Consumer Affairs asked to investigate National Warranty Company

The National Warranty Company (NWC) sells warranty products to people buying new and used motor vehicles. But Consumer Action recently had concerns about a NWC ‘Grand Warranty Plan’ provided in 2012 and the level of protection it provides.

We’ve asked Consumer Affairs Victoria (CAV) to investigate whether under NWC’s ‘Grand Warranty Plan’ consumers are (at least in part) paying for protection they already get for free under the Australian Consumer Law and if so, whether this is a breach of the Australian Consumer Law. Under the Australian Consumer Law, consumers are entitled to a refund or replacement if a product (including a motor vehicle) is faulty, unsafe, does not work or appear as it should.

We’ve asked CAV to look at:

  • Clause 1 of NWC’s Grand Warranty Plan which sets a monetary limit for payouts of $1,000 for the cost of repairs and limits the components of the car that are covered under the warranty—the Australian Consumer Law doesn’t limit a consumer’s rights to repair in this way;
  • Clauses that we believe put unreasonable requirements on the consumer, such as Clause 3 which states coverage is excluded where there is a failure to follow the servicing requirements under section 4. The section 4 requirements include an obligation to service every 3 to 6 months depending the age of the car and to send all service invoices to NWC within 7 days;
  • NWC’s blanket discretion to cancel the policy, whilst the customer is not able to cancel in any circumstance;
  • The requirements placed on the customer when wanting to transfer ownership of the warranty; and
  • The requirement of an excess of $200 payable on any claim, given that a consumer isn’t required to pay an excess or meet any other pre-conditions to access remedies under the Australian Consumer Law.

It is really important that consumers know what protections they get for free under the Australian Consumer Law and be able to compare this to what they might get under an extended warranty. Given the significant cost of this type of product—up to $875 for 12 months and $1,125 for 24 months—Consumer Action strongly encourages consumers to think very carefully before buying.

Print Friendly, PDF & Email