“The law clearly sets out the information that must be provided to consumers when selling an extended warranty,” said Commissioner Anna Rawlings. “That information helps consumers to decide whether an extended warranty offers them value over and above the rights they already have under the CGA.”

“They can then decide whether it is worth the extra cost,” she said.

Rawlings said the cost of the extended warranty should be made clear.

“Where the required information is not provided, consumers who purchase these products may be able to cancel their agreements and obtain a refund of the cost of the warranty.”

In sentencing Judge DRW Barry said the conduct was a significant set of failings, not a mere minor oversight.

Barry said it impugns the objectives of the FTA as consumers had no immediately discernible comparison between their rights under the CGA and those covered by the PCP.

“The financial harm to the couple [the consumers] was caused by the conflation of the warranty price with the price of the bracelet,” Barry said. “The consumers were effectively ‘guiled’ into paying for the warranty product.”

A Michael Hill spokesperson said they have been fully cooperating with the NZ Commerce Commission about this matter and chose not to contest their technical classification of a PCP as an extended warranty, according to a report from the NZ Herald.

“PCP continues to be a unique and valuable servicing arrangement which entitles our customers to services beyond those under the Consumer Guarantees Act,” the Michael Hill spokesperson said. “We will make the necessary changes to our sales brochure to reflect the extended warranty classification, which include a comparison table within the terms and conditions to clarify and differentiate the protections of the Consumer Guarantees Act and the unique benefits and services of a PCP.”

Michael Hill added it was an isolated incident where a refund was previously provided to the customer within a fortnight of their purchase once the company became aware that the sales professional may not have followed the correct procedure on this specific occasion.