Jewellery retailer Michael Hill has been fined $169,000 for selling extended warranties that failed to comply with the Fair Trading Act.
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The retailer admitted 12 charges that its professional care plan warranty didn’t include information required by the act.
Extended warranties must contain specific information about consumers’ rights to a remedy when products aren’t of acceptable quality.
The warranty front page must compare the protections consumers already have under the Consumer Guarantees Act (CGA) with the protections offered by the warranty. A summary of the consumer’s right to cancel the warranty must also be provided.
However, professional care plans sold by Michael Hill between 31 May 2017 and 30 May 2018 failed to provide this information.
The jewellery retailer also admitted one charge of misleading consumers by adding the warranty cost on to the price of a bracelet, without the knowledge of a couple who bought it in June 2016. The couple was later refunded after complaining to Michael Hill.
Last year, Michael Hill International earned AU$39.7 million from the sale of its professional care plans.
In sentencing, Judge DRW Barry said the conduct was a significant set of failings, stating it “impugns the objectives of the [Fair Trading Act] as consumers had no immediately discernible comparison between their rights under the CGA and those covered by the [professional care plan]. The financial harm to the couple [the consumers] was caused by the conflation of the warranty price with the price of the bracelet. The consumers were effectively ‘guiled’ into paying for the warranty product.”