Some of Australia’s biggest retailers are misleading customers about their right to repairs or replacement items, instead pushing “poor value” extended warranties on products.
That’s the conclusion of consumer advocate CHOICE, following research that says some of our largest retailers, including Harvey Norman, JB Hi-Fi and The Good Guys are selling unnecessary extended warranties.
The survey found 71 per cent of stores gave customers misleading information about their consumer rights if a product broke outside the standard warranty period.
You may already be protected under Australian law
Under Australian Consumer Law, customers have a basic set of rights known as ‘consumer guarantees’. These include a promise that the product should be free from defects and is fit for purpose.
These laws also compel a business to repair defective products if they break within a reasonable time frame, even if that is outside the manufacturer’s warranty period. If it can’t be repaired, the laws call for a replacement item or a refund.
These rights are automatic and cannot be negotiated away by either party. Warranties offered by a business on its products is in addition to these consumer guarantees, not in place of them.
Marg Rafferty, editorial director at CHOICE, says more than 91 per cent of stores surveyed tried to sell them extended warranties that covered little more than was covered by consumer laws.
“When we asked about consumer rights outside the manufacturer’s warranty period, stores tried to sell us extended warranties, which are not much more than a sneaky sales tactic designed to squeeze more money from concerned customers,” she says.
“Existing consumer rights provide all the protection you need against faulty products, so it’s incredibly disappointing to see these big retailers pushing poor value extended warranties onto consumers during a cost-of-living crisis.”
Are businesses accountable?
It’s illegal for a business to breach consumer guarantees, but there are no penalties for misrepresenting existing consumer protections.
Ms Rafferty says CHOICE’s mystery shoppers were told by store employees that “if it’s [the broken product] over two years, you have to pay for repairs yourself” and “after the manufacturer’s warranty there’s nothing we can do, it’s out of our hands”.
Read: Why we need a vehicle ombudsman for second-hand car sales
Both statements are not correct under Australian consumer law.
“Without fines for doing the wrong thing, too many businesses are getting away with telling consumers they’ll be denied their right to a repair, replacement or refund when something goes wrong with a product or service,” Ms Rafferty says.
Do extended warranties have any place in the purchase process?
Former consumer rights expert from CHOICE Julia Steward said that people should not “waste their money on an extended warranty”.
“Many extended warranties largely replicate or underplay your existing rights under the Australian Consumer Law. They’re a sales trick to squeeze more money out of you that ignore your existing rights. If someone tries to push an extended warranty on you, ask them ‘what does this give me beyond the Australian Consumer Law’?
“Remember, your rights are often longer and more comprehensive than what you receive from a warranty. Your rights aren’t one-size-fits-all.
“Under the law, the products you buy should be eligible for refund, replacement or repair depending on the expected lifespan of the product. Not what the company says the warranty is,” Ms Steward explained.
What to do if something goes wrong with your purchase
- Contact the retailer with proof of purchase. Explain the issue clearly and ask for your preferred solution (a refund, replacement or repair). Provide your proof of purchase and be clear about what you want. Be firm, but polite in asking for your refund, repair or replacement.
- Escalate. If you are unhappy with the response, write a formal complaint to the business. Articulate your rights under the Australian Consumer Law and what you expect. Using the language of the Australian Consumer Law in a direct and formal way can help you assert your rights. Articulate how you believe the law has been breached, put it in writing and escalate to someone higher.
- Take it further. If a retailer is not following the Australian Consumer Law, your local consumer affairs or fair trading body can sometimes mediate or help you with your next options. Consumer affairs or fair trading in your state or territory are a good next step if you’re unhappy with the retailer’s response. It’s important to tell these bodies, so they can act if there’s a broader issue at play.
- Contact your bank. Consider asking for a debit or credit card chargeback, as in some circumstances your bank may refund you.
What are you looking to buy at the Boxing Day sales this year? Have you ever purchased an extended warranty? ? Did you ever need to use it? Do you think they’re a waste of money?
In my opinion, extended warranties are nothing more than a rip-off. It has never been necessary for me to use it because in most cases, the manufacturer’s warranty has been more than adequate in my experience.
And the disgraceful behaviour of Harvey Norman, JB Hi-Fi and The Good Guys etc continues with impunity. The Albanese government needs to correct the failing of the previous Morrison do-nothing government and impose massive fines for this egregious flouting of the law.