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Same rights, added costs?

Extended warranties are rarely worth it.

Last updated: 01 December 2022


Checked for accuracy by our qualified fact-checkers and verifiers. Find out more about fact-checking at CHOICE.

After more than 10 years at CHOICE, there are a few issues that continue to stick in my craw. One of the biggest is extended warranties.

Before I came to CHOICE, I found myself occasionally buying an extended warranty for a major purchase. Who wouldn't? It sounds like such a good idea.

But now I understand a lot more about the basic rights we all enjoy under the Australian Consumer Law. I find myself seething every time I'm offered one.

The very term 'extended warranty' seems designed to mislead. For a start, it perpetuates the idea that manufacturers' warranties determine your rights if a product breaks or doesn't work as intended. That's patently untrue. 

Our consumer guarantee laws are some of the best in the world. They say that a product has to last for a reasonable period of time, taking into account the way it was described and how much you paid for it. They also make it clear that in many circumstances you are entitled to a repair, replacement or refund if something goes wrong. Manufacturers' warranties don't override those rights.

Many of the extended warranties sold by retailers last for the same period of time that your consumer guarantee rights would automatically apply

The use of the word 'extended' also suggests you'll be protected for a longer period of time, when in reality many of the extended warranties sold by retailers last for the same period of time that your consumer guarantee rights would automatically apply.

Finally, the way in which these products are flogged is a big problem. It's almost impossible to buy something at stores like JB Hi-Fi or Harvey Norman without being pushed to buy an extended warranty, with the clear implication that it would be unwise not to. 

It's pretty clear that salespeople face a lot of pressure to do this and our beef is not with them. Rather, it's with the large retailers that employ them. The results of our shadow shop of major retailers reported on page 38 shows clear patterns of behaviour that can only be the result of training and systems that encourage staff to communicate in a way that often misleads consumers about their rights.

The Australian Competition and Consumer Commission has been pretty good at taking retailers and manufacturers to court where it's found clear evidence of misleading behaviour. But it can be hard to get this evidence when the behaviour occurs through conversations rather than written communication.

We'll be encouraging the ACCC to keep cracking down on these practices in 2023. But in the meantime, if you're offered an extended warranty while shopping in the summer sales, the best advice I can give is to just say no.

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