Extended warranties are supposed to give you added protection and reliable service if a product breaks down or has a defect after the warranty's run out. But in reality, they can be money paid for nothing.
“A lot of extended warranties aren't worth the paper that they're printed on, a waste of money,” said Anthony Roberts.
Buying virtually any appliance or car, one thing's for sure – sales staff will promote the manufacturer’s three year warranty, and then they'll try to sell you yet another product, an extended warranty.
Extended warranties are a massive business. Two out of three shoppers will buy them when offered. Yet most will never use them, and when they do they find things aren’t as simple as they were told.
Charmaine Turton spent five months chasing her warranty on her new blinds. It was only when she complained to us, and Fair Trading, that the issue was resolved.More stories from Today Tonight
“I purchased an extended warranty for a fridge. The fridge packed it in after about fourteen months, and trying to get a replacement, or the fridge fixed, was almost impossible,” said Anthon.
That was before he became NSW Minister for Fair Trading.
“It wasn't until I threatened to go to Fair Trading that they turned around and offered to replace the fridge. When you do try to use an extended warranty as a remedy, you contact the supplier, who then turns around and says, ‘well it's not really our fault, you'll have to talk to the insurance company’.
“Under the Australian consumer laws, you can go straight back to the supplier and say, ‘there's been a major problem or a minor problem, I want this either rectified, replaced, or a refund’,” said Anthony.
Because fierce competition from online and discount shops is forcing retailers to cut prices to the bone, the big profit margins and sales commissions are now found in extended warranties. But as Today Tonight discovered, the mark-ups are so inflated, you can haggle the price right down.
Harvey Norman gave us an extended warranty for half price. JB hi fi knocked the price down, but made the item cheaper to make it look like warranty was reduced. David Jones didn't mark it down.Know before you buy
Before you purchase an extended warranty, find out:
1. Who’s providing it - the retailer or a third party?
2. Is there a cooling-off period to cancel?
3. Does the warranty cover full replacement or just repairs?
4. Are repairs limited, and how far away is the repairer?
5. Is freight fully covered if your item needs repairs?
“So don't spend hours shopping around for the best price, and then waste all that money you've saved on purchasing an insurance product you don't need,” warned Anthony.Fair Trading NSW