Retailers push extended warranties, mislead on consumer rights

Unfortunately, this won’t be a shock to many of us, but our recent investigation highlights once again how major retailers are frequently misleading consumers about their rights to push extended warranties.

CHOICE conducted a mystery shop of 80 Harvey Norman, JB Hi-Fi and The Good Guys stores across the country and found:

  • 71% of stores provided misleading information on a consumer’s rights if their product broke beyond the warranty period.
  • 91% tried to sell poor value extended warranties that often don’t provide much more cover than you already have under the Australian Consumer Law.
  • Stores argued "If it’s over two years, you have to pay for the repairs yourself”, “After the manufacturer’s warranty there’s nothing we can do, it’s out of our hands” and “If something happened after one year unfortunately it’s at your own cost.”

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The only problem I have with consumer law is the absence of adequate definitions for “major” failure or the product didn’t last for a “reasonable” amount of time. How do we overcome my views and store’s views on these terms as I’ve spent some episodes on this one. Wouldn’t it be good if this was made mandatory that the manufacture must specify this time.

The one that amuses me is Nick Scali’s “Lifetime Guarantee”. It’s not to be confused with our lifetime, but the life of the product, and no store staff could tell me what that was for lounge I wanted to buy.

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Agree with that. The ACL is full of wishy-washy terms that are undefined.

‘Entitled to ask’, ‘may’, ‘should’, ‘can’, and the classic ‘reasonable time’.

Interpretation is up to negotiation, and often courts to decide.

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I recently bought a sewing machine from Spotlight. They told me that unless I bought an extended warranty, if I had a problem with the machine I would have to send the sewing machine back to the manufacturer directly, that they wouldn’t accept the sewing machine in the store. This seems deceptive?

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Yep. Under ACL the retailer is the place to go, they own the problem and it is wrong for them to say the maker does.

Have a look at the link at the head of this thread, it covers extended warranties.

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Deceptive? No it is more than that.

It is illegal in two regards.

The seller is responsible for dealing with your warranty issues and that cannot be denied, and forcing the purchase of an extended warranty to maintain rights is also illegal.

If told that in a store I would call for the manager and suggest the person be sent on a training course to understand consumer laws. If the manager said the same thing, I would complain to the head office, and suggest everyone in the store be sent on the training course.

And I would log a complaint with the ACCC.

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Did they also use the line that it must be returned in the original box? That was often used as well and is not correct.

From the ACCC

“insisting consumers return goods unopened, or in their original packaging may be misleading (as these are not required to claim a remedy under statutory rights).”

Also a brochure worth reading in regards to ACL rights

In regards to returning to the Manufacturer, again quoted from the ACCC

Passing on responsibility for a remedy to a manufacturer

Because each sale is a contract between the buyer and the seller, consumers are entitled to insist that the seller provide them with a remedy, even if a problem is due to a manufacturer’s fault.

It is a breach of the Act for sellers to mislead consumers about this right – for example, by claiming they can do nothing and that the consumer must contact the manufacturer for a remedy.

In some circumstances it may be reasonable for a seller to return the item to the manufacturer to establish the cause of the fault – for instance, if the good has been used extensively or was purchased some time ago.

With technical goods such as cameras or mobile phones the seller may be unable to assess whether the consumer has damaged the good in some way.
In these circumstances, the seller should arrange delivery of the item to the manufacturer.”

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Seconds world was, shocking years ago buying a, fridge i fell for the extended warranty i wont ever buy again. The, sale’s person was adamant. I never went back to buy again. On fact the fridge has, always worked anyway. It’s pretty bad when hearing about the outcome from major stores trying to force sell extra warranties.

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Just out of curiosity what would you tell a retailer who is trying to sell you an extended warranty. I would be interested to hear what you would tell them. Now I am informed i might tell the sales person it is not necessary due to my rights. Please tell me on your opinion

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I just simply tell them politely that I don’t need it.

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I tell them “No Thanks”, if they really push I advise them I will be making a complaint to their management and to the ACCC. Most times they drop it once I say “No Thanks”.

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How do we successfully make use of these vague laws? Do we need to hire a lawyer? What’s the practical advice?

Yes i find it hard trusting them. Did you ever remember having these problems before. Big business being allowed to control. Why allow business to make huge profits but they in theory can’t sell something for example without not telling the truth or why one needs an extra warranty. As other members say a polite no thanks… Its pretty unbelievable how choice investigating how bad some stores from same business don’t know what correct policy around consumer rights. I know how hard it can be when having a faulty peice of electrical equipment. On the end it was better to dispose of it. I say to myself if a, product works olll be happy instead of having to go through hassle of repairs

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I’ve learnt most from following this and similar topics in the community. The posters often link to Choice consumer advice/guides. There are also a number of useful online resources that provide general advice on the ACL (ACCC) and for each state/territory their respective government provided consumer support. The last provide both advice and direct support.

The last resort is a court. The most basic actions of filing a small claim do not require a lawyer. Typically the business responding cannot be represented by a lawyer if it proceeds to a court.

Personal opinion only - the laws are not vague. They can always be improved and better supported. It’s for us to consider if without Choice’s efforts over many years they would even exist.

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This happened to me a couple of years ago at HN. I said 'you’re about to loose this sale if you persist in this warranty crap." So they didn’t persist and I bought the item and left. So my advice is to threaten them with no sale if they persist.

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Yes and not backing down. Usually if you say i can go elsewhere likely change attitude.

Your contract is with Spotlight. Not with the manufacturer. It is the same woth any retailer. Stand your ground of you have a problem with the machine & tell them you bought it from them, the contract is with them… THEY have to deal with the manufacturer on your behalf.

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Why haven’t these sorts of extended warranties been made illegal?

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It isn’t criminal AFAIK to offer poor value for money, it is up to the buyer to determine that.

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I agree that extended warranties are a waste of money, and it’s predominately retailers such as Harvey Norman and the Good Guys pushing them.

My experience was a manufacturing fault with a $6,500 leather lounge from Harvey Norman, but I can only praise the way the problem was managed.

The maker’s agent inspected the fault, did not dispute the claim, and Harvey Norman picked it up while offering either a store credit or full refund.

And that’s the way it should be for everyone…

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