JB Hi-Fi faces landmark class action over ‘junk’ warranties

JB Hi-Fi has been accused of selling customers worthless warranties in a landmark class action that could act as a test case for Australian retailers.

JB Hi-Fi is facing a landmark class action over its use of extended warranty products. Picture: Chris Pavlich / The Australian

JB Hi-Fi has been accused of selling customers worthless extended warranties for more than a decade in a landmark class action that could act as a test case for Australian retailers.

Law firm Maurice Blackburn lodged the class action in the Victorian Supreme Court on Friday - describing it as the first of its kind in Australia - alleging JB Hi-Fi’s extended warranties were of little or no value because customers already held the same rights for free under Australian Consumer Law.

The extended warranties, labelled Extended Care Plans or Extra Care Plans by the retailer, were offered to customers when they purchased consumer electronics, home appliances, home entertainment and other products.

Compensation is being claimed for all customers who bought an extended warranty product from JB Hi-Fi between 1 January 2011 and 8 December 2023.

Maurice Blackburn suggests hundreds of thousands of customers could be eligible for compensation, but says it’s too early to provide an estimate of how much in total compensation they could be entitled to.

Maurice Blackburn principal Miranda Nagy said the class action would seek refunds for consumers who bought the policies.

“These warranties are in most cases little more than a junk add-on to consumers’ purchase of the household goods they actually want,” she said.

“JB’s extended warranties expire just three-to-six years after purchase, but they add substantially to the cost.

“Our case alleges they added nothing meaningful to the strong rights for repair, replacement or refund under the Australian Consumer Law rights that consumers already enjoy.”

In a statement to the ASX, JB Hi-Fi said it would “vigorously defend” the proceedings.

“JB Hi-Fi takes compliance with its legal obligations very seriously and considers that it has complied with relevant laws at all times,” the company said.

The class action is being seen as a test case for extended warranty products offered by many of Australia’s largest electronics, furniture and other retailers.

After mystery-shopping 80 JB Hi-Fi, Harvey Norman and The Good Guys stores last year, consumer advocacy group Choice claimed seven in 10 stores surveyed misrepresented consumer rights to the customer.

Under consumer law, customers are entitled to a repair, refund or replacement for a major fault within a reasonable amount of time of buying a product.

The Australian Competition and Consumer Commission says businesses have an obligation to explain what an extended warranty provides over and above the consumer’s automatic rights under so-called consumer guarantees, and must not mislead consumers into paying for rights they automatically have under consumer law.

Maurice Blackburn’s class action alleges that JB Hi-Fi used misleading or deceptive conduct, or unconscionable conduct, in selling the extended warranties, including by telling customers either directly, or by implying, that the extended warranties operated for longer than the rights provided under consumer law and provided benefits that consumer law did not.

It claims JB Hi-Fi failed to provide customers with information about their rights under consumer law, and misled shoppers about the value of the extended warranty products.

The law firm said eligible customers did not need to sign up to the class action as they would automatically be added to the class action group if they purchased an extended warranty within the relevant time period.

JB Hi-Fi shares were trading 0.3 per cent higher on Monday at $49.22.