Brand Developers, trading as The TV Shop, has been fined $123,500 for selling extended warranties in the North Shore District Court after an investigation by the Commerce Commission.

The company sold 18,190 extended warranties to customers for a revenue of $1,974,723.

An extended warranty is sold at an additional cost when buying goods such as appliances, mobile phones from a retailer. An extended warranty is different from a manufacturer’s warranty, which is free.

The Fair Trading Act requires businesses to provide specific information to consumers regarding their extended warranties in legible writing, presented clearly. The investigation found that The TV Shop had failed to comply with these requirements.

Commission chair Anna Rawlings said the information provided by retailers to consumers when selling an extended warranty helps consumers to decide if the warranty offers 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. Businesses need to understand their obligations under the Fair Trading Act and consider the best ways to meet them,” she said.

The TV Shop updated its processes, after being notified by the commission. However, it continued to breach the Act because the information it provided to consumers was set out in multiple documents, meaning the extended warranties did not meet the requirements of being legible and presented clearly. 

In considering an appropriate penalty, Judge A M 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.”