We've all been faced with the decision at the checkout: you're in the middle of purchasing a fantastic new piece of technology, when the sales person offers you an extended warranty - for a price. Do you take it? What does it give you in addition to your statutory rights?
NZ consumer laws were amended in 2014 to further enhance consumer rights and in doing so, the sale of extended warranties was specifically addressed. Now, if a company wishes to offer an extended warranty it must be made clear to the consumer:
(a) what it offers over and above the rights that every consumer purchasing for personal use is granted under the Consumer Guarantees Act; and
(b) that the extended warranty can be cancelled by the consumer within five working days of purchasing it.
This is to provide consumers with adequate knowledge of their existing rights so they can understand the increased benefit of purchasing the extended warranty. The consequences of not doing this can be Commerce Commission charges, as seen in the Godfrey's prosecution.
Extended warranties can be useful where (a) the good is purchased for business purposes (which is not covered by the Consumer Guarantees Act), where you damage the good accidentally, rather than it being faulty (although this may be covered by home insurance), or where you need to use the good frequently and cannot wait for repairs. However, as shown by the Godfrey's case, whatever these additional benefits are, they must be set out to a consumer at the time the extended warranty is offered.
Vacuum cleaner retailer Godfreys has pleaded guilty to Commerce Commission charges relating to extended warranty agreements. The consumer watchdog brought 10 charges under the Fair Trading Act relating to more than 3000 extended warranty agreements that Godfreys sold to customers between June 17, 2014 and September 22, 2015.