Used motor vehicle dealer 2 Cheap Cars has been fined $438,000 for its use of “warranty waiver” documents, which the court suggests are designed to encourage the unlawful purchase of insurance.
According to Commerce Commission, 2 Cheap Cars routinely asked car buyers to sign a warranty waiver from January 01, 2014 to December 31, 2017. This was required of customers who chose not to purchase an extended warranty. The waiver included terms such as:
- “The vehicle you are purchasing does not include a warranty of any kind;”
- “I do understand that 2 Cheap Cars will comply with the Consumer Guarantees Act. I also understand that I am, and would prefer to be, solely responsible for any repair bills;”
- “If any repairs are carried out it will be done by 2 Cheap Cars [L]imited at a time of their convenience and that there are no courtesy cars provided.”
Now, Auckland District Court Judge Robert Ronayne in the Auckland District said the waiver “is blatantly untrue and misleading” and that “[b]y means of misinformation and untruths” creates an impression that unless an extended warranty is purchased “the purchaser had no rights.”
“This must have been designed to encourage (unlawfully) the purchase of insurance product,” the judge said in a written sentencing.
“2 Cheap Cars misrepresented consumers’ rights under the CGA,” Commerce Commission chair Anna Rawlings noted. “It should not have told customers they had no warranty of any kind and it should not have attempted to limit its liability for repairs in the way that it did.
“Conduct such as this puts pressure on customers to buy an extended warranty and deters them from returning to the seller for help if something goes wrong, even though they may have rights under the CGA. As Judge Ronayne notes, 2 Cheap Cars would have profited by avoiding its obligations to repair,” she added.
The Commerce Commission said 2 Cheap Cars earlier pleaded guilty to 10 charges under the Fair Trading Act 1986, following the watchdog’s investigation that opened in November 2017. The fine imposed also includes its “liquidation sale” and “84% off” advertising claims, which Ronayne described as “misleading and careless and, when viewed as a complete advertisement, tantamount to devious.”