TV Shop fined $120K for extended warranties disclosure failures

Commerce Commission Chair Anna Rawlings. Photo / Mark Mitchell

The TV Shop has been fined $123,500 for failing to comply with extended warranty disclosure requirements.

Brand Developers Limited, trading as The TV Shop, pleaded guilty in the North Shore District Court to breaching the Fair Trading Act following a Commerce Commission investigation into its sale of extended warranties.

The Fair Trading Act requires businesses offering extended warranties to provide specific information to consumers in specific ways – including requiring that the information is provided in writing, is expressed in plain language, is legible and is presented clearly.

The Commission's investigation found that between May 1, 2020 and March 1, 2021, The TV Shop failed to meet such requirements.

In that time The TV Shop, which sells a wide range of products through direct response television advertising, sold 18,190 extended warranties to customers for a total revenue of $1,974,723.

Judge Anna Fitzgibbon agreed with the Commission that a considerable number of The TV Shop's consumers had little to no prospect of understanding their rights and remedies under the Consumer Guarantees Act, how those compared with the protections offered by the extended warranty agreement, or their rights to cancel the agreement.

Judge Fitzgibbon said The TV Shop's history of non-compliance with the Fair Trading Act "provides context to apparent systematic failures within [its] practices. It supports the notion that there is a need for specific denunciation".

Anna Rawlings, Commerce Commission Chairwoman, said the case highlights the importance of having the right extended warranty documents and processes in place.

"Businesses need to understand their obligations under the Fair Trading Act and consider the best ways to meet them," Rawlings said.

Rawlings added that the information that retailers must provide to consumers when selling an extended warranty helps consumers to decide if an extended warranty offers them value over and above the rights they already have under the Consumer Guarantees Act, and whether it is worth the price.

"For this reason, it must be clearly disclosed in writing in a way that consumers can easily understand," she said.