Extended warranties

Are you being served or served up when offered an extended warranty?
 
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  • Updated:12 Nov 2008
 

01.Extended warranties

shopper viewing extended warranty with a magnifying glass

On 1 January 2011, a new national Australian Consumer Law regime came into effect. Please see our article or go to http://www.accc.gov.au/consumerrights for information on these changes.

In brief

  • To find out if people are being pressured by retailers into buying extended warranties, CHOICE and the NSW Office of Fair Trading conducted research via an online survey and a shadow shop of electrical retail stores.
  • Always ensure you know what the extended warranty covers – don’t rely on the salesperson’s knowledge.
  • Your right to repairs or replacement of a faulty item could be covered under the statutory warranty that covers all purchases.

Just before you get ready to pay thousands of dollars for a new TV, the salesman asks if you’d like to take out an extended warranty. He says it will give you another four years’ protection should anything go wrong and will only cost an extra couple of hundred dollars.

Suddenly the extra money doesn’t seem much to help protect your expensive investment, so you agree. After all, you think, things don’t seem to be made to last these days and it’s good to have some protection, right? Not necessarily.

You could be buying insurance you don’t need

Firstly, most appliances are covered by a manufacturer’s warranty, usually one year for TVs and up to three years for some LCD and plasma models. And contrary to common belief, most products, especially big-ticket items such as washing machines and TVs, are quite reliable.

Secondly, if something goes wrong with your TV outside the warranty period you may be covered under the federal Trade Practices Act, which provides all consumers with a statutory warranty whenever they buy any kind of goods or services (see Your statutory rights).

Three types of warranties

1. Manufacturer’s warranty

This is also known as a voluntary or express warranty and is the sort most consumers are familiar with. It’s usually provided as a booklet that comes with the product, but may only be available in certain circumstances, and is often for a limited time.

2. Statutory warranty

Your rights under this type of warranty are implied; that is, you don’t receive paperwork stating what’s covered and what’s not.

3. Extended warranty

An additional warranty retailers try to sell you which may or may not extend the manufacturer’s warranty. Some extended warranties may only replace the product or refund customers based on annual depreciation of the product. This means the product you get as a replacement may be inferior to the one you originally bought or you may be refunded less money than what you paid.

 

This information was current as of November 2008 but is still a useful guide to today's market.

 
 

 

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