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Manufacturers' Warranties - ACCC adopts a

commonsense approach to strict new rules

Thursday, 27 October 2011


The ACCC has quietly announced an intention to adopt a commonsense approach to enforcement of new rules that require prescribed information to be included in statements of manufacturers’ warranties.  These rules would otherwise mean that many products currently in stock or on route to Australia would become illegal to sell from 1 January 2012.

The ACCC has now said that:
  • until September next year, it will not enforce the requirement to remove old warranty cards from products packed prior to 1 November 2011 if doing that would create ‘serious practical difficulties’, provided the new mandatory warranty information is still given to the consumer; and
  • it will not require warranty statements on product packaging to comply with the new rules if the product has a separate warranty card that complies with the new rules.
This new guidance provides welcome relief to many businesses who are struggling with the new rules.  Nevertheless, companies that sell consumer products that have still not updated their warranty statements need to act now.

More details on the ACCC’s guidance and its practical consequences are provided below.

Background

From 1 January 2012, a manufacturer’s warranty card, or any statement about warranties made to a consumer at or around the point of sale, must contain mandatory information including prescribed text describing the consumer’s statutory rights.  These requirements are described in our June 2011 e’Newsletter. 

Dealing with current stock

The new rules mean it is illegal to supply a warranty card in Australia unless it has been specifically written for the Australian market.  Many products sold in Australia are imported with international warranty cards in their packaging.  Since such products often have long lead times between manufacture and ultimate sale to consumers, there are still high levels of stock containing international or non-compliant warranty cards.  Read strictly, the new rules mean that from 1 January, these warranty cards or statements must be removed before products can be sold. 

The ACCC has responded to this concern by stating that until September 2012 it is unlikely to take enforcement action for non-compliant warranty cards where:
  • the product was manufactured and packaged prior to 1 November 2011;
  • there are ‘serious practical difficulties’ involved in updating warranty documents inside the package; and
  • the supplier has taken all reasonable steps to ensure that a compliant warranty card has been provided to the consumer (such as by attaching a new warranty card to the outside of the packaging).
The ACCC has supplied little guidance on what it considers to be ‘serious practical difficulties’, offering only the specific example of tamper-proof packaging.  It is possible that the mere cost of opening and resealing normal packaging will not be considered by the Commission to be a ‘serious practical difficulty’. 

Suppliers who wish to take advantage of the new guidance should:
  • keep careful records as to the ‘practical difficulties’ involved in removing existing warranty cards; and
  • take reasonable steps to ensure that consumers are aware of the revised warranty cards, such as by printing it on brightly coloured paper and including prominent wording that it is the warranty that applies to the product.
Warranty statements on packaging

Read strictly, the new laws require any mention of a manufacturer’s warranty on a product’s packaging to contain the mandatory information.  The ACCC has confirmed that it will treat the provision of a compliant warranty card with the product as satisfying the law.  This means that a warranty can be promoted on packaging without the mandatory information as long as the product is supplied with a compliant warranty card.

However, the ACCC has also confirmed its view that if no separate warranty card is provided, any warranty statement on packaging must contain all the mandatory information.  It will be insufficient to refer to a website or other material.  This creates serious difficulties for small products, such as batteries, where packaging is too small to fit all of the new statutory information.

The ACCC guidance also still does not address other point of sale material that may include warranty statements, such as product brochures.  Although it appears that the ACCC’s primary concern is to ensure that consumers are provided with the required warranty information with the product, strictly interpreted, any brochure or other document that includes warranty information that may be given to consumers at the time of sale must also contain the mandatory information.

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