Harvey Norman, JB Hi-Fi and The Good Guys push poor value extended warranties onto customers

A new investigation from CHOICE ahead of this year’s Black Friday sales has found Harvey Norman, JB Hi-Fi and The Good Guys stores are misleading customers about their rights to a refund, replacement or repair.

Marg_Rafferty_out_the_front_of_the_good_guys_store

Katelyn Cameron

Last updated: 23 November 2021

A new investigation from CHOICE ahead of this year's Black Friday sales has found Harvey Norman, JB Hi-Fi and The Good Guys stores are misleading customers about their rights to a refund, replacement or repair.

CHOICE conducted a mystery shop of 80 Harvey Norman, JB Hi-Fi and The Good Guys stores across the country and found:

71% of stores provided misleading information on a consumer's rights if their product broke beyond the warranty period.
91% tried to sell poor value extended warranties that often don't provide much more cover than you already have under the Australian Consumer Law.
Stores argued "If it's over two years, you have to pay for the repairs yourself", "After the manufacturer's warranty there's nothing we can do, it's out of our hands" and "If something happened after one year unfortunately it's at your own cost."

"We were shocked by the results of our mystery shop of Harvey Norman, JB Hi-Fi and The Good Guys. Consumer guarantees mean retailers must help customers if a product breaks within a reasonable period of time - even if the manufacturer's warranty has expired," says CHOICE Editorial Director, Marg Rafferty.

"When we asked about consumer rights outside the manufacturer's warranty period, stores tried to sell us extended warranties, which are not much more than a sneaky sales tactic designed to squeeze more money from concerned customers."

"Existing consumer rights provide all the protection you need against faulty products, so it's incredibly disappointing to see these big retailers pushing poor value extended warranties onto consumers during a cost of living crisis."

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Extended warranties vs consumer law

Examples of extended warranty inclusions compared to legal rights you already have under the ACL.

'No lemon' guarantee

Extended warranty: If your product requires more than two separate and distinct repairs, you can request a replacement.

Under the ACL: If a product has two or more minor failures, and you would not have bought the product if you knew the nature and extent of these failures, it is considered a major failure, giving you the right to ask for your choice of repair, refund or replacement.

Food spoilage/laundry costs

Extended warranty: You can request a $100 reimbursement if your fridge or washing machine has a fault that incurs losses (spoiled food/laundromat costs).

Under the ACL: You are entitled to ask for reimbursement for losses incurred as a result of a faulty product. There is no dollar limit specified and losses can encompass things like damage to flooring from a leaking washing machine.

Paying for transport for larger items

Extended warranty: If your repairs cannot be completed at your home, pick up and return delivery of your product will be provided.

Under the ACL: If a product is too large, too heavy or too difficult to remove, the business is responsible for paying the shipping costs or collecting the product within a reasonable time of being notified of the problem.

Transferable cover

Extended warranty: Your extended warranty can be transferred to a new owner if you sell or gift your product.

Under the ACL: Most consumer guarantees don't apply to one-off sales between two people, where the seller isn't running a business. So if you sell your product to somebody else, they won't be able to seek a remedy if a fault arises.

Guaranteed replacement

Extended warranty: For eligible faults, which may include minor faults.

Under the ACL: Retailers are only obliged to offer a timely repair for minor faults, not a replacement.

Guaranteed repair time

Extended warranty: Repairs for minor faults will be carried out within a specified short timeframe (e.g. 20 days) or the consumer will be entitled to a replacement or refund.

Under the ACL: If the business fails to give you a free repair within a reasonable time or cannot fix your problem, you can:

get it done elsewhere and pass on the costs to the business
ask for a replacement
ask for a refund
recover compensation for the drop in value below the price paid.

Guaranteeing cover

Extended warranty: For a specified period of time e.g. five years. Some plans may offer repair coverage during this time, others offer a replacement.

Under the ACL: Products must be durable and must function for a reasonable amount of time after purchase without breaking down.

Repair cover

Extended warranty: Consumer is entitled to repairs on eligible faults.

Under the ACL: Retailers must offer to replace, repair or refund your money in the case of a major fault with a product.

While it is illegal for retailers to breach consumer guarantees, currently there are no fines for misrepresenting consumer protections.

"Without fines for doing the wrong thing, too many businesses are getting away with telling consumers they'll be denied their right to a repair, replacement or refund when something goes wrong with a product or service," says Rafferty.

Thinking about making a big purchase this Black Friday? Here are CHOICE's top tips:

Consumer guarantees mean your product should last for a reasonable period and if it doesn't, you'll be entitled to either a replacement, repair or refund.
The retailer is obliged to help you if a product you purchased from them becomes faulty within a reasonable period of time - they can't just fob you off to the manufacturer.
Consider if you're actually getting any bang for your buck with extended warranties. Most extended warranties are poor value, and you're better off using your existing consumer rights.

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