Extended warranties under Fair Trading spotlight

Attorney-General Jarrod Bleijie has today announced the Government will shine a spotlight on extended warranties this summer as part of a nationwide consumer protection operation.

Mr Bleijie said fair trading agencies across Australia had raised serious questions about the value of many extended warranties.

“Consumers are often offered extended warranties at point of sale, particularly when buying electrical equipment, whitegoods or motor vehicles,” Mr Bleijie said.

“However, in a majority of cases consumers already receive a high level of protection from consumer guarantees under the Australian Consumer Law (ACL).

“The ACL offers protections against faulty products, products that don’t last a reasonable time and those that don’t perform as expected.

“One of the key guarantees under the ACL is that goods are of acceptable quality and must function for a reasonable time after purchase without breaking down.

“What constitutes a ‘reasonable time’ is determined by the price and nature of the goods and any statements made by the manufacturer or supplier.

“Put simply, you would expect a $100 toaster to last longer than you would a $10 toaster.”

Mr Bleijie said when suppliers or manufacturers made extra promises about such things as the performance or characteristics of a product then an ‘express warranty’ is established.

“For example, a new mattress may come with a two-year warranty, but if they tell you it will last 10 years, they have established an express warranty and must honour the claim,” he said.

“What this means for consumers is that suppliers and manufacturers are not in the clear once the formal warranty expires.

“Retailers that make false or misleading claims about extended warranties can face fines of up to $220,000 for an individual and $1.1 million for a corporation.”

Mr Bleijie said Fair Trading inspectors would be investigating extended warranties to see whether they offer any benefits above that provided by the ACL.

“In the meantime, consumers considering an extended warranty should ask what it offers above and beyond their existing rights, and decide if it is worth the extra money.”

[ENDS] 21 December 2012 

Media contact: Lisa O’Donnell 0400 986 432