Michael Hill jeweller fined $169k

A couple who bought a bracelet from jewellery firm Michael Hill found they had also bought a $149 extended warranty without knowing it.

Now the company has been fined $169,000 for breaching the Fair Trading Act and misleading the buyers about the price.

The Whangarei couple had been told by a staffer the bracelet was going on sale in a week and she could give it to them at the sale price but had to send them the receipt after the sale begun.

They agreed but when the receipt arrived, they found the $1803 they had paid included $149.90 for a professional care plan or extended warranty that they had not agreed to.

Yesterday, Michael Hill New Zealand Ltd pleaded guilty to 12 charges of breaching the Fair Trading Act by not complying with how extended warranties should be set out and one charge of making a false or misleading representation about the price of a bracelet in June 2016.

Wellington District Court judge Denys Barry fined the company $144,000 for the breaches of the Fair Trading Act. The charges are infringement offences and do not carry convictions. The company was convicted of misleading, and fined a further $25,000.

A Michael Hill spokesman said the company had been ‘‘fully co-operating’’ with the Commerce Commission and while they chose not to contest the technical classification of a Professional Care Plan (PCP) as an extended warranty, they would continue to use the plans in future.

‘‘PCP . . . entitles our customers to services beyond those under the Consumer Guarantees Act. We will make the necessary changes to our sales brochure to reflect the extended warranty classification, which includes a comparison table within the terms and conditions to clarify and differentiate the protections of the Consumer Guarantees Act.

‘‘This was an isolated incident where a refund was previously provided to the customer.’’

The Commerce Commission took a snapshot of a year to show there were 76,306 warranties in 12 months with total sales of $8.8 million that had the potential to cause detriment to consumers, the judge said. ‘‘In this case, the consumer was guiled into paying for the warranty without knowing they were doing so or being given the choice.’’

While there was potential for more loss, this was a single incident by an employee who did not follow the procedures Michael Hill had laid out, the judge said.

The warranty did not have all the information the customer would have needed, including a comparison between what was offered by the warranty or the Consumer Guarantees Act (CGA), and it did not give full information of the right to cancel.

The company had no previous convictions.