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Michael Hill fined for misleading warranties

Michael Hill’s New Zealand operating company has been fined $NZ169,000 ($AU160,000) after it breached warranty disclosure laws and misled customers into paying for warranties they did not agree to.

In what Wellington District Court Judge Denys Barry labelled a “significant set of failings”, Michael Hill New Zealand Ltd admitted to 13 charges in November – 12 of which related to its Professional Care Plan (PCP) failing to include complete extended warranty information under the country’s Fair Trading Act.

According to the Commerce Commission – the prosecuting body – the jewellery retailer’s omissions included a comparison of protections consumers automatically had under the Consumer Guarantees Act (CGA) on the front page of the PCP warranty. It also did not provide an adequate summary of consumer rights and remedies under the CGA, nor did it detail the consumers’ right to cancel the PCP.

The company also admitted to misleading a couple in June 2016 who had the $NZ149 cost of the PCP added to the sale price of a bracelet without their knowledge. They were later refunded the warranty price after complaining.

Judge Barry said the breaches were “not a mere minor oversight” by Michael Hill: “[It] impugns the objectives of the FTA as consumers had no immediately discernible comparison between their rights under the CGA and those covered by the PCP.”

“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.”

Commerce Commissioner Anna Rawlings said the law clearly stated the information that must be provided to consumers when selling an extended warranty.

“That information helps consumers to decide whether an extended warranty offers them value over and above the rights they already have under the CGA. They can then decide whether it is worth the extra cost,” she said.

The case has since called into question the sales practices of some New Zealand jewellery retailers, with the Commerce Commission confirming it is now assessing four further complaints against Michael Hill and one relating to its rival, Pascoes The Jewellers.

According to Stuff.co.nz, recent complaints have included one customer paying more for a piece of jewellery than advertised because of apparent fluctuations in the exchange rate, and another refused a refund despite feeling pressured into buying a piece on finance arranged by Michael Hill.

In a statement, a spokesperson for Michael Hill said the company had been "fully cooperating" with the Commerce Commission and chose not to contest the technical classification of a PCP as an extended warranty in this case.

"We will make the necessary changes to our sales brochure to reflect the extended warranty classification, which include a comparison table within the terms and conditions to clarify and differentiate the protections of the Consumer Guarantees Act and the unique benefits and services of a PCP.”
















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Sunday, 17 February, 2019 10:20pm
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