Aussies are being warned to think twice about purchasing extended warranties on items bought at Harvey Norman, JB Hi-Fi and The Good Guys after an investigation found they're little more than "a sneaky sales tactic".
Australia's consumer safety watchdog CHOICE conducted a mystery shop at 80 stores across Australia. Of these, 71 per cent provided misleading information to customers about their rights to a refund, replacement or repair on an item damaged after the warranty period.
CHOICE Editorial Director Marg Rafferty told Yahoo News Australia the finding was "really alarming". "What we found is that 7 out of 10 of the stores we spoke to got it wrong when we asked what our rights were if our purchase broke down after the manufacturer's warranty had expired," she said. The investigation also found that 91 per cent of stores "tried to sell poor value extended warranties" which offer little more than what's already covered under Australian Consumer Law, she added. This means Aussies are "not getting an awful lot for their money," she said.
Aussies are 'paying for rights you already have'
A common example, Ms Rafferty said, relates to damages that occur as a result of a faulty fridge or washing machine. She explained extended warranties might offer consumers the option to request a small reimbursement for "food going off" or "damage to your floor" should their washing machine leak.
"But in actual fact, you're entitled to ask for reimbursement for actual loses incurred as a result of a faulty product under the Australian Consumer Law with the rights you already have," she said. "There's no dollar limit on it either," she added.
Another example might be the "no lemon guarantee" which Ms Rafferty said usually offers a replacement if your product needs "more than two separate and distinct repairs". "But under consumer law, if your product has two minor failures, that adds up to a major failure which means you can request your choice of a repair, refund or replacement. So you're basically paying for rights you already have," she explained.
Major concern for Aussie consumers
Ms Rafferty said they were "shocked" by the results of the mystery shop and said it's "incredibly disappointing to see these big retailers pushing these poor-value extended warranties onto consumers", particularly during a cost of living crisis. She said extended warranties are "not much more than a sneaky sales tactic designed to squeeze more money from concerned customers."
While it is illegal for retailers to breach consumer guarantees, currently there are no fines for breaking this 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," she said.
Ms Rafferty told Yahoo News what Aussies can do if they're faced with a problem, saying it's "really important" to familiarise yourself with your rights under the Australian Consumer Law. Then put it in writing to the store.
"Write a letter or an email and explain the issues that you have and outline the remedy you'd like to see in line with your rights. That often is enough to get a positive result," she said. "If at that point you don't get the outcome you think you deserve, that's when you can escalate it to consumer affairs or governing bodies such as the ACCC."
Do you have a story tip? Email: email@example.com.