The Federal Court has declared by consent that both Fisher & Paykel Customer Services Pty Ltd (Fisher & Paykel) and Domestic & General Services Pty Ltd (Domestic & General) made a false or misleading representation in the course of offering an extended warranty to consumers, and imposed a pecuniary penalty of $200,000 on each business.
Between January 2011 and December 2012, Fisher & Paykel and Domestic & General sent letters to consumers who had purchased a Fisher & Paykel appliance inviting them to purchase an extended warranty. The letters contained a number of statements, including:
Your Fisher & Paykel [appliance] is now a year old, which means that you have 12 months remaining – after that your appliance won’t be protected against repair costs.
Justice Wigney held that the letters contained a false or misleading representation to consumers that they would not be protected against repair costs for their appliance after a period of two years from the date of purchase (being the period of the manufacturer’s warranty), unless they purchased the extended warranty. In fact, under the Australian Consumer Law (ACL) consumers may be protected beyond the manufacturer’s warranty period without the purchase of an extended warranty.
In his judgment, Justice Wigney said: “The conduct here unquestionably involves serious and significant contraventions of the ACL. The misleading representations concerned extended warranties for well-known consumer goods. The misrepresentations potentially misled or deceived thousands of consumers in respect of the supposed need for extended warranty plans”.
ACCC Chairman Rod Sims said: “The Court’s decision sends a strong warning to businesses that they must not misrepresent or understate consumers’ rights under the ACL when marketing extended warranties. This is especially important for companies like Domestic & General which specialise in offering warranty services”.
“Under the ACL, consumers may have a right to a repair, replacement or refund regardless of any extended warranty or express manufacturers’ warranty,” Mr Sims said.
The Court also granted injunctions against Fisher & Paykel and Domestic & General, ordered each of them to update their compliance programs and ordered that they contribute to the ACCC’s costs of the proceedings. All orders were sought by consent, with the exception of the terms of the injunction against Domestic & General.
The ACL consumer guarantees regime is a current enforcement priority area for the ACCC, particularly in the context of the sale of extended warranties.
This was the first case taken by the ACCC alleging false or misleading representations regarding consumer guarantees in the context of businesses offering extended warranties.
The proceedings were brought by the ACCC under the Australian Securities and Investments Commission Act 2001 (the ASIC Act) pursuant to a delegation from the Australian Securities and Investments Commission (ASIC), as the extended warranty in this case was a financial product under the ASIC Act. The ACCC has consulted with ASIC throughout the investigation and proceedings.