Issue Date:  -  Monday, 27 March 2000

Warranty waivers

Used car buyers should be aware that vehicles usually carry a warranty. This is the message from the Commissioner for Fair Trading, Patrick Walker.

"A recent growing trend that dealers are waiving vehicle warranties as discounts or incentives has caused some concerns for the Motor Vehicle Dealers Board", Mr Walker said.

Whilst a purchaser can apply to the Commissioner for Fair Trading for warranty obligations to be set aside, the Commissioner must be satisfied that the consumer understands and accepts the effect of waiving a warranty. The dealer must also have offered a genuine discount in return for the warranty being waived.

Previously, the dealer’s representative and potential buyer were required to go into the Ministry of Fair Trading for an interview, so that each understood the ramifications of waiving a warranty. Now dealers can fax through applications, the numbers have risen significantly since the process was changed.

Mr Walker said the concerns centered around the fact that some dealers were using the availability of warranty waivers as a marketing tool in advertising, when this was never the intention of the provision.

“Some advertisements have made a selling feature out of the fact that there might be no warranty. The truth is, statutory warranties exist to provide a greater degree of certainty for buyers of motor vehicles and for customers", the Commissioner said.

Mr Walker said there would always be instances where it was appropriate, and suited both parties, to waive the warranty.

“What the board doesn’t want is dealers and customers believing that this is the rule, rather than the exception,” Mr Walker said. The Fair Trading Act, just like the Commonwealth Trade Practices Act, states that any vehicle – including second-hand ones – must be fit for the purpose for which they were bought.

Put simply, even if the statutory warranty is waived, the dealer must not forget that the consumer still retains some protection at law. The Ministry has written to all licensed dealers using this facility explaining the warranty-waiver issue in more depth.

“Obviously the Board wants to make the waiver provision available where the circumstances are appropriate, but it’s not prepared to open the floodgates,” Mr Walker said.

Consumers can obtain free advice from the Ministry of Fair Trading by telephoning 1300 30 40 54 for the cost of a local call state wide.

Media Contact:
Mike Winchester
(08) 9282 0961