Godfreys pleads guilty to charges over warranty agreements

2 September 2016
Release no. 26

Godfreys pleads guilty to charges over extended warranty agreements

New Zealand Vacuum Cleaner Company Limited (trading as Godfreys) has pleaded guilty to 10 charges brought by the Commission in relation to the extended warranty agreements it sold to consumers.

All of the charges are brought under the Fair Trading Act 1986 (FTA). They relate to over 3,000 extended warranty agreements Godfreys sold to customers between 17 June 2014 and 22 September 2015.

Five of the charges relate to Godfreys’ failure to comply with the written disclosure requirements for extended warranty agreements. In particular, Godfreys failed to give written advice to customers of their rights under the Consumer Guarantees Act (CGA), how the extended warranty compared with those CGA rights, and that the customer could cancel the extended warranty within 5 days of buying it.

The other five charges relate to Godfreys’ failure to verbally advise consumers about their cancellation rights before they entered into the extended warranty agreement.

This case is the first prosecution which focusses on the new FTA provisions imposing specific obligations on the sale of extended warranty agreements, which came into force in 2014.

As this matter is before the Court, the Commission is unable to comment further at this time.

Background

Godfreys sells vacuum cleaners and other cleaning products to both retail and commercial sectors. It has been operating in New Zealand for approximately 15 years and has 31 stores nationwide.

During the charge period Godfreys sold 3,202 extended warranties to consumers at an additional price when they purchased a product.

The FTA was amended in June 2014 to provide additional disclosure requirements for extended warranty agreements and additional rights for consumers to cancel an extended warranty agreement after purchase. The additional disclosure requirements require the warrantor to explain in the extended warranty agreement the guarantees already provided to consumers under the CGA, and to compare the CGA guarantees with the protections provided by the extended warranty agreement.

For further information on the sale of extended warranty agreements, see the Commission's online guidance.

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