‘Just throwing cash away’: Consumers warned off extended warranties following court decision

AUSTRALIANS are being tricked into paying for this every day. But the truth is, you really don’t need it and you certainly shouldn’t be wasting hundreds of dollars on it.

RACV Homeshow Supplement (Page8-9). Green Products. Fisher & Paykel Aquasmart Washing Machine, $1190, Stand A41

SHOULD you buy an extended warranty? No, you probably shouldn’t.

Australians are being warned to think twice about paying for an extended warranty when buying household goods such as whitegoods and electronics.

Under Australian Consumer Law, consumers may be protected beyond the manufacturer’s warranty period without the purchase of an extended warranty.

Guarantees under the ACL, including for replacements, repairs or refunds, do not have a specific expiry date and can apply even after any warranties have expired – although there are no set guidelines on time-frames.

Consumer group Choice has likened them to throwing money down the drain. “What we’ve found when it comes to extended warranties is in very few cases are they worth the money,” said spokesman Tom Godfrey.

“Under Australian Consumer Law, consumers have rights to refund, repair or replacement, and really spending money on extended warranties is just throwing cash away.

“The other thing to suggest is if you are tempted by an extended warranty, it’s really important to read the terms and conditions carefully to make sure you’re getting value for money.”

The call comes after two companies were this week ordered to pay penalties of $200,000 each for misleading consumers.

Consumer guarantees apply even after any warranties have expired.

The Federal Court on Tuesday ordered Fisher & Paykel and Domestic & General to pay the fines for making false or misleading representations in letters sent to customers between January 2011 and December 2012 asking them to purchase extended warranties.

The letters contained a number of statements including: “Your Fisher & Paykel [appliance] is now a year old, which means that you have 12 months remaining — after that your appliance won’t be protected against repair costs.”

The court found that the letters contained false or misleading representations that consumers would not be protected against repair costs unless they purchased an extended warranty.

“The conduct here unquestionably involves serious and significant contraventions of the ACL,” Justice Wigney said in his judgment.

“The misleading representations concerned extended warranties for well-known consumer goods. The misrepresentations potentially misled or deceived thousands of consumers in respect of the supposed need for extended warranty plans.”

Australian Competition and Consumer Commission chairman Rod Sims welcomed the court’s decision, saying it sent a strong warning to businesses that they must not misrepresent or understate consumers’ rights when marketing extended warranties.

“This is especially important for companies like Domestic & General which specialise in offering warranty services,” Mr Sims said. “Under the ACL, consumers may have a right to a repair, replacement or refund regardless of any extended warranty or express manufacturers’ warranty.”

In a media statement issued at the time of the proceedings, Fisher & Paykel said it had written to all affected customers in Australia and offered a full refund where they wished to cancel their extended warranty.

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