Tyre firm cops $243k fine
A tyre company has been fined $243,000 after breaching the Fair Trading Act in the sale of an extended warranty labelled “road hazard cover”.
The Commerce Commission took legal action against Beau Ideal Limited, previously known as Beaurepaires and now trading as Advantage Tyre Solutions, and filed charges in April.
Anne Callinan, the commission’s deputy chair, says: “Beaurepaires is a large and long-standing company that should have taken more care to ensure they complied with the law and consumers got a fair deal.
“The lack of processes and staff training resulted in customers being charged for road hazard cover without their awareness or consent, and without the necessary information given to them.”
The commission says Beaurepaires’ invoicing system automatically added road hazard cover to all customer quotes for tyre purchases and required customers to opt-out if they didn’t want the product.
Consumers were reliant on Beaurepaires’ employees to tell them about the additional product and manually remove the cover from the quote if requested.
In the judgement, Judge Stephen O’Driscoll says “an informed decision could not be made by the customer whether to accept or decline road hazard cover. This was deceptive and unfair conduct on the part of the defendant.”
Callinan adds taking payment for services when customers aren’t aware they’re buying or have not expressed interest in purchasing is “unacceptable behaviour”.
“We encourage all businesses to use an ‘opt-in’ sales approach. This allows consumers to make their own decisions and reduces the risk of breaching the Fair Trading Act,” she says.
“All businesses have a responsibility to be transparent about extended warranties and consumers’ existing rights so consumers can make an informed decision. A service doesn't need to be labelled as an extended warranty to be captured by the Fair Trading Act.
“Retailers must provide specific information when selling an extended warranty to help consumers decide if it offers value over and above the rights already available under the Consumer Guarantees Act.”
