Customers' legal rights were buried in the fine print.
Appliance company Fisher & Paykel has been pinged in Australia for telling owners of its products they needed to buy an extended warranty to cover repair costs.
The Australian Competition and Consumer Commission (ACCC) filed proceedings in the Federal Court over the letter Fisher & Paykel sent 48,214 owners of its appliances.
The letters read: “When you purchased your [appliance] it came with a warranty protecting you against the cost of repairs for a total of 2 years. Your [appliance] is now a year old, which means you have 12 months remaining - after that your appliance won’t be protected against repair costs. Fisher & Paykel can help.
“We have teamed up with Warranty Specialists, Domestic & General to offer you an extra 2 years of protection with our Service Plan. With the Fisher & Paykel Service Plan you can enjoy the peace of mind and convenience of protection against unexpected repair bills even as your appliance gets older.”
The fact customers had rights under Australian consumer law was only disclosed in the warranty fine print.
The extended warranty offer was taken up by 1326 people and the price of the extended warranty ranged from $100 to $220.
When Fisher & Paykel became aware of the ACCC’s investigation, it undertook a voluntary refund program. Only 107 people applied for refunds.
In his judgement, Justice Wigney said Fisher & Paykel and Domestic & General admitted the representation was false or misleading and the making of it was conduct that was misleading or deceptive.
Fisher & Paykel and Domestic & General were each fined $200,000.
Consumer’s CEO Sue Chetwin said it was extremely disappointing that Fisher & Paykel had flagrantly disregarded the law, particularly as it is a company that is fully aware consumer law is similar across Australia and New Zealand.
“Consumers should also be aware that under recent consumer law reforms the rules around extended warranties have been further strengthened,” she said.
“Now when a retailer tries to sell you a warranty they have to tell you in plain English what benefits it offers over what your rights are under the law. In most instances, extended warranties are not worth the money.”