Consumers urged to be wary of extended warranties

Retailers across Australia have had their extended warranty practices examined by consumer protection agencies, including NSW Fair Trading. Fair Trading Commissioner Rod Stowe said the joint operation undertaken during 2013
examined the practices of 141 retailers across Australia, including 23 in NSW.

Mr Stowe said the work built on an earlier national project by consumer protection agencies that closely examined the practices of traders in honouring the consumer guarantee provisions of the Australian Consumer Law.

“The national operation focused on retailers who commonly sell extended warranties with their products, such as whitegoods, electronics and new cars,” Mr Stowe said.

“While many retailers were found doing the right thing, some national retailers need to lift their game with investigations continuing into some traders.”

Mr Stowe said often manufacturers’ warranties were only valid for 12 months, with retailers selling extended warranties to cover subsequent years.

“Consumers need to be aware that their legal rights often outstrip what retailers are trying to sell in an extended warranty and they could be buying an unnecessary warranty product that the Australian Consumer Law already provides,” he said.

“Just because the manufacturer’s warranty on a $3,000 television expires after one year doesn’t mean you have to buy an extended warranty.

“The law protects your purchase because it is reasonable to expect an expensive television to last longer than a year, with or without an extended warranty.”

Consumers are also being misled about their refund rights, with the Australian Competition and Consumer Commission recently initiating action against some major retailers and manufacturers.

Enforcement action has been taken against one retailer, with investigations continuing into another nine across the country.

Mr Stowe said he welcomed news that Choice had independently conducted recent scrutiny of the extended warranty practices of a number of large national retailers and looked forward to examining the outcome of their work.