National Warranty Company (NWC) has agreed to make changes to its extended vehicle warranty (ETW), which is mainly sold through used-vehicle dealerships, following concerns raised by the ACCC.

The ACCC was concerned that:

• the product name, ‘Extension to Manufacturer’s Warranty’, could mislead consumers into thinking they received cover on the same terms as the vehicle manufacturer’s warranty (which was not the case)
• The ETW had some exclusions and financial limitations not normally found in a manufacturer’s warranty
• Certain statements in the product’s terms suggested that the warranty benefits applied in addition to the statutory guarantees under the Australian Consumer Law (ACL), when in fact there was clear overlap with those consumer guarantees.

As a result, NWC has renamed the product to ‘Optimum Warranty’ and agreed to make several amendments to the product’s terms.

For product manufacturers, clearly it is very risky to describe an extended warranty as being ‘in addition’ to any ACL guarantees; any extensions should be described by reference to your standard manufacturer warranty!