Extended warranties may not be warranted

Information status

All announcements issued prior to 1 July 2017 were issued by the former Department of Commerce. Announcements listed here are the latest versions available, but may be subject to review. For more information on this announcement, please contact online@dmirs.wa.gov.au.

The collapse of an extended warranties provider in Australia is being used as an opportunity to highlight questions about the value of extended warranties.

U-nited Warranties Pty Ltd has appointed liquidators – the majority of its extended warranty products were offered at the point of sale through major retail chains, including Big W and Myer and a number of independent retailers. 

The Australian Securities and Investments Commission (ASIC) is taking the lead in relation to this matter, however Commissioner for Consumer Protection Anne Driscoll said her agency is liaising with ASIC and she wishes to clarify consumer rights.

“The Australian Consumer Law (ACL) provides mandatory consumer guarantees for goods and services and that means that if there’s a problem consumers are entitled to specific remedies which can include replacement goods or a full refund,” she said.

“The type of situations where a remedy must be provided include when a product is not of acceptable quality, not fit for the intended purpose or does not match the description given. These rights cannot be limited by timeframes specified by the manufacturer or retailer in warranty documents provided with the goods.”

“It is not uncommon for retailers to offer extended warranties at the point of sale, particularly for electrical items; however in the majority of cases, Consumer Protection finds that the extra money paid is not justified because the consumer has the same protections for free under the ACL.”

Ms Driscoll warned that retailers who wrongly convince customers of the need to purchase extended warranties could be breaking the law.

“It’s an offence for a business, or its sales representatives, to make a false or misleading representation concerning the need for any goods or services. The penalties are high; a maximum fine of $220,000 for an individual and $1.1 million for a company,” she said.

“Trying to convince consumers that they should buy an extended warranty, when it only offers the same protections provided for free under consumer law, would fall into the category of a false and misleading representation.”

Consumers who have purchased goods from a retailer and an extended warranty from U-nited and who have a problem with the product should return the goods to the place of purchase. The retailer has legal obligations and cannot avoid these responsibilities by claiming the consumer rights would only have been available through the extended warranty.

WA consumers requiring more information about their warranty/guarantee rights under the Australian Consumer Law should log on to www.commerce.wa.gov.au/consumerprotection, call 1300 30 40 54 or email consumer@commerce.wa.gov.au.

For information and advice relating to the U-nited Warranties liquidation consumers should refer to the Australian Securities and Investments Commission media statement which can be viewed at http://www.asic.gov.au/asic/asic.nsf/byHeadline/Information-for-customers-affected-by-U-nited-Group-Liquidation?opendocument

 

END OF RELEASE

 

(Consumer Protection is a division of the Department of Commerce)

 

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Media Contact:

Alina Cavanagh

9282 0679 or 0423-846397

alina.cavanagh@commerce.wa.gov.au

Consumer Protection
Media release
01 Aug 2012

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