Harvey Norman hit with class action lawsuit over ‘worthless extended warranties’

The retailer faces a class action lawsuit over ‘worthless extended warranties’ that were sold to shoppers but were ultimately unnecessary given existing consumer protection laws.

Harvey Norman has been hit with a class action lawsuit over ‘worthless extended warranties’. Picture: Britta Campion

Echo Law has launched a class action in the Federal Court on behalf of Harvey Norman customers allegedly sold unnecessary and worthless extended warranties.

Tens of thousands of Harvey Norman, Domayne and Joyce Mayne customers who were sold extended warranties between September 2018 to the present day will be covered by the class action, with hundreds of millions of dollars estimated to have been paid by those customers in largely worthless warranty costs over the period.

The case centres around Harvey Norman’s ‘Product Care’, an extended warranty sold with products such as electronics and whitegoods, which claims to offer additional protection to consumers where there is a fault with their product.

Echo Law’s class action alleges that Product Care provides no value to consumers, as the “protection” it offers customers is no more than the rights and remedies already provided to those consumers under the Australian Consumer Law.

The amount of money Harvey Norman customers have paid for Product Care is typically an additional 10 to 40 per cent of the product price, depending on the type of product and length of coverage.

“We have heard from hundreds of Harvey Norman customers who are furious that they’ve paid thousands of dollars for Product Care over the years and for little or no benefit,” said Dr Lauren Meath, Echo Law senior associate.

“They feel like they’ve been tricked. Harvey Norman has been making its customers pay extra for rights that they already have for free. It’s a practice that is hugely profitable for the retailer.”

The class action lawsuit alleges Harvey Norman breached the law by engaging in misleading or deceptive conduct as well as unconscionable conduct, by leading customers to believe that the extended warranty would give them additional protection they would not have otherwise had.

“However, when you look at the rights all consumers are guaranteed under the Australian Consumer Law and the long list of fine print exclusions to Harvey Normans’ Product care, it becomes clear there is nothing substantially ‘additional’ or ‘beneficial’ about this product,” Dr Meath said.

While the revenue collected by Harvey Norman through the sale of Product Care has not been disclosed in its financial reporting, Echo Law estimated that Harvey Norman customers have paid hundreds of millions of dollars for the “junk” protection since September 2018, which is the period covered by the class action.

Harvey Norman said in a statement to the ASX that it was aware of the class action lawsuit and said that its stores had complied with all relevant laws at all times and intended to “defend the proceedings vigorously”.

The issue of retailer extended warranties is a prickly one. In late 2023 law firm Maurice Blackburn Lawyers lodged a class action alleging consumer electronics giant JB Hi-Fi ripped off consumers by selling worthless extended warranties for more than a decade.

Harvey Norman shares closed flat at $4.83 each.