The Warranty Fraud

•’Blame patrons for buying goods without franchise’
•It’s unacceptable that a producer, distributor or trader’ll attempt to vitiate the right of consumers -Atoki

Warranty or guarantee clauses in sales agreement appear to be mere nomenclatures. This, according to this report by Isioma Madike, is mainly due to the nonchalance of marketers, who feed fat on unsuspecting patrons who are left to bear the burden of the inadequacies of their products.

Naomi is a graduate of Physiotherapy from the Obafemi Awolowo University (OAU), Ile Ife, in Osun State. She has been distraught for about two months now.
She had bought a Samsung brand cellphone, from a dealer who has a franchise of the popular Slot to sell from its shop at the equally popular Computer Village, Ikeja, Lagos, sometime in January.
Naomi was excited to have bought a new cellphone preparatory to her one year internship programme at LASUTH. But her excitement was short-lived. The cellphone malfunctioned after just two weeks. And she took it back to the dealer hoping to either get a refund or a replacement.
That was not to be.
She was asked to drop the faulty cellphone for repairs. But, it has persistently been defective, despite efforts by the dealer’s technicians to rectify it.
An Ogba, Lagos-based estate agent is in a similar mess as the car dealer he bought a Honda brand from, a popular car dealer somewhere in Ikeja, has refused to handle his complaints. He is worried that the anti-lock brake system, ABS light of the car has remained defective ever since he bought the car in November 2024.
ABS is an innovation in modern automobiles that is capable of guiding the car from skidding when the brakes are suddenly applied even on slippery and wet roads.
There are those who have been lucky somehow. One of them is Anthony, a banker with one of the new generation banks on the Island, who had, some years back, acquired a Tokunbo Toyota Camry brand, popularly known in Nigeria as “Big Daddy.
About six months later, Anthony indicted the dealer for delivering a faulty car.
The dealer’s decision to replace the car was prompted by the warranty the buyer was entitled to under the conditions of purchase established between them.
But Ojomo was, however, not as lucky. The Japan made Toyota car he purchased from a dealer in Agidingbi, Lagos, was not replaced when it was found to be malfunctioning. It is, however, not clear what terms of purchase were agreed upon by both parties.
Grace Oguche, who lives in the Agbado area of Lagos, took a similar swipe at a smart television dealer last year, when she demanded replacement of a faulty Life is Good (LG) television brand she bought in a shop at Oshodi, Lagos.
The trader, after much argument, chose to refund Oguche’s money.
Many other cases abound where unsuspecting customers are left to bear the loss arising from product inadequacies. Some sellers complicate matters by interchanging warranty and guarantee even when both clauses differ.
While warranty is the trader’s undertaking that the product sold came from him, fit for use, and that he would accept responsibility for repairs needed over a specified period. Guarantee only implies a formal promise or assurance that the product is of a specific quality.
An interior decorator, Madu Odinma, believed that an oil pump he bought recently from a spare parts shop along Akilo Road, Agege, Lagos, was guaranteed until it malfunctioned. Odinma was shocked when the seller refused to accept responsibility for damage to the oil pump as he claimed it was sold under good condition.
What happened to Odinma is a worrisome trend as modern automobiles unlike the older models and versions are increasingly becoming more complex and easily susceptible to damage, apparently due to the great deal of electronic contraptions inherent in them.
In Nigeria, warranty issues primarily arise from consumers facing difficulties enforcing their contract rights when products malfunction.
This is often due to unclear terms in the warranty, lack of readily available service centres, and challenges in reaching out to manufacturers or sellers to process claims.
This is the reason the Federal Competition and Consumer Protection Commission (FCCPC) serving as the primary agency to address such complaints and advocate for consumer protection regarding warranties was created.
Products and goods that often experience warranty or guarantee issues include: electronics like smartphones, laptops, TVs, appliances (refrigerators, washing machines), power tools, complex machinery, vehicles, clothing with specific performance claims, and high-end luxury items; where issues can arise from manufacturing defects, improper usage, wear and tear exceeding the warranty period, or unclear terms within the warranty document itself.
The common problems about warranty/guarantee issues are: Faulty components, premature failure, malfunctioning features, cosmetic defects, damage due to mishandling, issues related to battery life, or performance not meeting advertised standards.
Over time, millions of vehicles had been recalled by car makers worldwide because of potentially dangerous safety faults.
A Benin-based lawyer, Emmanuel Nwaghodoh, told Saturday Telegraph that client protection takes the form of warranties and guarantees.
Although he said, these concepts are similar in the sense that they all provide protection for parties; a closer look, however, will reveal that each concept is very different and are all of tremendous importance where the protection of interest is concerned.
He said: “A warranty is a tool used in a transaction to assure a party to a contract of the existence of a fact, oftentimes relating to the title, quality, or quantity of the subject matter, upon which the other party may rely.
“A breach of it gives the aggrieved party the right to claim damages but not to treat the contract as repudiated.
“However, warranties may vary depending on the nature of the transaction and the negotiation strength of the parties. Damages for breach of warranty are calculated on a contractual basis and aim to mitigate the loss or damage.
“Whereas, guarantee only implies a formal promise or assurance that the product is of a specific quality, and is effective until revoked or extinguished by some rule of law or the express intention of the guarantor.”
The automotive world buzzed about the massive airbag recall covering many millions of vehicles in the United States of America a few years back.
The issue involved defective inflator and propellant devices that may deploy improperly in the event of a crash, shooting metal fragments into vehicle occupants.
Approximately 42 million vehicles were potentially affected in the United States, and at least seven million were recalled worldwide.
Takata automobiles were in a similar situation in 2013. Initially, only six makers of its products were involved when it announced the fault in April of that year.
But a Toyota recall in June 2016, along with new admissions from Takata that it had little clue as to which cars used its defective inflators, or even what the root cause was, prompted more automakers to issue identical recalls.
In July 2016, another auto company forced additional regional recalls in high-humidity areas including Florida, Hawaii, and the U.S. Virgin Islands to gather removed parts and send them to Takata for review. That was not all.
Another major recall that occurred in October 2016 expanded the affected vehicles across several brands. For its part, Toyota replaced defective passenger-side inflators.
The Chrysler Group’s recall of 13,000 Dodge Chargers and Chrysler 300s due to anti-lock brake problems made bold newspaper headlines. Throughout the years, the auto industry has let some devastating design flaws slip through the cracks of the production line.
As a result, some of the world’s most popular cars have been subjected to recalls exceeding more than a million models at a staggering cost to their manufacturers.
Ironically, hardly are the recalls extended to the local markets, especially Nigeria, where some vehicles have been discovered to have defaults from the assembly lines.
The dealers are thus always locked in battle with their patrons who demand warranty claims on abnormalities discovered in their vehicles.
The process of recalling vehicles, according to one dealer, who did not want his name in print, could only be prompted by interplay of forces.
This, he said, could involve an outright manufacturer’s default or sudden discovery of an unusual performance by the vehicle in question.

He, nonetheless, noted that hardly would any manufacturer acknowledge any problem that resulted from the carelessness and negligence of the user of the product. Such products, he added, are expected to be operated according to the maker’s specification.
“Blame patrons for their woes. The majority of them move to patronise vehicles without a franchise. Manufacturers only work out special agreements with their appointed distributors worldwide to cater for claims arising from basic faults that are not prompted by negligence of the user,” he said.
But an automobile workshop owner, who also craved anonymity, fingered the nation’s ineffective consumer protection agency, for the increasing risk consumers suffer in recent times.
He said: “Where there is consumer protection, there would be a level of expectation, especially when parting with your money. Once that level is not provided, then something has gone wrong.”
According to him, patrons should not use warranty as a means to defraud dealers and the traders should not also stipulate that the product must be repaired at the authorised seller’s workshop. But rather that repair should be done according to the manufacturer’s specification, using the approved parts.
There are also those who have urged the National Automotive Council (NAC), for instance, to be on guard for ‘untropicalised’ vehicles imported into Nigeria, describing them as models susceptible to the harsh climate conditions of the tropics.
The National Automotive Policy provided for the establishment of the National Automotive Council as the agency that will carry out its objectives. Act No. 84 of August 25, 1993, was promulgated to back up the establishment of the Council as a Parastatal of the Federal Ministry of Industry.
It is a common practice in this civilised age for nations to make laws that are designed to protect the interest of its citizenry in the course of buying and using goods or services.
This action, usually referred to as consumer protection, guards against exploitation of consumers, reduces risk of exposure to harm from the usage of goods and services as well as provides a platform for the consumers to seek redress in the event where this inadvertently happens.
In Nigeria, this is provided for in the Consumer Protection Council Act, under Chapter C25 Laws of the Federation of Nigeria 2004. It is an act to provide for the establishment of the Consumer Protection Council and for matters connected therewith.
But a high level of ignorance among the Nigerian consumers seemed to have impeded that.
However, the phenomenon is not only predominant among the majority of illiterate Nigerians but also among the literate and even the well-educated. The number of Nigerians aware of the existence of this parastatal of government, which is backed by law, can be said to be very small.
The number is sure to further reduce if one seeks to know those that have sought redress through the Council or any other means at all.
The good news for vehicle buyers and all patrons is that the former Director-General, Consumer Protection Council (CPC), Mrs Dupe Atoki, had announced that the agency was set to use all within its powers to ensure manufacturers and business owners entrench guarantee and warranty policy on their goods and services in the country.
Atoki had accused manufacturers and retailers of short-changing consumers by their failure to honour guarantee/warranty terms and abuse of consumer rights with ouster clauses.
“The situation in Nigeria is a sharp contrast as traders boldly print on purchase receipts terms like ‘no refund of money after payment’ and ‘goods received in good condition cannot be returned’.
“It is unacceptable that a producer, distributor or trader will attempt to completely vitiate the right of the consumer to redress by caveats of this nature. The statement should not be a blanket one, it should be subjective.
“This is because on the face value the product may look okay while it may have a manufacturer’s defect which can only be detected when the buyer puts it to use.”
The ex-CPC boss had pointed out that even multinational corporations that adhere strictly to the tenets of implied or specified guarantee and warranty in other countries, come up with all sorts of devices in Nigeria to renege on the same.
While describing the situation as pathetic, she had advised businesses operating in the country to emulate their counterparts in other climes where “the concept of guarantee and warranty is not taken for granted.
“Manufacturers in those countries do not only strive to produce according to specifications, they also make after-sales-service an integral part of their marketing strategy.
“As a result, businesses in such climes have clearly articulated policies on return, repair, replacement or refund of money for products which do not meet the expectation of consumers.”
She had added that the almost non-existent after-sales service culture among businesses in the country had denied Nigerian consumers of simple redress of their complaints without the intervention of the council.
According to her, “it is a common occurrence to see businesses invent reasons to justify why consumers should not derive the desired benefits from their purchases.”
She further said: “It is disheartening, for instance, to see a consumer purchase a product, which should serve for a number of years, but malfunctions after a few weeks, without any indication of support from the supplier.
“In countries where consumer satisfaction is at the heart of business, such occurrences will trigger a spate of investigations to enable the producer to unravel the real cause of the problem, with a view to forestalling the same in future.
“But here in Nigeria, save for evidence of purchase receipts, some companies will go as far as disowning the product.”
Lending credence to what the CPC boss said, Dr Paul Angya, then boss of Standard Organisation of Nigeria (SON), had questioned retailers’ print of “goods sold in good condition cannot be returned”, on receipts. He wondered if “this is in anticipation of a product failure or a guarantee on the quality of a product.”
Decrying the anomaly, Angya had noted that the standards of product liability NIS 506, 2006 stipulates that suppliers of goods and services have the responsibility and obligation to ensure that defective products and services are not sold to consumers.
Barrister Ken Ukaoha, ex-President, National Association of Nigerian Traders (NANTs), in his submission, regretted that traders are usually blamed when the terms of guarantee and warranty are not implemented.
“Traders are not necessarily the manufacturers. They (manufacturers) are the only ones who can implement the warranty clauses. Traders are just the intermediary and their roles should be clearly specified,” he said.