Are extended warranties really all that necessary, considering the protections Australian Consumer Law offers?
The selling practices of the extended warranty industry were recently made subject of a review which has resulted in a set guidelines of aiming to "provide greater transparency" into what consumers are being told by retailers. Two companies in particular (one of which is part of the Harvey Norman group) have been instructed to follow a new set of guidelines.
"The ACCC has been concerned with the conduct of some retailers overstating the benefits of buying an extended warranty, when consumers have the free protection of consumer guarantees under the Australian Consumer Law (ACL)," ACCC Commissioner Sarah Court said.
The two companies in particular who will be subject to the new guidelines are Domestic & General Services and Yoogalu, a wholly owned subsidiary of Harvey Norman. Domestic & General Services provides administrative, claims management and other services to retailers who sell extended warranties to consumers for electronics, domestic appliances and white goods. Yoogalu was involved in planning, designing and creating the extended warranty program sold at Harvey Norman, Domayne and Joyce Mayne.
Yoogalu and Domestic & General will now need to:
- engage with retailers to revise extended warranty brochures to include additional information to assist consumers in comparing the features of the extended warranty being sold with the existing remedies available under the ACL
- provide ACL compliance training to those retailers
- develop and implement a program for monitoring retailers' extended warranty selling practices, including by mystery shopping, and if necessary take action to improve those practices
Domestic & General Services and Yoogalu cooperated with the ACCC by voluntarily offering these undertakings which follow similar measures recently agreed to with ferllow extended warranty provider Lumley and Virginia Surety.
As a result of these four undertakings, all major Australian retailers who offer extended warranties to consumers of electronics, domestic appliances and white goods will receive compliance training and have their selling practices monitored. Regular reports to the ACCC in relation to the implementation of these obligations will also be required.