Have you ever been offered Extended Warranties?
You may have seen news recently regarding class actions against retailers Harvey Norman, Domayne and JB Hi Fi, concerning extended warranties and ‘care’ packages offered to customers who purchase products such as personal electronics and household appliances.
Typically, these extended warranties are sold for an extra cost in addition to the purchase price for the product in question.
Click here to learn the difference between a warranty and an extended warranty.
What’s in dispute?
The class actions argue that the retailers engaged in misleading or deceptive conduct, or unconscionable conduct, by leading customers to believe that the extended warranties would provide additional protection.
The central argument that underpins these actions is that the warranties are fundamentally of no value. This is because the remedies they offer allegedly go no further than the protections and rights that consumers already enjoy under the Australian Consumer Law (ACL). In other words, it is argued that the retailers are repackaging their existing obligations under the law and then charging an additional fee (it is worth noting that in some cases marketing and other material did notify consumers of their rights under the ACL).
The class actions also allege that the sale of the warranties amounts to the unlicensed sale of financial products, although these arguments are slightly more technical and don’t directly concern the ACL.
Consumer Guarantees under the ACL
The ACL gives consumers basic rights and guarantees in relation to goods and services.
These guarantees are automatically included in consumer contracts and cannot be excluded, even if a business purports to exclude or modify them.
Key consumer guarantees covering the sale of goods include the following:
- Goods must be of acceptable quality, meaning that they are fit for purpose, acceptable in appearance and finish, free from defects, safe and durable;
- Goods must be as described by the retailer or supplier and correspond with any demonstration models; and
- Manufacturers must ensure repair facilities are available for a reasonable period after the goods are supplied.
The content and duration of these guarantees will vary from transaction to transaction. For example, consumer guarantees as to repair will be very different in the context of the sale of a car as opposed to small household items such as disposable pens or lighters.
Key takeaway
If you are considering buying an extended warranty, it is important to understand exactly what is and isn’t included.
The key is to understand your protections under the ACL and whether the extended warranty will give you more coverage than that. For example, a warranty that operates for a defined period of time may be greater than, or less than, protections under the ACL which last for a ‘reasonable time’ after purchase.
You should also ask about costs, including any fees that may apply when making a claim, whether there are any limits or exclusions on claims, and whether the extended warranty applies straightaway or only after the manufacturer warranty ends (this latter point is important as manufacturer warranties and extended warranties may offer different coverage and remedies).
Want further clarification?
Aintree Group Legal will be happy to discuss all of your commercial law needs. Contact us today.
This is general advice only and has not been prepared with your situation and needs in mind. For individual and personalised advice, we highly recommend that you seek out proper professional advice from your lawyer.
