29 November 2018
Release no. 83
Jeweller Michael Hill fined $169,000 in extended warranty case
Jewellery retailer Michael Hill New Zealand Limited (Michael Hill) has been fined $169,000 in the Wellington District
Court today following a Commerce Commission investigation into its extended warranty product.
Michael Hill admitted 12 charges that its Professional Care Plan (PCP) failed to comply with the extended warranty
disclosure requirements of the Fair Trading Act between 31 May 2017 and 30 May 2018.
The PCP includes various services to prolong the life and maintain the appearance of the jewellery item. The PCP
documentation supplied to customers failed to include all of the required information on the front page, including:
• comparing the protections consumers automatically have under the Consumer Guarantees Act (CGA) with the protections
offered by the PCP
• an adequate summary of consumer rights and remedies under the CGA
• a summary of the consumer’s right to cancel the PCP
Michael Hill also admitted one charge that it misled consumers by adding the cost of the PCP onto the price of a
bracelet, without the knowledge of a Whangarei couple who bought it in June 2016. The couple were later refunded the
cost of the PCP after complaining to Michael Hill.
Commissioner Anna Rawlings said “the law clearly sets out the information that must be provided to consumers when
selling an extended warranty. 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. 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. 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. The consumers were effectively ‘guiled’ into paying for the warranty
Guidance for businesses
The Commission has published this fact sheet for businesses, on selling extended warranties
The key requirement is that the front page of an extended warranty document must contain key information, including a
summarised comparison between the relevant CGA guarantees and the protections provided by the extended warranty
The rules are intended to help consumers make informed choices about whether they are better protected with an extended
warranty than without one, whether they want or need the extended warranty, and whether it is worth the price they are
required to pay.
Advice for consumers
Our website has advice for consumers
, including episode 10 of the Commission’s animated series It’s All Good
which focuses on extended warranties.