A new investigation by CHOICE reported that 85% of Australian electronic stores do not adhere to Australian Consumer Law. The employees even at big retail chains are clueless and so are the consumers.

The biggest mistake both make is to confuse consumer guarantee and warranty. While a retailer may choose to give or not warranties for their products, consumers are still protected by consumer guarantees under the law (sometimes consumer guarantees can outlive warranties!).

What are extended warranties?

Imagine you go to buy a new TV set. The salesperson informs you that the warranty for your $3,000 TV is 2 years but they currently offer extended warranty that covers repairs for 3.5 years. But that costs extra.

The 1.5 year of extra warranty is called extended warranty.

The question we are answering today is should you purchase extended warranty under Australian Consumer Law?

Extended warranty is usually purchased for items of high value – home appliances, cars, electronic devices and such.

If you are about to purchase such an item, it makes sense to save yourself the money and check what warranties apply to these types of products anyway under consumer law.

You might find out that you are entitled to these 3.5 years of warranty without having to pay extra for it. Each group of consumer goods, products and services has specific guarantee terms. According to Australian Consumer Law, 2011 retailers are forbidden to misrepresent warranties and guarantees as only available for an additional fee if the consumer is already entitled to them by law.

For example, if the consumer guarantee by law for your tablet is supposed to be 2 years, the retailer can’t offer only 1 year warranty and ask you to pay extra for an extended one.

Retailers misrepresent information and create a whole new stream of income for their businesses. They might mislead a consumer into thinking that they will have extra protection only available upon purchasing the extended warranty. This is usually not the case and consumers very often pay for what they are already entitled to by law for one simple reason – the lack of information and education on warranty rights.

Let’s say a consumer buys $5,000 sports equipment that stops working properly after 15 months. The retailer refuses to repair it because the manufacturer guarantee is only 12 months and the consumer did not buy the 3-year extended guarantee.

Common sense tells us that $5,000 equipment should have longer life than 15 months and the consumer is still protected.

Australian consumers do not understand the law very well – according to CHOICE, 2008 only 29% of Australian consumers are aware of the statutory rights under the implied warranties.

The answer to the question if you should buy extended warranty is simple – research and educate yourself about the real meaning and implications of warranties so you can make informed decisions on the spot.

More often than not you are entitled to consumer guarantee that extends far beyond the scope of any warranty. Knowing your rights will save you money and make you feel confident when returning goods.