Worth­less war­ranties warn­ing

Auckland City Harbour News - - NEWS -

Worth­less! That’s how the Com­merce Com­mis­sion sees ex­tended war­ranties on ap­pli­ances and elec­tron­ics like TVs, fridges and stereos.

Ac­tu­ally, I’ll quote it a bit more fully from its Con­sumer Harm re­port that I got us­ing the Of­fi­cial In­for­ma­tion Act:

‘‘This group (do­mes­tic ap­pli­ance re­tail stores)… have in­creased prof­its by sell­ing worth­less ad­dons such as ex­tended war­ranties that run con­cur­rently to Con­sumer Guar­an­tees Act rights.’’ It’s a bril­liant busi­ness model. The Con­sumer Guar­an­tees Act means that re­tail­ers are re­spon­si­ble for fix­ing stuff they sell which isn’t of ad­e­quate qual­ity.

Ad­e­quate qual­ity for a TV, wash­ing ma­chine and stereo means to me that un­der or­di­nary use, they should last for years and years. If they break down then the re­tailer needs to take re­spon­si­bil­ity and fix it or it is not rea­son­able qual­ity.

If you buy a mu­sic sys­tem, you are likely to be of­fered an ex­tended war­ranty of one, two, or three years.

In my book, none of those pe­ri­ods is an ac­cept­able time pe­riod to have prob­lems.

But if I bought a Sony Mi­cro Sys­tem for $258 at Har­vey Nor­man, a two-year war­ranty would cost an ex­tra $49. Three things strike me about this.

First, $49 is a lot of money and it is bet­ter kept in your pocket.

Sec­ond, in­sur­ance that costs $24.50 a year in­di­cates you are run­ning a very, very low risk of find­ing your­self need­ing to make a claim.

Third, in­sur­ance is for risks you can’t af­ford to run.

Th­ese are ‘‘cat­a­strophic’’ risks, risks that would crip­ple you. Your stereo not work­ing is not one of those.

Un­less con­sumer ap­pli­ances have be­come as­tound­ingly badly made in the past 20 years I see no value in ex­tended war­ranties and con­cur with the com­mis­sion’s view.

In fact, I’d go fur­ther. No guar­an­tee should be al­lowed to be sold that cov­ers the first year of an ap­pli­ance’s life.

I have one of those old black stack stereos from the 1980s in the cor­ner of my lounge. It works great. It is ex­cel­lent for the kids to play all their Fa­mous Five CDs on. In the bed­room, I have one of those CD/tape play­ers from the 1990s.

They have a com­bined re­sale value of no money but have saved me heaps by not hav­ing to buy a new sound sys­tem.

It helps that mu­sic re­ally hasn’t moved very far for me since Kate Bush’s Hounds of Love so I don’t find my­self con­stantly han­ker­ing for new mu­sic – and new ways of play­ing it.

But the key point is that they are both still work­ing. And, amazingly, the mix tapes that have some­how sur­vived from my teen years still play.

I ex­pect dura­bil­ity from the ap­pli­ances I buy now.

It is an ar­ti­cle of fi­nan­cial faith with me never to ac­cept an ex­tended war­ranty, a be­lief that was ce­mented last year when I bought my el­dest an iPod. The shop tried to sell me an ex­tended war­ranty for it.

When I laughed, they said they could do the war­ranty for half price.

That in­di­cated to me that there was far more profit in that war­ranty than was jus­ti­fied at best and that as in­sur­ance it was a joke.

Some risks I will run my­self, such as hav­ing a fight with a re­tailer to fix an item that has bro­ken down un­ac­cept­ably soon. I will self-in­sure by leav­ing the money in my bank ac­count.

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