Appliance company Fisher & Paykel and its warranty provider, Domestic & General, have each been ordered to pay $200,000 for misleading and deceptive conduct involving extended warranties.
The Federal Court of Australia found Fisher & Paykel misled and deceived their customers into thinking they were had to purchase an extended warranty in order to protect their products from repair costs. Under Australian consumer law, customers can seek repairs, replacements or refunds, even after the manufacturer’s warranty has expired, if the product is of unacceptable quality or is affected by a “major failure”.
Customers who had purchased a dishwasher with a two-year warranty received letters from Fisher & Paykel stating that “your dishwasher 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.” The letter then offered the option to purchase an extended two-year warranty in addition to the original warranty. According to the ACCC, 48,214 letters were sent out.
The Court found it was not enough for the letter to note that customers were “entitled to a replacement or refund for a major failure and compensation for any other reasonably foreseeable loss damage” since this was “in relatively fine print” on the back page of the letter.
After the legal proceedings commenced against the two companies, all 1326 consumers who bought the extended warranties were contacted and offered a full refund. However, only 107 actually claimed a full refund.
Justice Wigney of the Federal Court also ordered the two companies to pay $15,000 in costs.
Source: Sydney Morning Herald
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