Jeweler Michael Hill fined $ 169,000 for misleading price by his clients

A couple who bought a bracelet from the jewelry company Michael Hill discovered that he had bought a $ 149 extended warranty without knowing it.

Now, the company has been fined $ 169,000 for breaking the fair trade law and misleading buyers about the price.

A staff member had told the Whangarei couple that the bracelet was on sale in a week and that she could give it to them at the selling price, but had to send them the receipt after the start of the sale.

They accepted, but when they received the receipt, they found that the $ 1,803 they had paid included $ 149.90 for a professional care plan or extended warranty they did not accept.

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Thursday, Michael Hill New Zealand Ltd. pleaded guilty to 12 counts of breach of the Fair Trading Act by not complying with the manner in which the extended warranties should be set forth and to a charge of making a false or misleading statement about the price of a bracelet in June 2016..

Wellington District Court Judge Denys Barry fined the company $ 144,000 for violating the Fair Trade Act. The charges are offenses and do not result in convictions.

He declared the company guilty of misreporting and fined him $ 25,000.

In a statement, a spokesman for Michael Hill said that the company "cooperated fully" with the Trade Commission and that even though they had chosen not to challenge the technical classification of a professional protection plan ( PCP) as an extended warranty, continue to use the plans in the future.

"PCP continues to be a unique and valuable service arrangement that allows our customers to benefit from services other than those provided under the Consumer Guarantee Act and will make the necessary changes to our sales brochure to reflect the extended warranty classification, which includes a comparative chart in the terms and conditions to clarify and differentiate the protections of the Consumer Guarantees Act and the benefits and unique services of a PCP.

"This was an isolated incident in which a refund had been provided to the customer within fifteen days of its purchase, as soon as the company had learned that the sales professional may have not be followed the appropriate procedure on this occasion, "said the spokesman.

The Trade Commission took a brief overview of a year to show that there were 76,306 12-month warranties, with total sales of $ 8.8 million likely to harm consumers, said the judge.

"In this case, the consumer was prompted to pay for the guarantee without knowing that he was doing it or having a choice."

Although there is a potential for further loss, it was just one incident committed by a rogue employer who had not followed the procedures described by Michael Hill, said the judge.

"The sins of the employees must be visited on the principal.This was a unique case in this sense."

The guarantee itself did not contain all the information that the client would have needed, said the judge. There was no comparison between what was offered by the guarantee or the Consumer Guarantee Act (CGA) and did not provide complete information about the customer's right to cancel .

The judge stated that the company had procedures in place, reimbursed the couple and cooperated with the Commission.

The lawyer of Michael Hill New Zealand Ltd, Linda Clark, said that it was not true that the company had been very careless.

Information was available and the company proposed a longer cancellation period than required by law.

It was acknowledged, however, that the summary of client rights was not adequate, she said.

The company had no previous convictions.

& # 39; A SIGNIFICANT CHALLENGE SET & # 39;

Anna Rawlings, European Commissioner for Trade, said in court that she described Michael Hill's transgressions as a significant set of failings, and not as a mere minor oversight.

In this case, consumers had no immediately discernible comparison between their rights under the CGA and those covered by Michael Hill's Professional Care Plan (PCP), she said.

"The financial loss suffered by the couple was caused by the confusion between the guarantee price and the price of the bracelet.The consumers were actually pushed to pay for the guarantee product."

The law clearly states the information that must be provided to consumers when selling an extended warranty, Rawlings said.

"This information helps consumers decide if a warranty extension gives them more value than they already have under the CGA, and then decide whether it pays to pay an additional fee," he said. she said.

"The cost of the extended warranty must be clearly defined.When the required information is not provided, consumers who purchase these products may be able to terminate their contracts and obtain a refund of the cost of the warranty."

WHAT IS A PROFESSIONAL CARE PLAN?

According to the Trade Commission, Michael Hill's Professional Care Plan (PCP) program includes a variety of services designed to extend the life and preserve the appearance of jewelery.

In this case, the PCP documents provided to customers have failed to include all the required information on the homepage, including:

• Compare the protections automatically available to consumers under the Consumer Guarantee Act (CGA) with the protections offered by the PCP
• An adequate summary of consumer rights and remedies under the CGA
• Summary of the right of the consumer to cancel the PCP