length of the warranty.

Last updated on the 16th September 2019