WFI Insurance Limited trading as Lumley Retail Warranty - s.87B undertaking

The Australian Competition and Consumer Commission (ACCC) has accepted a court enforceable undertaking volunteered by WFI Insurance Limited (trading as Lumley Retail Warranty)(Lumley) following an investigation into potentially false or misleading representations about consumers’ rights under the Australian Consumer Law (ACL) made in extended warranty brochures.

Lumley is an extended warranty underwriter and claims administrator for a number of Australian retailers of household electronic and white goods who sell extended warranties (known as customer care plans) to consumers.

The ACCC was concerned that the brochures did not sufficiently identify the degree of overlap between the remedies available under the extended warranty customer care plans purchased by consumers and those already available to consumers  under the consumer guarantees contained in the ACL.  As a result, the ACCC considered that the brochures had the potential to mislead consumers.

The ACCC also considered that current and/or past versions of the brochures contained potentially false or misleading representations to the effect that:

• the cost of the customer care plan to the consumer did not include any costs for benefits which overlap with the ACL, when in fact certain costs may have been for benefits that did overlap with the ACL;
• the customer care plan provided some benefits which may overlap with the ACL, when in fact those benefits did overlap; and
• the benefits to a consumer under the customer care plan were in addition to the consumer’s rights and remedies under the ACL, when in fact some benefits of the plan overlapped with ACL rights and remedies and were not in addition to those rights or remedies.

Lumley has acknowledged the ACCC’s concerns, including that these representations potentially contravened the ACL. To address them, it has committed to taking the following measures in a court enforceable undertaking for a period of two years:

• revise the customer care plan brochures to include information necessary to facilitate a comparison of the features of the plan against the remedies available under the ACL;
• provide compliance training to Lumley and retailer staff; and
• design and work with retailers to implement a program for monitoring and if necessary improving retailers’ practices of selling customer care plans.