A tyre company has been fined $243,000 for breaches of the Fair Trading Act when extended warranties were charged to customers without their awareness or consent.
The charges were filed by the Commerce Commission.
Beau Ideal Limited, formerly trading as Beaurepaires and which now trades under the name Advantage Tyre Solutions, sold extended warranties called ‘Road Hazard Cover’ that provided tyre care and repairs for the first 12 months after the tyres were purchased.
The company’s invoicing system automatically added Road Hazard Cover to all customer quotes for tyre purchases and relied on customers to opt-out if they did not want the product.
Customers were reliant on employees to both tell them about and manually remove the Road Hazard Cover from the quote if requested.
Judge O’Driscoll in a judgment from the Auckland District Court said “an informed decision could not be made by the customer whether to accept or decline RHC”.
“This was deceptive and unfair conduct on the part of the defendant.”
Commerce Commission deputy chairperson Anne Callinan said Beaurepaires was a large and long-standing company that “should have taken more care” to ensure it complied with the law.
“The lack of processes and staff training resulted in customers being charged for Road Hazard Cover without their awareness or consent, and without the necessary information given to them.”
She said businesses should use an “opt-in” sales approach to allow consumers to make their own decisions.
“All businesses have a responsibility to be transparent about extended warranties and consumers’ existing rights so consumers can make an informed decision.
“A service doesn’t need to be labelled as an extended warranty to be captured by the Fair Trading Act.”
