The Australian Competition and Consumer Commission (ACCC) has accepted a court enforceable undertaking pursuant to section 87B of the Competition and Consumer Act 2010 from Virginia Surety Company, Inc. (VSC). This follows the ACCC’s review of extended warranty selling practices and engagement with participants in the extended warranty industry.
Details about the company
VSC is incorporated in Illinois in the United States and registered in Australia as a foreign registered company.
It underwrites and procures marketing and administration services for a range of extended warranty plans (some known as Product Protection Plans) sold to consumers by retailers of consumer electronics, domestic appliances and white goods.
Details about the conduct
The ACCC is concerned about marketing practices that have occurred in the extended warranty industry from time to time, including the content of extended warranty plan brochures provided to consumers at the point of sale.
Specifically, the ACCC is concerned about the following practices which have the potential to confuse or in some cases mislead consumers:
Insufficient disclosure of:
the degree of overlap between some contractual rights obtained by purchasing an extended warranty and the rights and remedies already available to consumers under the Australian Consumer Law (ACL), in the event that goods prove to be faulty; and
the contractual rights that go beyond those rights available under the consumer guarantees.
The use of representations to the effect that:
the extended warranty provides some benefits which may overlap with the consumer guarantees – in circumstances where those benefits do overlap;
extended warranty rights are additional to rights and remedies available to consumers under the ACL – in circumstances where those features overlap with those ACL rights and remedies; and
the price of the extended warranty does not include any cost attributable to the rights and remedies available to consumers under the ACL – in circumstances where certain costs may have been for rights that overlap with the rights and remedies already available under the consumer guarantees.
In response to the ACCC’s invitation to participate in the industry wide outcome, VSC provided the ACCC with a section 87B undertaking that it will:
revise extended warranty brochures to include information which will allow a consumer to compare the features of the EW against the rights and remedies available for free under the Australian Consumer Law (ACL);
provide ACL compliance training to VSC representatives and staff of retailers who sell extended warranties underwritten by VSC; and
develop and implement with retailers a program for monitoring and if necessary improving retailers’ extended warranties selling practices.