PB Tech admits warranty charges, warned for bait advertising

Tuesday, 3 July 2018

PB Tech markets itself as New Zealand’s largest computing and IT retailer with 11 'superstores' and service centres throughout the country.

Leading computing and IT retailer PB Tech has admitted not meeting its requirements with regard to extended warranties - and warned about 'bait' advertising.

The firm has plead guilty to 14 charges laid by the Commerce Commission against the company for breaching the Fair Trading Act.

The commission accused PB Tech of failing to give customers a summary comparing the existing Consumer Guarantees Act rights with the rights provided by the store's extended warranty.

The company also failed to give customers a copy of the extended warranty agreement, and that customers were not told their cancellation rights before signing up.

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PB Tech sent an email to 100,000 people promoting a sale on Apple watches, despite having just 14 in stock. This was 'likely' to have breached the Fair Trading Act, the commission says.

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The charges related to extended warranty agreements sold to consumers and businesses last year, between May 11 and November 30.

Commissioner Anna Rawlings said businesses had to give customers information about benefits provided by the extended warranty in addition to benefits already provided by the Consumer Guarantees Act.

'This information helps customers to decide whether they need an extended warranty and whether the benefits it provides are worth the price they are being asked to pay.'

PB Technologies, which trades as PB Tech, is due to be sentenced in September.

The commission has also warned PB Tech about bait advertising, after it promoted Apple watches at special sale prices in an email to about 100,000 people, when it only had 14 available at those prices.

Bait advertising refers to luring customers into a store with a deal, but failing to have reasonable quantities in stock.

Rawlings said PB Tech was 'likely' to have breached the Fair Trading Act, as it did not appear to have 'reasonable grounds to believe that it could supply reasonable quantities of Apple watches at the sale price'.

'The qualifying statement 'strictly limited stock' was not displayed near the Apple watch advertising and in these circumstances, customers were not adequately alerted to the limitations of the 2016 Cyber Monday sale.

'Businesses should not promote sought-after goods to attract consumers into a shop, or to a website, unless those goods are available in reasonable quantities, or the business has made it clear that the goods are available in limited quantities,' she said.

'PB Tech admitted that it knew the watches would sell out and two complainants told us that they sold out in the first few minutes of the sale.'

Any limitations to stock availability had to be noted prominently, so consumers could make an informed decision, she said.

'If there are only a small number of goods available, it is best practice for businesses to clearly state precisely what that number is.'