Commissioner's Blog: Shops must act honestly on extended warranties
It’s a familiar scenario for many shoppers – you’re about to pay for a new car or appliance, then the salesperson tries to ‘upsell’ you with an extended warranty for things that may go wrong after the manufacturer’s warranty expires.
As the end of financial year sales roll around, we want consumers to seriously question whether buying this type of insurance policy means paying for rights they already have for free under the Australian Consumer Law (ACL).
These rights require retailers to help you if a product breaks within a reasonable period of time, regardless of any extended warranty purchased or if the manufacturer’s warranty has lapsed.
In the last 12 months, Consumer Protection has received 420 enquiries and 113 complaints about extended warranties, mostly relating to the purchase of motor vehicles. We also heard from consumers who encountered issues after buying extended warranties on washing machines & dryers, televisions, microwaves, furniture, and even on an air-con remote controller.
The main issues involved consumers being unable to seek a satisfactory remedy after a fault developed, or unaware their particular issue wasn’t covered under the policy.
A recent investigation by consumer advocacy group CHOICE found 91 per cent of major electrical stores visited by a mystery shopper were trying to upsell customers with extended warranties that offered no more for the customers than their rights under the ACL.
Nobody likes wasting money – so next time you’re offered an extended warranty in a shop or car dealership, ask the salesperson directly about the benefits over and above your existing rights under the ACL to a refund, replacement or repair if the product is faulty.
Also ask whether the policy has any important exclusions and restrictions, or special requirements to ensure the extended warranty policy remains valid, such as a cleaning regime or regular servicing of a vehicle with the selling dealer.
Failure due to fair wear and tear may not be covered, so consider whether the cost of an extended warranty is worth it compared with the cost of the product and its likely lifespan.
It is against the law for a retailer to mislead you or use unfair tactics to pressure you into buying an extended warranty, so report any instances of this to Consumer Protection via our website at www.consumerprotection.wa.gov.au or email email@example.com or call 1300 30 40 54.