CA: Having resilient consumers ensures fair trading

The Netherlands Consumer Authority (CA) will take action against companies in the electronics sector that provide consumers with incorrect information about warranties that can be bought in addition to the item purchased or about extended warranties that consumers can take out when making their purchase. The CA made a statement to this effect when it presented its 2008 annual report. An investigation by the Consumer Authority into extended warranties or warranties that can be bought in addition to the item purchased has revealed that these warranties do not often provide more or do not provide a great deal more than the statutory rights that the consumer already has. Warranties that are bought in addition to the item purchased may however give rise to less discussion for the consumer if they demand a solution from the salesperson that is free of charge should a fault occur to the product after the manufacturer's warranty has expired. Marije Hulshof, Director of the Netherlands Consumer Authority, explains: "We have found that consumers who pay for an additional warranty pay a great deal of money for rights that they already enjoy in the form of statutory rights. The role of the CA is to ensure fair trading between companies and consumers. We take action against companies that fail to comply with the rules and regulations. In addition, we will continue to do everything within our power to make consumers more resilient by means of our consumer information portal ConsuWijzer. Consumers who know their rights are the most effective way to ensure fair trading."

Investigation into the additional purchase of warranties

The CA has carried out an investigation into additional warranties in the electronics sector, involving six companies that together have over 180 locations. This investigation revealed that, in practice, the additional purchase of warranties does not offer many additional extras on top of a consumer's statutory rights. These companies actively offer the opportunity to purchase additional warranties in sales talks. In these talks, consumers are not always fully and correctly informed about what such additional warranties offer compared with the warranty rights that consumer already have. As a result, consumers may decide to purchase such additional warranties on false grounds. The sales that the companies under investigation achieved with the additional warranties were over EUR 36 million in 2007 and 2008. On average, an additional warranty costs EUR 62. The CA suspects that, when such warranties are sold, incorrect and/or incomplete or misleading information is provided. That may constitute a violation of the Unfair Commercial Practices Act. The CA will take enforcement actions when it establishes a violation.

The Netherlands Consumer Authority in 2008

In 2008, the CA imposed five penalties for a total amount of EUR 658,000. In addition, commitments were agreed with two companies to bring their behavior in line with the law. In 2008, the CA completed 160 national and 51 international investigations. Ms. Hulshof explains: "We are still observing many violations of consumer protection rules. In most cases, companies clean up their act after a warning from the CA, but sometimes, more action is needed to have them do so. In such situations, we will not hesitate to use our powers."

In 2008, over 90,000 individual recommendations were issued to consumers via ConsuWijzer about their rights. The website has been visited over 1 million times. Ms. Hulshof adds: "Consumer empowerment continues to be an important objective. On the one hand, it ensures that businesses fulfil their obligations. On the other hand, it is important that consumers know their rights and also actively exercise their rights. The CA will continue to use ConsuWijzer as an instrument to keep a close watch on trends and developments in order to be able to tackle the most obvious violations."