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Retailers misleading shoppers about legal rights

Retailers misleading shoppers about legal rights

Once again a Consumer NZ mystery shopping survey has found retailers are promoting extended warranties by misleading consumers about their legal rights.

Selling extended warranties for home appliances is a lucrative sideline for retailers, said Consumer NZ's deputy chief executive David Naulls. "But if you're buying goods for personal use, you don't usually need one. You already have strong after-sales rights under the Consumer Guarantees Act."

Despite this, Consumer NZ's mystery shop of Bond & Bond, Harvey Norman and Noel Leeming stores in Wellington found extended warranties continue to be sold with misleading advice about shoppers' legal rights.

"Sales staff told us that if we did not buy an extended warranty - which can cost several hundred dollars - then we would have to go back to the manufacturer if the product failed," said Naulls.

"This advice is wrong. The Consumer Guarantees Act obliges retailers to guarantee the products they sell are of an acceptable quality. If a new product fails, and you haven't caused the fault, you go back to the retailer to get the problem fixed. You don't have to battle it out with the manufacturer."

Naulls says it is an offence under the Fair Trading Act for retailers to try to sell an extended warranty by claiming the consumer would otherwise have no protection.

Consumer NZ also found Bond & Bond's and Noel Leeming's extended warranty brochures contain misleading information that risks breaching the Fair Trading Act. "We've informed the Commerce Commission of our concerns," Naulls said.

Little has changed since Consumer NZ sent mystery shoppers to visit the same retailers in 2007. "Our 2007 investigation found the stores rarely informed customers about their legal rights and some staff misled shoppers," he said.

Consumer NZ has been calling for a clamp-down on misleading claims about the protection provided by extended warranties.

Law changes are being considered. If passed, amendments in the Consumer Law Reform Bill will require retailers who sell extended warranties to provide consumers with a summary of their legal rights. Consumers will also have five working days to cancel the warranty and get a refund.

"We believe these changes are long overdue. We also want extended-warranty contracts to clearly state what benefits the warranty gives in addition to the rights and remedies already available under the Consumer Guarantees Act," Naulls said.


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