When you're asked to pay for an extended warranty on your new product, ask the sales rep: what does this warranty cover me for, that I don't already have for free under the Australian Consumer Law?
Category
🗞
NewsTranscript
00:00 You know those extended warranties you often feel pressured into paying for when you're
00:04 buying a new TV, computer, camera, phone, toaster, whatever. A lot of those are actually
00:12 worthless. Stop me if you've heard this one. You wander into a big department store to purchase a
00:18 new TV, say its ticket price says it will be $2,000. It comes with a built-in 12-month
00:25 manufacturer's warranty. But when you're ready to hand over your hard-earned cash, the sales rep
00:30 upsells you with a three-year extended warranty for an extra $200. It seems like a good idea at
00:38 the time. But when you try to use your warranty within the allotted three-year period, you're told
00:45 about a whole bunch of complex fine print conditions that mean you can't get that TV repaired.
00:52 That's when you realize that extended warranty you've shelled out for, it's not worth the paper
00:57 it's been printed on. It was a huge waste of your money. And here's the thing, your new TV is already
01:04 protected for free under the Australian Consumer Law. The law protects that product for as long as
01:12 it could be reasonably expected to last. So for that TV, that's probably around two or three years.
01:20 Coincidentally, the same amount of time you've just paid extra for under the extended warranty.
01:27 You're effectively paying for a right you already had for free. Not everything is covered by
01:34 Australian Consumer Law though. The law won't cover accidental damage, additional customer support,
01:40 and it doesn't cover loan replacement during repairs, for example. Most consumer electronics
01:46 have what's called a bathtub curb of failure. That means most products will fail early when
01:53 still under manufacturer guarantee, or they'll fail after two or three years when the extended
01:59 warranty has run out. And that's why big retail companies love extended warranties so much.
02:05 The warranties cover the period of time when the product is least likely to fail. That means
02:12 companies really can make money off your misfortune. If you're buying a used car from a dealership,
02:19 for example, you could be paying a few thousand dollars for an extended warranty. In a couple of
02:25 years time, that warranty could have cost you more than the car is actually worth. And here's the
02:32 kicker, secondhand cars are covered by Australian Consumer Law too. So when you're next out and
02:40 about buying your latest gadgets, arm yourself with one simple question. When you're offered
02:46 an extended warranty for an additional cost, ask the sales rep, "What does this extended
02:52 warranty give me that I don't already have for free under the Australian Consumer Law?"