Godfreys fined $48k over warranty failures

  • 19/12/2016
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 (Getty, file)
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 (Getty, file)

New Zealand Vacuum Cleaner Co, which runs the Godfreys vacuum cleaner retail chain, has been fined $48,000 over its failure to disclose customer rights in extended warranty agreements.

The company pleaded guilty to 10 charges under the Fair Trading Act in Manukau District Court.

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.

Godfreys New Zealand general manager Chris Mason said his team had apologised to affected customers and also fully co-operated with the commission's enquiries.

Five of the charges against the retailer related to its 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 commission said.

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 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.

"As soon as Godfreys became aware that its warranty agreements did not reflect recent changes to consumer law, we contacted customers who may have been affected, offering a full refund on their warranty cost," Mr Mason said.

"In addition we have ceased selling extended warranty agreements."

"The New Zealand Commerce Commission has acknowledged that Godfreys has fully co-operated with in its enquiries."

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.

NZN