Retailers’ extended warranties give no more cover than existing consumer rights, Choice says Law (Australia)

Australian consumers are being sold extended warranties that provide no more cover than standard legal rights, the consumer group Choice has claimed.

Choice bought products from 80 stores in the Harvey Norman, JB Hi-Fi and The Good Guys chains.

It found 91% of the stores tried to sell extended warranties, and claimed 71% provided misleading information on a consumer’s rights if their product broke beyond the warranty period.

They often suggested that consumers had to pay for repairs themselves after the warranty period, and used those discussions to suggest consumers buy an extended warranty, the investigation found.

But consumers are entitled under the law to a repair, refund or replacement for a major fault within a reasonable amount of time of buying a product.

Marg Rafferty, the editorial director of Choice, said the law provided for full reimbursement if a product was faulty.

“Existing consumer rights provide all the protection you need against faulty products, so it’s incredibly disappointing to see these big retailers pushing these poor value extended warranties onto consumers during a cost of living crisis,” Rafferty said.

In some cases an extended warranty might offer a voucher to reimburse a consumer if a product fails, she said.

“But actually, under the consumer law, you’re entitled to ask for reimbursement for losses that happen as a result of a faulty product and there’s no dollar limit on it. Whereas the extended warranty will say you can request $100, but that’s actually selling short what you’re already entitled to,” she said.

Manufacturers’ warranties typically last for one year, but a $2,000 television, for example, would be expected to last more than two years, Rafferty said.

If a product fails under those circumstances the retailer is obliged to help the consumer get in contact with the manufacturer.

“People need to go back to the place where they bought the product, and explain what’s gone wrong,” Rafferty said.

“Let that store know that you know you have rights under the consumer law and ask them to provide a remedy that is suitable.”

She said extended warranties were sometimes sold under names such as “extended care” or “product protection” and upsold to customers at the checkout.

“We have seen examples where they’re automatically added to the product’s sale, especially online, you’ll see them added to your basket at checkout and you’d have to untick it,” Rafferty said.

None of the stores where Choice bought the products responded to a request for comment.

A spokesperson for the Australian Competition and Consumer Commission said in a statement that it had engaged with Choice as part of its investigation.

“The ACCC is concerned that the current consumer guarantees framework under the Australian Consumer Law does not provide sufficient incentives for businesses to comply with their statutory obligations.”

The spokesperson said the ACCC continued to advocate for law reform to compel retailers to meet consumer guarantee obligations and to make it illegal for manufacturers not to reimburse consumers when a fault in a product was the responsibility of the manufacturer.

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