Ending extended warranty hustles
I shudder to think how much money I’ve wasted on extended warranties. I thought I was being sensible, protecting my expensive new gadget. Turns out it I was a complete sucker, fooled into buying worthless scraps of paper.
In recent years, it’s become clear that extended warranties are little more than a licence to print money for retailers.
Consumer NZ says we don’t need them. In a recent report, the Commerce Commission bluntly described them as ‘‘worthless addons’’.
It turns out extended warranties are usually no better – and often worse – than the protection we already have under the Consumer Guarantees Act (CGA). This plucky piece of law valiantly defends us from faulty flatscreens and toasted toasters, if only we knew how to use it properly.
Awareness is growing fast, and new rules are in force that clamp down on misleading claims. The commission has launched a crusade on dodgy sellers, but we’re not out of the woods by a long shot.
Lots of people still don’t know their rights. Under the CGA, goods have to be of acceptable quality and fit for purpose. If they crap out before they reasonably ought to, it’s on the retailer to make things right. You don’t need an expensive piece of paper – the law is already on your side.
Let’s say you shell out a hundred bucks to get a three-year warranty. If the gadget should have a lifespan of at least three years anyway, you’ve probably wasted your money.
Kicking yourself right now? If it was a recent purchase, you’ve got five business days to get a full refund on the warranty.
That’s one of the things the shop assistant now has to mention when they’re trying to sell you a warranty. They also have to let you know about your rights under the CGA, and explain exactly how the warranty provides better protection than the law.
An example would be a promise to replace the item straight away, rather than having to go through the repair process. The CGA also doesn’t apply to goods normally used for business purposes, so an extended warranty may make sense in some cases.
These are the exceptions. If you’ve never heard a red-faced salesman try to explain how the warranty they’re hawking is any better than the CGA, you haven’t lived.
If they somehow forget to give the necessary disclosures (and many do), you could gently remind them of the $10,000 fine hovering above their head.
Regulators are cracking down, but mostly you still have to fight for your own rights – and that means this is the perfect area to indulge your inner bush lawyer.
Consumer NZ recently surveyed its members, and found about a third had successfully returned a faulty item in the last two years. Those who were confident about consumer law were much more likely to get a refund or replacement. iSTOCK
If you need to return something, always invoke the CGA. Bring one along for some added firepower, or read it out over the phone. Don’t let the retailer fob you off to the manufacturer either – it’s their responsibility to fix the problem.
It makes my blood boil to think how many millions of hardearned dollars have been wasted on useless extended warranties. You have to grudgingly admire the sheer audaciousness of the hustle. But now it’s time to bring it to an end. Got a money question you’ve been struggling with? Want to send a bouquet or a brickbat? Email Budget Buster at meadows182@gmail.com, or hit him up on Twitter at @MeadowsRichard.
‘ You still have to fight for your own rights – and that means this is the perfect area to indulge your inner bush lawyer.’