Godfreys drops extended warranties after ComCom legal action

New Zealand Vacuum Cleaner Co, which runs the Godfreys vacuum cleaner retail chain, has stopped offering extended warranties in New Zealand after admitting it breached disclosure rules that were introduced to the Fair Trading Act in 2014.

The Commerce Commission took its first prosecution focussed on the new provisions of the FTA, which require warrantors to advise customers of their rights under the Consumer Guarantees Act, which provides some similar protections to those offered under extended warranties.

The charges relate to more than 3,000 extended warranty agreements Godfreys sold to customers between June 17, 2014, and Sept. 22, 2015, the Commerce Commission said in a statement. Five of the charges relate to the retailer's failure to provide written advice to customers of their rights under the Consumer Guarantees Act and the right of customers to cancel extended warranties within five days.

The other five charges relate to Godfreys' failure to verbally advise consumers about their cancellation rights before they entered into the extended warranty agreement, the commission said.

More broadly, Consumer chief executive Sue Chetwin earlier told NBR that extended warranties are a waste of money.

“There are virtually no situations where the [extended] warranty gives you better coverage than you can get under the Consumer Guarantees Act,” she said.

The CGA reasonable life-time and free repair or replacement provisions over-rule manufacturer's warranties, which are typically restricted to 12 months. 

Godfreys said it had "learned its lesson" and is now fully cognisant of its obligations in this new regulatory environment."

"Godfreys responded as soon as it became aware of the issue and offered full refunds to all customers who had purchased an extended warranty," it said in emailed answers to questions. "Extended warranties were immediately withdrawn from the market. Godfrey's no longer sells extended warranties."

The company had also engaged with industry lobby group Retail New Zealand "to implement a full review of policies and procedures to ensure compliance," it said. Godfreys declined to comment about whether there was still a place for extended warranties under the new rules.

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)

Click the hamburger symbol top right of our homepage to access the Rich List 2016 and other sections.