Extended warranties: are they worth the paper they’re written on?

'They don't make 'em like they used to' tends to be our general attitude in this fast-paced world — products are increasingly disposable, replaceable and not made to last. This is simply reality, but only to some extent: it’s important to remember that manufacturers and retailers still have an obligation to provide customers with goods that are both safe and durable. Here, we consider your rights and responsibilities under consumer-protection law.

The law

When the Australian Consumer Law (ACL) Act came into force in 2011, it clarified many consumer rights that were ambiguous under the previous Act. To be specific, the ACL Act sets out a statutory guarantee that products must be fit for their common purposes, free from defects, durable and safe — definitions that must accord with the standards of a 'reasonable consumer'. This means that the manufacturer or retailer may have to guarantee a product outside the warranty period they’ve provided.

Companies' obligations

In determining a manufacturer's or retailer's obligation, the ACL Act also takes into consideration the nature of the goods; the price or value; and any statements about the product, whether they're part of its marketing or a comment from the manufacturer or a salesperson. The most common example of this is a TV. If you pay $1500 for a TV, it's reasonable to expect to enjoy regular use of it for more than 12 months. And if you buy a big-brand TV, as opposed to an unknown brand of lesser quality, you'd expect to use it for much longer.

Extended warranties: are they worth it?

Many extended warranties (or 'product care' packages, as some companies call them) don't necessarily equate to the rights of the ACL Act. According to an investigation conducted by the consumer-advocacy group Choice, some companies will assist only in the case of a minor fault. If the product has a major fault, the warranty or product-care package will provide no remedy.

In other cases, an extended warranty may provide additional assistance, but only if you purchase the longest available extended warranty, which is usually for an extra four to five years — and often costs a pretty penny.

Ultimately, your best defence, according to the Australian Competition and Consumer Commission (ACCC), is to do your research before paying for an extended warranty. Always ask the supplier to confirm what the warranty provides that your consumer rights under the ACL Act don’t already cover.

Consumer-rights claims

If you’ve bought a product that has failed to meet the ACL Act’s standards, your first step is to return it to the retailer and request a refund or exchange. The Act may require them to guarantee the product, even if the warranty period has passed.

If the retailer refuses your request, and you believe you have a claim, it's time to seek independent legal advice. You may have grounds to seek reimbursement for the product through your state or territory's consumer-affairs or civil-claims tribunal.

Sometimes a failure to meet product standards can result in personal injury. Take this recent case, for instance: a customer bought a lantern from a camping store, and the lantern later exploded, causing the customer to suffer a hearing impairment. In cases such as these, you may be entitled to consumer compensation.

If a faulty product causes personal injury, you can pursue a claim under the ACL Act or the Wrongs Act. Each Act is different, so their thresholds, caps and compensatory damages vary. A lawyer can assess your injuries to advise you on the best course of action.

Be aware that consumer protections do not extend to change-of-mind purchases. In these cases, refunds and exchanges are not enshrined in law — they're at the discretion of the individual retailers.

It's important to understand your rights and responsibilities as a consumer. These legal protections ensure that the products you buy are safe and durable, and they protect you from injury. They’re a guarantee that at the end of the day, you get what you pay for.

Extended warranties and your consumer rights

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Dimi Ioannou

Maurice Blackburn Melbourne

Dimi Ioannou is a Principal Lawyer and Practice Group Leader at Maurice Blackburn Lawyers in charge of the firm’s Public and Product Liability team in Melbourne. Dimi is an accredited specialist in personal injury law.

Dimi works in the area of public liability and represents clients in a wide range of consumer law litigation involving different product liability claims.

Dimi also represents families at coronial inquests, acti…

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