National Warranty Company agrees to change extended warranties

The Australian Competition and Consumer Commission (ACCC) noted that the Davantage Group Pty Ltd trading as National Warranty Company (NWC) has agreed to make changes to its 'Extension to Manufacturer's Warranty', which is primarily sold through used-vehicle dealerships, following concerns raised by the ACCC.

NWC's extended warranties are available nationally through dealers for new and used vehicles. The ACCC investigated following concerns that NWC's extended warranties had the potential to mislead consumers about the benefits, and need for, purchasing an extended warranty.

In particular, the ACCC was concerned that:
  • the product name, 'Extension to Manufacturer's Warranty', had the potential to mislead consumers into thinking they received cover on the same terms as the vehicle manufacturer's warranty, when it was a generic product that contained a number of exclusions and financial limitations not normally found in a manufacturer's warranty
  • certain statements contained in the product terms represented that the warranty benefits were in addition to the statutory protections under the Australian Consumer Law (ACL), when there was clear overlap with the consumer guarantee provisions.
NWC has renamed the product to 'Optimum Warranty', and agreed to make several amendments to the product terms. NWC has also committed to review its other warranty products to ensure compliance with the Australian Consumer Law, and will monitor how motor dealers promote and sell its warranty products.

"Under the Australian Consumer Law, automatic consumer guarantees apply to products and services people buy regardless of any other warranties suppliers sell or give to them. Suppliers must not mislead people into paying for the rights that they already have under the consumer guarantees," ACCC Deputy Chair Delia Rickard said.

"NWC will now provide vehicle buyers with additional information about consumer guarantees, and clarification about any overlap between the extended warranties' benefits and the rights and remedies under consumer law," she said.

"The ACCC welcomes the approach taken by NWC and encourages other industry participants to adopt similar measures to improve extended warranty selling practices," Ms Rickard said.

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