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Electronic resellers cheat on extended warranties

by on19 November 2008

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Waste of cash


Retailers who try to sell you an extended warranty should be avoided, according to a consumer watch-dog.

Choice has found that retail staff receive commissions on the extended warranties they sell, which can top up the manufacturer's guarantee for up to five years on appliances. However, many of the warranties were unnecessary, overpriced and packed full of small print and exclusions. Sales pitches from staff often involved false or misleading claims over the extent of the extra cover offered.

It named and shamed Australian retailers Harvey Norman and the Good Guys as among the worst offenders. Some consumers had been persuaded to take out coverage costing up to a quarter of the purchase price. While a standard warranty for a product is covered by the manufacturer, the optional warranty to extend the length of the coverage is picked up by the retailer, which usually offers its staff commissions or bonuses.

But Choice's spokesman, Christopher Zinn, said many extended warranties were unnecessary because statutory warranty, which demands a basic level of quality and performance, already covers consumers for faulty goods once the manufacturer's warranty has expired.

In the case of a television the purchaser is still entitled to a refund under statutory warranty if the product develops a serious fault after, say, 15 months, even if the television manufacturer's warranty has already expired.

Last modified on 20 November 2008
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