Need to know
- Seven in 10 stores in our mystery shop actively misrepresented consumers' rights to a remedy
- As a consumer, you have rights under Australian Consumer Law, regardless of whether or not you buy an extended warranty
- Retailers are not allowed to say that your rights are limited to the warranty of the product
The Christmas holiday season is just around the corner, soon to be followed by the end-of-year sales, so you may be considering that big-ticket electrical item you've had your eye on all year.
And if you're shopping at one of the nation's major electrical retailers, you'll probably be offered an extended warranty with your purchase. But buyer beware: the sales pitch may mislead you about your consumer rights.
We mystery-shopped 80 Harvey Norman, JB Hi-Fi and The Good Guys stores across the country. Our results reveal that seven in 10 (71%) of these stores misrepresented consumer rights, meaning the Australian Consumer Law (ACL) is still being ignored or misunderstood.
The results are disappointing, but not necessarily surprising, given that some businesses seem to have no qualms about disregarding the ACL.
Some businesses seem to have no qualms about disregarding the ACL
The ACCC recently launched a court case against US-based company Fitbit, after it allegedly informed customers that they could get a refund for a faulty product only if they returned it within 45 days of buying it.
This may be an extreme example, but our mystery shop reveals that misrepresenting consumer rights is a widespread issue in Australia.
According to the ACL, a retailer must offer to replace, repair or refund your money in the case of a major fault with a product.
If the fault is minor, the business can choose to give you a free repair instead of a replacement or refund. Retailers are obligated to do this for a reasonable amount of time after a purchase, depending on the value of the product.
Retailers aren't allowed to say you have these rights only if you bought an extended warranty
So if you buy an expensive TV and it breaks through no fault of your own after just a few years, for example, the retailer must offer to fix it, replace it or give you your money back – the choice of remedy is yours. This holds true even if the manufacturer's warranty has expired and you didn't buy an extended warranty.
Retailers aren't allowed to say you have these rights only if you bought an extended warranty, nor are they allowed to tell you to take it up with the manufacturer.
A mystery shopper posed as a customer looking for a Samsung 65" Q60B 4K QLED Smart TV 2022 priced at $1850.
We called salespeople at 80 stores – belonging to Harvey Norman, JB Hi-Fi or The Good Guys – asking what would happen if there was an issue with our TV after the manufacturer's warranty had expired (as with most TVs, the ones we mystery-shopped come with a one-year manufacturer's warranty).
Some retailers offer two years' voluntary warranty on products in this price range (including the manufacturer's warranty), so if this was mentioned, our callers also asked what would happen if the TV broke down shortly after this warranty ended.
Shockingly, more than seven in 10 (71%) stores in our mystery shop actively misrepresented a consumer's rights to a remedy if their product developed a fault outside the warranty period.
More than 71% of stores in our mystery shop actively misrepresented a consumer's rights to a remedy
The most common way consumer rights were misrepresented was staff stating or implying that the chances of receiving a free remedy after the warranty period were very slim or nonexistent.
Sometimes we were told that we'd be entitled only to a repair (never a replacement) or that our rights were limited to a specific time period (such as two years).
About one in three salespeople did not mislead us about our rights, but the quality of their advice was highly variable
About one in three salespeople did not mislead us about our rights, but the quality of their advice was highly variable.
For example, some simply told us that we still had consumer rights after the warranty period, but didn't give much more detail.
The best answers were those that informed us that the remedy we were entitled to would depend on the cost of the TV, how long we'd owned it for and the type of fault we were experiencing, or those that mentioned that we'd be entitled to a remedy if our TV didn't last for a reasonable amount of time.
Many of the salespeople we spoke to misrepresented a consumer's rights to product repair or replacement, without the purchase of an extended warranty.
How retailers misrepresented consumer rights
Deferring to 'the system'
In many of our calls, we were told our rights to a remedy after the warranty period ended were decided by "the system" at the store. When we asked what would happen if our product experienced a fault outside the warranty, the answers we got included:
- "Come in to us and we put it through the system – it tells us what we're allowed to do."
- "Come into the store and we'll put it through the system and see what it says."
- "Nine times out of 10 [the system] will say, 'Sorry, but it's at your cost'."
When pushed to explain what this "system" was based on, salespeople were unsure. Some seemed to think the system was run by the ACCC, others said that it was the manufacturer that made the final call.
Either way, these kinds of answers imply that a consumer's right to a remedy depends on an internal, store-run system, rather than being enshrined in the ACL.
Confusion and contradiction
Many times there was confusion about consumer rights and we were given contradictory information.
For example, some salespeople initially told us that any repairs outside the warranty period would be at the customer's expense.
Evidently, the information that shoppers receive depends very much on how they phrase their questions
But then when we asked if there was any chance of receiving a free remedy outside the warranty period, the salesperson would amend their response, saying that in some cases people might be entitled to some sort of free remedy.
Evidently, the information that shoppers receive depends very much on how they phrase their questions – and how hard they push for clarification.
Upselling a warranty
When we asked about consumer rights outside the manufacturer's warranty period, often the conversation turned immediately to the benefits of an extended warranty. In fact, 73 of the 80 salespeople we spoke to offered to sell us one.
Only when specifically asked about rights without an extended warranty was it acknowledged that we already had rights under consumer law.
We found this to be a misleading sales technique, as it gives the false impression that people have rights only if they buy an extended warranty.
We called 26 Harvey Norman stores, 18 of which (69%) misrepresented our consumer rights. Some salespeople told us misleading things including, "After the manufacturer's warranty there's nothing we can do, it's out of our hands."
But others gave us correct information – for example, "It's not the end of the world if you don't have the extra warranty and something goes wrong. So if it broke, us or Samsung would have to help you". And, "Consumer guarantees will cover you for longer than (a year). TVs must last a reasonable amount of time. They base it on the value of the TV, it would be longer than a year."
Harvey Norman offers customers the option to buy one, two, three or four years of 'product care' for electrical goods, depending on the product. Coverage starts after the manufacturer's warranty expires and entitles customers to a replacement for eligible faults.
But although you might assume this means you'll get an automatic replacement if anything goes wrong with your product, this isn't necessarily true.
The product care terms and conditions state that if there is a fault with one of the product's "Essential Accessories" – such as the ice maker on a fridge, the remote control for a TV, or the battery for a vacuum – only the accessory will be replaced, not the entire product. You'll get a replacement product only if one of the main components, such as the compressor in a fridge, fails to operate.
Although you might assume you'll get an automatic replacement if anything goes wrong with your product, this isn't necessarily true
A failure of this type would probably be considered a major failure under the ACL too, entitling you to ask for a replacement or refund, so it's unclear whether the promise of a replacement offers any extra protection over and above your ACL rights.
The Harvey Norman policy also stipulates that you're entitled only to a one-off replacement, so if you experience a fault again, you're no longer entitled to one. By contrast, the ACL entitles you to a replacement or refund for major faults even if your product has already been replaced.
One benefit of the product care policy is that it's transferable, meaning it can be passed on to a new owner if you sell or give your product to somebody as a gift. But it also stipulates that any replacement is only a one-off, so if, say, your replacement fridge develops the same fault as the previous one, it won't be replaced again.
JB Hi-Fi offers a 'voluntary warranty period' on top of the manufacturer's warranty. The length of the period depends on the price and type of product. In the case of a TV worth more than $1000, but less than $2000, JB Hi-Fi offers a total warranty period of two years.
This offer was framed as great value by JB Hi-Fi's salespeople, but remember that under the ACL, your TV would probably be covered during the same period if you bought it from another retailer.
The voluntary warranty policy may actually give you fewer rights than those you're already entitled to under consumer law
What's more, if you read the fine print on JB Hi-Fi's voluntary warranty policy, you'll see that the retailer offers a replacement or refund only for the first six months after you bought the product. After that, it offers only repairs, regardless of whether the fault is major or minor.
This means the voluntary warranty policy may actually give you fewer rights than those you're already entitled to under consumer law.
To assess salespeople's understanding of consumer rights outside the warranty period, we asked what would happen if we experienced a fault with our product just after the voluntary warranty period had expired.
We found that salespeople in 24 of the 29 (83%) JB Hi-Fi stores we called misrepresented our consumer rights, telling us things like, "If it's over two years, you have to pay for the repairs yourself."
We found that 24 of the 29 JB Hi-Fi stores we called misrepresented our consumer rights
Some employees seemed to think the extra year of voluntary warranty represented the extent of JB Hi-Fi's responsibility, telling us that "the manufacturer gives one year warranty and then JB gives one extra year by consumer law" and that after that period "there's no coverage, you go by yourself to a TV mechanic".
Also, some staff got the time period of the voluntary warranty wrong or didn't mention it at all (although we didn't penalise a salesperson for that).
JB Hi-Fi also sells an extended warranty called 'Extra Care', which offers replacement cover for products costing less than $1000, or repair cover for more expensive products.
Coverage starts when the warranty or voluntary warranty period ends and lasts for five years after the date of purchase or delivery.
You can also transfer this policy if you sell the product or give it to someone as a gift.
The Good Guys
We called 25 Good Guys stores, of which 15 (60%) misrepresented our consumer rights. Information we were given included: "You can still contact Samsung but call-out fees and parts will be required", and "If something happened after one year unfortunately it's at your own cost."
Others gave us accurate information, including "You have rights after the warranty period, it's decided on a case-by-case basis. It depends on a few things like how much you've paid and how old the TV is."
Some salespeople directed us to read about our consumer rights online or to come into A Good Guys store to see their brochure about consumer rights.
Some salespeople directed us to read about our consumer rights online
Although none of the salespeople we spoke to mentioned it, The Good Guys also offers a two-year voluntary warranty period on products in this price range, according to its website. Like JB Hi-Fi, The Good Guys offers a replacement or refund for the first six months only, after which repair is the only remedy available under the voluntary warranty policy. Many of the salespeople we spoke to seemed unaware of this policy, although others did make reference to an extra year of coverage.
Just like many JB Hi-Fi staff, many of those at The Good Guys seemed to think the retailer's obligation to consumers ended at the two-year mark. Some of their responses included:
"With the ACL, depending on how much you spend, you get covered for a certain period of time. With this TV … you'd be covered for two years. So if something goes wrong in the first year, Samsung would fix [it] and if something went wrong in the second year, we would fix it. After that, there's nothing we can do."
The Good Guys seemed to think the retailer's obligation to consumers ended at the two-year mark
"Under ACL, you have sort of coverage for an extra 12 months. Technically. If it's three or four years, that's where you'd need to purchase an extended warranty."
"The manufacturer says you've only got one year's warranty on this, but under consumer law you've actually got two years."
The Good Guys gives customers the option to buy its Concierge Gold Service Extras, which it markets as offering a suite of benefits including store credits, discounts on other brands, 30-day 'price-drop protection' and its 'Product Care', which is a form of extended warranty, offering repair cover.
For products costing more than $500, customers can choose between a three- or five-year plan, which starts as soon as they buy the product. The policy can be transferred if you sell your product or give it as a gift.
As a consumer it's important to know your rights, so that you're not paying for what you may already be entitled to under Australian Consumer Law.
Belinda* worked as a casual Christmas staffer at the front desk across three JB Hi-Fi stores in Canberra from 2014 to 2017. She says she was told to sell customers extended warranties, but was given no information on their consumer rights.
"We were just told what was included in the extended warranties and encouraged to sell them," she says.
Belinda says that at certain times she was under extra pressure to sell these warranties
When asked what she would tell customers who asked about their rights without the extended warranty, she says, "We were just told to say if your product breaks after two years [the JB Hi-Fi voluntary warranty period], it wouldn't be covered. We wouldn't be able to give you a replacement or a refund."
Belinda says that at certain times she was under extra pressure to sell these warranties and was encouraged to remind customers that, without it, they'd be covered only for the life of the warranty (usually two years).
*Not her real name
In some cases, extended warranties can offer you rights and benefits over and above what's already enshrined in the ACL.
But often people are being misled into paying for rights they already have and, in some cases, these warranties actually offer fewer rights than your consumer guarantees do.
For example, if you buy a $2000 TV, the salesperson may try to sell you an extended warranty that guarantees you a free repair if your TV becomes faulty within a specified time period, such as three to five years after you bought it.
Often people are being misled into paying for rights they already have
But under existing consumer law you're already entitled to a free repair, replacement or refund – the choice should be yours – if your TV develops a major fault within the first few years after purchase.
So selling people an extended warranty can lead them to believe they're entitled only to the remedies outlined in that plan (such as a repair) when they actually may be entitled to a better remedy (such as a replacement or refund).
Dodgy sales tactics
The tactics used to sell these extended warranty plans can also be dubious. Some retailers either imply or explicitly say that you have no right to a remedy if your product becomes faulty outside the manufacturer's warranty unless you buy one of the retailer's extended plans. According to the ACCC, this isn't allowed.
"Businesses engage in problematic conduct where they either imply or expressly state that the only relevant consideration when dealing with a product fault is found under the terms of the warranty," says an ACCC spokesperson.
"Businesses need to ensure that they consider consumers' rights under the ACL when responding to claims for remedies."
We contacted JB Hi-Fi, Good Guys and Harvey Norman for comment on this story. JB Hi-Fi and Good Guys declined to comment. Harvey Norman did not respond.
Stock images: Getty, unless otherwise stated.