A warning on warranties: Fisher & Paykel fined after ACCC investigation

Fisher & Paykel was fined $200,000 after the Federal Court determined it had mislead customers when offering them an extended warranty by not making it clear enough that in some circumstances consumers may have been entitled to repairs or a refund under Australian Consumer Law (ACL).

On 19 December 2014 both Fisher & Paykel and warranty services company Domestic & General, which was working for Fisher & Paykel at the time, were each fined $200,000, bringing an end to the legal action initiated by the ACCC in November 2013.

The Court found that between January 2011 and December 2012 Domestic & General, on behalf of Fisher & Paykel “engaged in misleading or deceptive conduct and made false or misleading representations to consumers concerning the need for extended warranties, and the existence and effect of statutory consumer guarantees in the ACL.”

Under ACL consumers have the right to repairs or refunds even after the manufacturer’s warranty has expired under certain circumstances. The Court found that Fisher & Paykel hadn’t made this clear enough in a letter they sent to approximately 48,214 purchasers of its appliances, including ovens, cookers, dishwashers, refrigerators, freezers, washing machines and dryers.

The extended warranty letters were sent to buyers 12 months after they had purchased a Fisher & Paykel appliance, encouraging them to purchase an additional two year warranty.

References to the ACL in the terms and conditions were in relatively fine print on the reverse side of the letter. The fine print stated: “You are entitled to a replacement or refund for a major failure and compensation for any other reasonably foreseeable loss or damage. You are also entitled to have the goods repaired or replaced if the goods fail to be of acceptable quality and the failure does not amount to a major failure. The benefits to the consumer given by the Service Plan are in addition to other rights and remedies of the consumer under law in relation to goods and services to which the Service Plan relates.”

Between June 2013 and September 2013 Fisher & Paykel undertook a voluntary consumer refund program. All consumers who received the extended warranty letter and purchased an extended warranty were unconditionally offered a full refund. According to the court documents only 107 refunds were claimed. “It is unclear why so few consumers claimed a refund. Because so few refunds were claimed, the total amount refunded was fairly modest,” the document stated.

 

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