Extended warranties

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

02.CHOICE members feel the pressure

A CHOICE survey revealed consumers are regularly being offered extended warranties: of the 570 people we found had been offered an extended warranty, 95% said it had happened more than once and 33% said they had been offered one more than five times.

Our survey also showed that consumers sometimes feel pressured to buy extended warranties, with more than a third of the 375 respondents who said they had gone on to buy an extended warranty reporting some degree of pressure.

Why do people buy extended warranties? A fear of breakdowns is what drove 69% of our survey respondents who had purchased an extended warranty to buy one — they believed the cost to repair the product would be too high — while 24% felt that the manufacturer’s warranty didn’t provide enough cover.

The CHOICE reliability survey

CHOICE regularly conducts reliability surveys on various products such as washing machines, TVs, digital cameras and ovens to put this theory to the test. The great news is that most products are, in fact, reliable. Our 2007 survey showed that more than 90% of TVs, digital cameras, washing machines and refrigerators purchased by our respondents since 2000 hadn’t needed to be repaired in the previous 12 months.

It may be worth buying an extended warranty for some products, such as computers, which can be less reliable than other appliances. Or, if you’re thinking of buying a brand or technology that’s new to you or a particularly expensive item where you’re worried about faults occurring down the track, an extended warranty may be worth it.

However, is the cash register really the right place to make such an important decision? CHOICE doesn’t think so.

What our shadow shop revealed

shadow shopperWe engaged a shadow shopper to buy eight LCD TVs and six digital cameras at 14 major retail stores in Sydney. She was instructed by us to accept the extended warranty at an additional cost.

  • The offer was mainly made to her as a “yes” or “no” question with no extra information provided until the shadow shopper asked for more information.
  • On five of the 14 occasions she was offered an extended warranty she felt she wasn’t told enough information about what it covered. In one instance she was simply told “this is better than the manufacturer’s warranty”, while another salesperson said “it was a good idea” to buy one.
  • On three occasions the sales assistants weren’t clear about whether the extended warranty was provided by the retailer or by a third party.
 

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