PB Tech promises change after guilty plea on warranty issues

PB Technologies has pleaded guilty to 14 charges brought by the Commerce Commission what the regulator says were "failings in its extended warranty agreements."

The country's largest chain of computer stores, owned by Pat Huo and Lan Yu, now faces a fine of up to $600,000.

Consumer has described extra-cost extended warranties as "worthless" because they largely replicate rights buyers already have under the Consumer Guarantees Act or CGA (the key exception is business buyers, who are not covered by the CGA).

In PB Tech's case, the charges alleged it failed to give its customers a summary comparing their existing Consumer Guarantees Act rights with the rights provided by the extended warranty, as required under the Fair Trading Act.

Customers were also not given a copy of the extended warranty agreement after paying for it and they were not told their cancellation rights before signing up to the extended warranty.

PB Tech also received a warning over what the commission described as "bait advertising."

A 2016 "Cyber Monday" Apple Watch promotion was sent to 100,000 customers when PB Tech had just 14 units in stock.

“PB Tech admitted that it knew the watches would sell out and two complainants told us they sold out in the first few minutes of the sale. Businesses must remember they should have reasonable grounds for believing they can supply the goods in reasonable quantities when they advertise them for sale," commissioner Anna Rawlings says.

The FTA charges come just days after PB Tech reached a settlement with the Department of Internal Affairs over spam emails. The retailer had been contacting people using information harvested from Trade Me; it signed an enforceable undertaking to stop the practice.

'Now 100% compliant'
"The information we had previously provided to consumers about the benefits of our popular PB Care Programme was not as detailed as it should have been but we have since fixed the issues identified and are now 100% compliant with all New Zealand consumer laws," PB Tech group general manager Darren Smith tells NBR.

Regarding the bait advertising warning, Mr Smith says "We have since implemented better systems for checking stock availability and are now 100% compliant with the Fair Trading Act."

Weak law
The Commerce Commission has recently ramped up its activity enforcing the law over extended warranties.

The Noel Leeming chain, owned by The Warehouse Group, faces similar charges to those brought against PB Tech. The company did not enter a plea when the charges were filed in April (the case was originally due to be heard in the Auckland District Court on May 29, it has now been delayed until July 10).

Earlier this month the commission sent a warning letter to Apple for allegedly misleading consumers by saying they had a two-year warranty (the CGA says goods must last for a "reasonable" amount of time) and allegedly presenting second-hand goods as new when replacing faulty product (Apple declined the opportunity to comment).

Consumer head of research Jessica Wilson says that, despite numerous warnings, and legal actions, retailers are not changing their ways.

Her organisation wants much stronger fines, and the ability for the commission to levy significant penalties – where there is a clear breach – without recourse to the courts.

Certainly, penalties are lighter on this side of the Tasman. 

While PB Tech faces a maximum fine of $600,000, Apple was recently slapped with a $A9 million fine for breaching Australia's equivalent of the Consumer Guarantees Act with its warranty claims.

Are extended warranties worth it?
Is there any situation where it’s worth giving in to the hard sell?

“Very rarely is it worth buying an extended warranty. They can cost several hundred dollars. In most cases, the Consumer Guarantees Act is going to have you covered,” Ms Wilson says.

“The only instance where you might want to consider it is if you’re buying goods for your business or home office. The act doesn’t cover goods bought for business purposes. So in that case, you might want to consider it.”

Where to start
If people think they have a claim under the act, they should always start with the retailer they bought the product from, Ms Wilson says.

If that fails, they could try the importer or the manufacturer but the research head says consumers have fewer rights if they go down either of those avenues.

She advises going straight to the low-cost Disputes Tribunal if a retailer messes consumers around over a Consumer Guarantees Act claim.

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