PB Tech fined $77,000 for extensive failings with customers’ extended warranties

Monday, 1 October 2018

Commissioner Anna Rawlings says the law clearly sets out the information that businesses must give to their customers when selling extended warranties.

Computing and IT retailer PB Tech has been slapped with a $77,000 fine for selling non-compliant extended warranties.

PB Tech pled guilty to 14 charges laid by the Commerce Commission in July, and the fine was handed down at the Auckland District Court on Friday.

Between May and November 2017, the company sold more than 4000 of its 'PB Care' extended warranties without giving consumers information to enable them to make an informed choice about whether to buy the extended warranty.

In sentencing, Judge E M Thomas said there needed to be a deterrent response to PB Tech's behaviour.

PB Care warranties, including for its iphones, were sold for between 10-15 per cent of the value of the good, depending on the length of the warranty.

* PB Tech admits warranty charges, warned for bait advertising

* Fake signatures, courier packages left at the neighbours', all part and parcel of service**

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

'There is a significant public interest in ensuring that warranties and policies of that nature, renowned for their exclusions and limitations, are fairly provided or that disclosure relating to those is fairly provided to customers so that they can make an informed decision in investing a significant sum of money in that product,' Thomas said.

Under the Fair Trading Act, consumers should have received information including:

- A summary of consumers' rights and remedies under the Consumer Guarantees Act (CGA).

- A summarised comparison of consumers' CGA rights and remedies and those provided by the extended warranty.

In sentencing, Judge E M Thomas said there needed to be a high need for a deterrent response to PB Tech's behaviour.

- Written and verbal information about the right to cancel the extended warranty agreement and obtain a refund if customers changed their minds within five working days.

- A written copy of the extended warranty at the time of purchase.

PB Tech failed to comply with these legal requirements.

PB Tech also sold AppleCare warranties for Apple products but did not give consumers a copy of the extended warranty agreement at the time of sale nor did it inform consumers of their cancellation rights.

An extended warranty is sold at additional cost when buying goods such as computers, mobile phones and washing machines.

It is different to a manufacturer's warranty, which comes free with goods and is also different from guarantees provided automatically under the CGA.

During the seven-month charge period, PB Tech sold more than 4000 PB Care warranties both online and across its 11 stores and service centres.

About 250 warranties were sold via its website.

PB Care warranties were sold for between 10-15 per cent of the value of the good, depending on the length of the warranty.

Apple Care warranty prices also varied depending on the product. For example a two-year warranty for a $460 Apple iPad was $129.56.

Commissioner Anna Rawlings said the law clearly set out the information that businesses must give to their customers when selling extended warranties.

'That information reminds customers of their rights under the Consumer Guarantees Act and helps them to decide whether an extended warranty offers useful extra protections and is worth the additional cost,' Rawlings said.

'It also ensures that customers who make a decision on the spot know that they can reconsider within five working days, cancel the extended warranty and get their money back.

'All retailers selling extended warranties should take appropriate steps to make sure that their documentation is compliant and that their sales staff know what they need to do to comply with the law in store,' she said.