Experts advise against buying extended warranties

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Now that all your Christmas shopping is finally done and dusted, it is almost time to turn your attention to the Boxing Day sales (once that actual Christmas business is out of the way), but there is one thing you should avoid buying according to the experts – extended warranties.

Explaining your consumer rights in the lead-up to the big sales, consumer group CHOICE has explained that extended warranties are a “waste of money”.

A national CHOICE survey of 1112 people found that nearly one in five (18 per cent) Australians are still buying extended warranties even when they offer nothing more than your legal rights.

Consumer rights expert from CHOICE Julia Steward said that people should not “waste their money on an extended warranty”.

“Many extended warranties largely replicate or underplay your existing rights under the Australian Consumer Law,” Ms Steward said. “They’re a sales trick to squeeze more money out of you that ignore your existing rights under the law.

“If someone tries to push an extended warranty on you, ask them ‘what does this give me beyond the Australian Consumer Law’?

“Remember, your rights are often longer and more comprehensive than what you receive from a warranty. Your rights aren’t one-size-fits-all.

Under the law, the products you buy should be eligible for refund, replacement or repair depending on the expected lifespan of the product. Not what the company says the warranty is,” Ms Steward explained.

What to do if something goes wrong
1. Contact the retailer with proof of purchase. Explain the issue clearly and ask for your preferred solution (a refund, replacement or repair).

“Provide your proof of purchase and be clear about what you want. Be firm, but polite in asking for your refund, repair or replacement,” Ms Steward explained.

2. Escalate. If you are unhappy with the response, write a formal complaint to the business articulating your rights under the Australian Consumer Law and what you expect.

“Using the language of the Australian Consumer Law in a direct and formal way can help you assert your rights,” Ms Steward said.

“Articulate how you believe the law has been breached, put it in writing and escalate to someone higher.”

3. Take it further. If a retailer is not following the Australian Consumer Law, your local consumer affairs or fair trading body can sometimes mediate or help you with your next options.

“Consumer affairs or fair trading in your state or territory are a good next step if you’re unhappy with the retailer’s response,” Ms Steward said.

“It’s important to tell these bodies, so they can act if there’s a broader issue at play.”

4. Contact your bank. Consider asking for a debit or credit card chargeback, as in some circumstances your bank may refund you.

What are you looking to buy at the Boxing Day sales this year? Have you ever purchased an extended warranty? Did you know that they were a waste of money?

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Written by Ben


Total Comments: 7
  1. 0

    i thought the standard warranty for fridges or what ever was 12 months

  2. 1

    The standard warranty for almost anything is 12 months. But as the article states consumer law says an article should last for it’s reasonably expected life which could be several years. It’s a bit airy fairy but if you push it your legal rights to a remedy for goods which fail after 12 months may apply.

  3. 0

    Of course if the supplier is in another city you may have a hard time getting a satisfactory result, especially if the goods are solar panels or inverters.

  4. 0

    I disagree. I took a 3 year extended warranty on a clothes drier and it broke down on final day if the warranty – and the store gave me a brand new one.

  5. 0

    Roger, you have missed the whole point of the article.

    It states “Under the law, the products you buy should be eligible for refund, replacement or repair depending on the expected lifespan of the product. Not what the company says the warranty is”

    I have no doubt that the expected life of an “el-cheopo” clothes drier would be at least 5 years, and for a quality premium brand possibly 10 years (my previous Hoover drier lasted 34 years, and was actually still going strong when I replaced it recently as part of a full laundry update).

    So, assuming your drier had a 1 year manufacturer warranty plus a three year extended warranty, it had lasted only 4 years and still had a minimum of 1 year remaining of the FREE warranty given to you by law.
    Therefore, as the article points out, the extended warranty was a complete waste of money.

  6. 0

    I got to admit the last time I talked about an extended warranty was when I purchased a car.
    I think the salesman was trying to sell this harder then the car just for a lazy $750 when he finished and I woke up I just said no he seemed a little upset.

  7. 0

    I am in Brisbane and had a problem with a computer monitor that had already been fixed under warranty and failed again. It was a common fault according to the local repairer who I was directed to take it to for the initial warranty fix. When it failed again it was outside the initial warranty and the warranty was not extended to another 12 months after it was repaired the first time. I applied to the supplier based in NSW (importer) to have it fixed under the ‘merchantable quality’ provisions but it was rejected.

    I tried to exercise my rights under consumer law without success and even said in a letter that I would lodge a claim through the consumer watchdog in that state which was the former Consumer, Trader and Tenancy Tribunal (CTTT) in New South Wales. Costs of lodging an application vary between states but there is a fee. It may not be economic to do so in all states. However, as the supplier was based in NSW and me in Queensland, I was able to lodge my claim in NSW which as an aged pensioner, a cheaper fee applied. The matter went to the CTTT but as I was in Queensland, I did not have to appear.

    My ‘appearance’ was done by telephone with a mediator from the CTTT contacting me. As the supplier was in NSW and within a certain distance of where the hearing would be held, they would have been required to send a representative of the company to the CTTT hearing. The day before that happened, I was contacted by the supplier and offered a brand new latest model of the monitor.

    The supplier obviously thought the cost and time in sending someone to the CTTT hearing would be uneconomic when they would most likely be ordered to replace the monitor anyhow. I was advised by the CTTT to withdraw the action only once I had received the offer in writing by email.

    I had to take the faulty monitor back to the local repairer and pick up the new monitor. I asked the repairer what would happen with the faulty monitor and he said it would probably be repaired and offered for sale as a factory second.

    I have had a number of successful replacements of devices and equipment over ten years by exercising my consumer rights.



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