Lumley Retail Warranty has agreed to change “potentially misleading” extended warranty brochures, the Australian Competition and Consumer Commission (ACCC) says.

The company, which is a part of IAG-owned WFI Insurance, is an underwriter and claims administrator for electronic and whitegoods retailers that sell extended warranties, also called customer care plans, to consumers.

The ACCC was concerned the customer care brochures, in circulation since 2011, did not adequately identify the degree of overlap between remedies available under the extended warranties and those already available under the Australian Consumer Law.

ACCC Deputy Chairman Delia Rickard says many consumers buy extended warranties because they do not realise the extent of protections provided by consumer law.

“It is very important that extended warranty products being sold to consumers should clearly identify the benefits they are providing that go beyond those rights and remedies already available to consumers, and that representations made at point of sale do not mislead consumers about the extent of the benefits being acquired,” she said.

The Australian Consumer Law gives consumers sold faulty products rights to repair, replacement and, where there is a major failure, refunds, plus consequential damages in some circumstances.

These rights exist for a reasonable time from the date of supply, regardless of any express manufacturer’s warranty or extended warranty bought in addition by the consumer. 

Lumley has acknowledged the ACCC’s concerns and volunteered a court-enforceable undertaking to amend its brochures.

It will also provide consumer law compliance training to its own and retailer staff.

“The undertakings… are significant because they reach beyond the direct actions of the underwriter of these extended warranty plans and will influence representations about the benefits of the plans that are made at the time of sale to consumers,” Ms Rickard said. 

“Lumley is the first underwriter in the industry to agree to roll out such a program, and the ACCC acknowledges and welcomes the industry lead taken by Lumley by committing to the steps contained in this undertaking.”

The ACCC will encourage other extended warranty underwriters to adopt similar measures.