Consumer guarantees and extended warranties – changes you need to know about

From 17 June, some of the guarantees that your goods and services must meet under the Consumer Guarantees Act (CGA) are changing. Your business also needs to follow new laws if you sell extended warranties.

Changes to consumer guarantees

Three changes to the Consumer Guarantees Act may affect your business from 17 June 2014:

  • All types of sales to consumers will be covered by the Consumer Guarantees Act.
  • You will need to meet a new delivery guarantee when you send goods to your customers.
  • If you sell electricity or gas, you will need to meet new acceptable quality requirements.

All types of consumer sales will be covered by the CGA

All sales of goods and services to consumers will be covered by the Consumer Guarantees Act, including those made through auctions, competitive tenders or online bidding using websites like Trade Me.

See Consumer Guarantees Act (external link)  on the Consumer Protection website for more information.

New delivery guarantee

You must make sure any goods you send or deliver yourself to a consumer arrive in acceptable condition and on time. This means you will be liable to the consumer where goods arrive damaged, late or fail to arrive at all – even when the carrier caused the problem.

These changes increase your liability to consumers. You can help prepare for the changes by:

  • reviewing the terms of your carriage contracts to make sure you are comfortable with the liability provisions
  • getting appropriate insurance, particularly if the items you send are valuable
  • reviewing your claims processes and how you communicate to consumers. The Consumer Guarantees Act requires consumers to bring faults to your attention within a reasonable time, but this might not fall within the timeframe you have agreed in your carriage contract.

Selling electricity or gas

From 17 June, there is a new acceptable quality guarantee in the Consumer Guarantees Act that specifically applies to the supply of electricity or gas. This is the only CGA goods guarantee that electricity or gas suppliers must meet from this date. But you must continue to comply with service guarantees in the Act.

New laws for extended warranties

From 17 June 2014, when you offer a consumer an extended warranty, you must comply with new Fair Trading laws enforced by the Commerce Commission.

Customers will have the right to cancel a warranty within 5 working days of receiving it. You must tell consumers about:

  • the extra protection your extended warranty provides on top of the guarantees included in the Consumer Guarantees Act (CGA)
  • the cooling-off period and how they can cancel during that time.

You will also need to make sure your agreements include certain information on their front page and disclose all the terms and conditions of the agreement.

See Consumer Protection's Warranties (external link) page for more information.

What happens if you don’t comply

If you don’t comply with the new laws for selling extended warranties, the consumer can cancel the agreement at any time and have the right to a full refund. You will also be in breach of the Fair Trading Act, and may be prosecuted or served with an infringement notice by the Commerce Commission.

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