Patterson Cheney Pty Ltd, trading as Patterson Cheney Holden, has paid two infringement notices totaling $13,200 following an Australian Competition and Consumer Commission investigation into its promotional offer of a 'Free Extended Lifetime Mechanical Warranty'.

The ACCC raised concerns as limitations applied to the warranty which effectively negated the 'lifetime' offer. The warranty offer only operated until either the vehicle had reached 175,000 kilometers or the consumer made $3,000 worth of claims.

In addition to the infringement notices, Patterson Cheney Holden provided a court enforceable undertaking to the ACCC to provide affected customers with the option of switching to its premium warranty product. It will also implement and maintain a trade practices compliance program and publish corrective notices on its website and in The Herald Sun and The Age.

Patterson Cheney Holden operates motor vehicle dealerships in Victoria, selling new and used vehicles. It advertised on 15 October 2010 in The Herald Sun and 16 October 2010 in The Age that during a three day sale it was offering consumers a 'Free Extended Lifetime Mechanical Warranty' for new and used vehicles purchased at its Vermont dealership.

Patterson Cheney Holden admits that it made a misleading representation when making the 'Lifetime Mechanical Warranty' statement, as the warranty was subject to significant limitations.

"This matter is a warning to the motor vehicle industry that dealerships need to be truthful in their advertising and avoid exaggeration when promoting vehicles," ACCC chairman Graeme Samuel said.

"While dealerships are free to offer extended warranties to customers, their advertising of such warranties must be accurate. Misleading statements must not be used to bait consumers."

Mr Samuel said the ACCC considered that the representation by Patterson Cheney Holden contravened section 53(g) of the Trade Practices Act 1974. This provision prohibits false or misleading representations about the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy.