New Zealand Vacuum Cleaner Co, which runs the Godfreys vacuum cleaner retail chain, has been fined $48,000 in the Manukau District Court after pleading guilty to 10 charges under the Fair Trading Act (FTA) over failure to disclose customer rights in extended warranty agreements.
Between June 2014 and September 2015, Godfreys sold more than 3000 extended warranty agreements which did not include information it has to disclose to customers, the Commerce Commission said in a statement.
Five of the charges related to the retailer's failure to provide written advice to customers of their rights under the Consumer Guarantees Act (CGA) and the right of customers to cancel extended warranties within five days, while 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 commission said.
"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."
In a statement, Godfreys said the company had been co-operating with the Commerce Commission in its inquiries.
“We apologise to our customers who purchased extended warranties during this period and who may have been impacted by the inadequate disclosure of the key terms of those warranties,'' Chris Mason, general manager of Godfreys New Zealand, said.
“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. 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 inquiries. We have taken decisive action to ensure our ongoing compliance meets best practice including instructing New Zealand solicitors and implementing targeted internal training programs.
“We are pleased to now have this matter behind us,” he said.
Customers who have any concerns can contact Godfreys toll-free on 0800 282-288 or through the Company’s website www.godfreys.co.nz.
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.
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.
