Extended warranties

Consumers are being pressured into purchasing extended warranties.
 
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  • Updated:25 Nov 2008
 

01.The issue

DVD player with warranties under it

When purchasing big-ticket items, such as white-goods or electronics, it is more and more common these days to be offered extended warranties. Whilst this may seem to like a good option, many consumers are not adequately informed of what the extended warranty actually covers and how this differs from their statutory rights.

Often consumers are being asked to make this decision at the cash-register, without adequate time to weigh up the pros and cons.

In November 2008 CHOICE published a report about consumer experiences buying extended warranties. We found that 1 in 3 consumers surveyed reported feeling pressured to buy an extended warranty. We also found evidence of misinformation from sales staff.

We also conducted a shadow shop of how extended warranties are sold to a typical consumer. Our shadow shopper found that sales staff often did not provide enough information about what it covered. For example, in one instance our shadow shopper was told that the extended warranty was much better than the manufacturer’s, but was not provided with any details of what it covered. In two other instances, our shadow shopper was not informed of the existence of the manufacturers’ warranty prior to sale of the extended warranty.

What we want

CHOICE thinks consumers should not be pressured into buying an extended warranty. We also want to make sure consumers have enough information to decide whether such warranties would benefit them in their particular circumstances.

We think the retail industry needs to lift its standards. CHOICE is calling on the major retailers to work with government to:

  • Allow consumers to purchase extended warranties for up to 30 days after the purchase of the original item;
  • Improve consumer awareness of statutory warranties and how statutory warranties apply to consumer purchases;
  • Create new guidelines to outline how extended warranties should be offered to consumers;
  • Allow ‘cooling-off’ periods on the purchase of extended warranties.

What we’re doing

CHOICE has written to the major retailers explaining our concerns about the current circumstances under which extended warranties are offered, and proposing measures to improve the consumer experience.

We have also published a report that examines the way in which extended warranties are sold to a typical consumer. It also details consumers’ experiences more generally with extended warranties.

What you can do

CHOICE recommends that when purchasing white goods or electronic products, you request all terms and conditions in writing. Our research indicates that sales assistants often given incorrect information.

If a store is not prepared to provide full and accurate information about their extended warranty product, it may suggest that is not good value for money.

We also recommend you familiarise yourself with your statutory rights that apply independently of extended warranties.

More information

Read the full CHOICE report on extended warranties here.

 
 

 

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