The fine print on warranties, extended warranties and refunds

by Rosalyn Page | Friday 20 May 2011

We take another look at the question of whether or not you should bother with "extended warranties".

My dad always joked that the first thing to throw away when you buy something is the instructions. This may or may not be wise, depending on whether you’ve just bought an Ikea shelving unit or a thumb drive.

But one thing you should never throw away is the receipt because you just might need it again if something goes wrong. The warranty card is useful to keep, but consumers are covered regardless of whether they have this card or not. An extended warranty, however, is offered by the supplier or manufacturer and comes at a cost and has its own terms and conditions.

In considering whether it’s worth paying for additional warranty cover, remember that the new national consumer laws provide a consumer guarantee and you are covered regardless of any warranty provided by the supplier or manufacturer, and this includes an extended warranty.

If you are told that an extended warranty provides extra protection, which would not be offered unless you buy it, this is not necessarily true. The consumer guarantees provide rights that exist despite anything the supplier or manufacturer may say or do. You don’t need to pay for any rights equivalent to a consumer guarantee.

For example, the one-year warranty is a manufacturers warranty and an extended warranty may provide a refund or repair for an additional year or two. But the consumer guarantee by law provides refund, replace or repair cover for a reasonable length of time depending on the price and quality of the item; but many consumers are unclear about this important point.

Proof of purchase such as a tax invoice or receipt is usually needed and most people already understand that this is the case. But what about packaging? According to the ACCC, a refund cannot be refused with the original packaging or wrapping isn’t supplied if the goods are returned because of a problem.

Once you tell the supplier that the goods are being returned, they become the property of the supplier. The cost of returning items may be borne by the consumer, although it’s worth noting that some Australian-based online retailers will offer a free reply paid address for returns. However, the consumer law specifies that if the cost of returning, removing or transporting is costly, the supplier must collect the goods at their own expense within a reasonable time.

Do you pay extra for extended warranties? Why or why not?

See more about: investigator | warranty

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gnome 21 May 2011	Extended warranties have become a growth industry - and in many cases a racket. The cost in relation to the value of the item and the protection specified is often ridiculously large. But the main problem with many extended warranties is that while customers assume (and are encouraged to think) they will provide a time extension of the statutory warranty, the fine print renders them useless for many types of claim. Comment made about the PC & Tech Authority article: The fine print on warranties, extended warranties and refunds? We take another look at the question of whether or not you should bother with "extended warranties". What do you think? Join the discussion.
petergaskin 21 May 2011	The problem is that there are 3 types of warrantees - Statutory warrantee, manufacturers warrantee and the extended warrantee. Retail staff are encouraged to upsell - by selling consumers useless extended warrantees. i am sure that in some cases, the extended warrantee barely covers any more than the manufacturers warrantee. Given the new laws introduced on January 1 - why arent retailers examining how they sell extended warrantees? Why isnt the ACCC interested in prosecuting retailers for wrongfully inducing customers to buy extended warrantees. Whenever I go to buy an elctronic item from one of the major retail outlets - ie Harvey Norman and Office Works, the first question I am asked is - do I want an extended warrantee? Nothing has changed despite the change in the consumer laws.
rubaiyat 21 May 2011	So you guys reward companies like Apple that offer and keep their word on excellent warranty and support? No? Thought not. Why are you whinging then?
Slatts 21 May 2011	Hardly normals is in the process of replacing my 3 year old electolux front loader washing machine with a new one under an extended warranty. It's taking forever but they at least gave us a C & N loaner till the new one gets here. I tend to get the extended warranty whenever I buy anything over about $600.
blockcentre 21 May 2011	My experience with Apple support: My wife had an iPhone. The WIFI stopped working just over a month outside the warranty period. Apple refused to do anything about it except charge several hundred dollars to fix/replace it. This might just be a one off and I'm sure nearly every other company is almost same, however it does leave a bad taste in the mouth. I had a similar experience with a Telstra device. At least eventually they attempted to resolve the issue to my satisfaction, however the whole experience was ugly. Perhaps we're just unlucky as I hear nothing but sterling reports regarding Apple's customer service. The most positive experience I've had was with... wait for it... an ACER product. I know, sounds absurd. My wife had an ACER laptop several years ago. The screen started showing bands across it about 3 months after the warranty ended. ACER still honoured it by sending a courier to pick it up, repaired it within 3 days and sent it back all without charge. Worked perfectly until we sold it just over a year later.
blockcentre 21 May 2011	Slatts wrote: Hardly normals is in the process of replacing my 3 year old electolux front loader washing machine with a new one under an extended warranty. It's taking forever but they at least gave us a C & N loaner till the new one gets here. I tend to get the extended warranty whenever I buy anything over about $600. Slatts, I got my home contents insurance to over all major appliances for damage or failure. I haven't had to use it yet but I'll let you know what the experience is like when I do.
Slatts 21 May 2011	blockcentre wrote: Slatts, I got my home contents insurance to over all major appliances for damage or failure. I haven't had to use it yet but I'll let you know what the experience is like when I do. That can be a trap too. I had the compressor burn out in my upright freezer a few months ago. when my wife approached our insurer (Suncorp) they said that as the freezer was over 11 years old, it was no longer covered. Seems it was in the disclosure statement somewhere. I was not amused.
rubaiyat 21 May 2011	blockcentre wrote: My experience with Apple support: My wife had an iPhone. The WIFI stopped working just over a month outside the warranty period. Apple refused to do anything about it except charge several hundred dollars to fix/replace it. This might just be a one off and I'm sure nearly every other company is almost same, however it does leave a bad taste in the mouth. Yeah same happened to me except mine was 4 years out of warranty. Doesn't it just piss you off?
.:Cyb3rGlitch:. 21 May 2011	You forgot the sarcasm tags there rubaiyat. ;) I don't know about you, but I've had many products die on me a month out of warranty, and after a chat with support, they offered to replace it anyway. That's customer service. Of course, after a month or so, it may be asking too much.
rubaiyat 21 May 2011	Apple has replaced an iPod for me a month out of warranty, for which I was extremely grateful. It has been extremely generous in most cases where I needed it. Apple does have AppleCare extended warranty, to always expect that it give that chargeable service away for nothing is unrealistic. Like expecting the government to pick up your insurance costs, so that you can spend that money you saved on life's "essentials", booze, horses and ciggies. Or even an iPad 2, that you couldn't possibly live without. Now if someone wants to make the case that ALL quality electronics should have 3 years warranty on them because they should be manufactured to be reliable for that long, then I will agree. The principle being that if that was the default we would have a lot less waste. Edited by rubaiyat: 21/5/2011 07:27:32 PM
Draxxx 23 May 2011	I bought an extended warranty for my Sony Bravia X-Series LCD TV. That covered me for 3 years, and I thought I would be covered for at least half the life of the TV. However 4 years (!!!) down the track, I started experiencing an intermittent power problem. So I call up Sony who sends a "Service Technician" to my house (for $120 call out fee). He punches a few buttons on my remote control, and gets an on-screen diagnostic, and confirms there is a problem with my power board. Ok, no problem, should be $100 or so to fix, and he'll call the following day with an appointment. Three days later I call Sony, who bring up my file, confirm the Techs visit and promptly advise me that there are no parts for my 4 year old LCD as simply are made any more. They advise my best option is to purchase a second hand X-Series, and cannibalize it for parts, or to buy a new TV. Gee, Thanks. My advice - get an extended warranty. Keep your product serviced and where possible covered under some sort of renewable warranty. And don't buy Sony. :(
girkers 23 May 2011	The problem with the wording of the warranty is "reasonable". What may be a reasonable time frame for me, is not necessarily the same for the manufacturer. They say it relates to cost, I bought a new TV about 14 months ago for $3500, this year it is $2500, so which is the more reasonable time frame, from the original cost, or the cost of the item now. Also where is the burden of proof, do I have to prove that it is reasonable, or the manufacturer have to prove the time expired is unreasonable. Like most things in law they are open for interpretation, so where are the guidelines so us "normal" people know what sort of reasonable time we should expect from a product/price point of view.
shivaiyr2004 23 May 2011	I don't fully understand the article. If extended warranty is also covered by Consumer laws then why would anyone buy extended warranty ? Also, how can I find out exactly what the extended warranty cover is under the consumer laws ? For instance, do we have a website that can easily tell us what is covered, how long it is covered and what products come under is' scope ? Can anyone help Or can the author of the article expand on his article ? This would help one to arm with sufficient information BEFORE purchasing any item and hopefully not be pushed by the Salesmen into buying useless warranty.
violet 23 May 2011	I think much of the problem with electronic products is that they're not being made to last as long as they used to. I own an old style Sony TV which is 18 years old which works perfectly and refuses to die. As my area is switching over to digital TV soon, I finally bought a digital ready LCD TV. However, in my research I discovered that the newer TVs are lucky to last 3-5 years. When people are becoming more environmentally aware, why aren't we looking at making electronic equipment that is more sustainable, instead of making cheap stuff that ends up in land fill? I would much rather buy something that I know would last 5-10 years and pay more for it, even if it took me a while to save up for it.
gnome 23 May 2011	@violet, good point about for how long things are built to last, but there may be another side to it. Modular construction of modern gear means that in many cases any repair will involve replacing most, or all, of the hardware. Combine this with the fact that tech items are now relatively a lot cheaper, and the cost of paying a service person is a lot dearer, and it's not hard to see how we got to the present situation. But the fact remains that most stuff will still last longer than most 'extended' warranties, so if like most people you have several items, it is better to self-insure and ignore the self-serving sales pitch.
petergaskin 23 May 2011	Statutory warrantee exists - its just not defined, except for mobile phones sold on a 2 year contract. in this case, the phone should last 2 years. So the real problem is that we have laws that are largely not proven in a court of law. So we must wait for our favorite electronic item to go to court and the court will decide the reasonable life of the item in question. Either that, or the Government must define the reasonable life of all electronic items - a bit like the used car warrantees on secondhand vehicles.
LeeSMaz 27 March 2012	Lol at u all. As a consumer , customer actually of Harvey Norman in this example. Cheap PVR Teac, I did get the extended warranty. Always on goods over $300, especially where I think the design or concept has much that can and I expect will go wrong. In this case, PVR's, the way they work is expected will have mutli break downs. Cant b helped. So within 3 months the pvr had problems, which I corresponded with teac's tech about n got numerous software updates to solve issues. By 6 months the hard disk as expected was iffy and I turned its active pause n rewind live TV off. By 9 months I delivered it to teac nominated service(Harvey does not accept returns), the technician as expected replaced the hard drive n I think even the board in attempts to solved software issues. Anyways, another update n I still found the hard drive active pause rewind live tv a problem. but anyways, 14 months after purchase the Hard drive died outright again tho this time my external drive was still working but I went thru extended warranty and they just replaced the unit with a more recent model which had non of the software issues or hardware issues of the previous. I didnt bother to renew the extened warranty. Figured I'll just fix it myself next time. I did get extended warranty on our LCD TV tho. U never know. Was a cheap but. $40 for 3 years extra. I noticed they stopped 5 year extended warranties. My PVR barely got a few months into the 5 year warranty b4 getting replaced. The extended warranties r ended when they replace the item. Now as a supplier/seller/shop point of view. We deal in toys. We get an abnoxiously large percentage returned to us?? Much of which I sort out on the spot or a day later as user error. ie. actually nothing wrong and product works fine if u put the batteries in the right way or make sure they connect or charge the batteries or inniitalise the products as in the instructions that no one reads. A small proportion have proper faults of which is hotly debated as to customer induced from damage or real manufacturer defect. We do have instances of customers abusing returns warranties etc with products bought online from elsewhere, markets or ebay etc. problem with products not being built to last is customer demand for cheapness fostered by the rise of online sales which constantly drive prices down. In the end u get what u pay for and the price to the buyer might seem expensive(only because of rising cost of living, a hunderd dollars isnt much these days, a quarter of ur rent or utility bill, a tank of fuel n a drink or 2 for some, but it is a lot to a lot of people) but the cost to the manufacturer seems very cheap. just so many points in between raising the cost. To get back to quality we need to stop hinder limit overseas online sales like some other countries r now doing. Only then will we see decent lasting products and really ACCC, ASIC, Department fair trading need to get real with their policies and actions. This massive grey area of reasonable time, no time limits contradiction is the problem. Actually putting in place rough times for statutory warranties for particular lines of products would make everyones life easier, not sure why the authorities dont want this to come about? Do they make money out of the confusion or does it guarantee them a job?? Reasonable time for some for a $200 item might be a month or 2 as consider it cheap for what it is but then to others $200 might be all they can spend a month so is a considerable price to pay n they expect it to last a year or 2. They grey area needs defining or just removing and put it back on the advertised warranty of the product so is plain n simple for everyone. Product states 3 months warranty then thats it, over a cheaper 1 month wearranty product that at the moment u then claim unfair after buying the cheapy as it stops 2 months later n u want statutory warranty. its the cheap chasing thats the problem. remove statutory warranty n solves everything. U buy cheap u get cheap, u buy something with longer warranty u pay more u get better product.
petergaskin 27 March 2012	Would have to agree. The statutory warrantee shoudl be defiend - by product by price range. This would clear all the confusion, but it would put lawyers out of bsuiness. the law is written for large retailers that can take advantage of the confustion.