Consumer law expert Philippa Heir reveals truth behind extended warranties as JB Hi-Fi sued

A consumer law expert has revealed how Aussie businesses can use extended warranties to avoid their legal obligations, as one of the country’s biggest retailers faces shock claims it sold the “junk” products for more than a decade.

JB Hi-Fi is in hot water over allegations it used “deceptive conduct” in selling the warranties on products since 2011 by claiming they offered guarantees not ensured under Australian Consumer Law.

But the electronics retail giant has disputed these claims, asserting it had always complied with the laws and vowing to defend the accusations in court.

Maurice Blackburn Lawyers has lodged the class action suit in Victoria’s Supreme Court, alleging the warranties were “of little to no value” on products sold since 2011.

But legal expert Philippa Heir explained extended warranties can be a way for businesses to “hide their obligation” under existing consumer law.

She told NCA NewsWire customers were already afforded basic rights under clauses in Australian Consumer Law and there were “inherent issues” present in the market.

Some of the guarantees include the product being of acceptable quality and that consumers were entitled to a repair, refund or replacement if not.

“You still have these rights, even if the goods or services come with a warranty or if they don’t,” Ms Heir, managing lawyer at the Consumer Action Law Centre (CALC), said.

“They are inherent in the consumer transaction.

“The difficulty we see is that businesses can sometimes use the warranty to ignore their obligations.

“So they might say: ‘Oh sorry, it’s not covered under the extended warranty, our hands are tied, we can’t do anything else’.”

Ms Heir said this was “not necessarily true”, explaining the sale of extended warranties can impact people’s understanding of their existing rights.

“For example, if the term is only two years, the warranty provider might say: ‘Oh sorry, that’s it, you’re out of time’,” she said.

“But under consumer law, the relevant time is a reasonable time… so it might be more than two years (for some products).

Maurice Blackburn’s class action alleges JB Hi-Fi used “misleading or deceptive conduct” or “unconscionable conduct” in selling the extended warranties on products sold between January 1, 2011 and December 8, 2023.

The firm alleges the electronics retailer did this by telling customers either directly or by implying that the warranties “operated for longer than the rights” under consumer law, provided benefits that consumer law did not, or were “of value” to customers.

“JB’s extended warranties expire just 3-6 years after purchase, but they add substantially to the cost,” Maurice Blackburn Lawyers principal Miranda Nagy said.

“Our case alleges they added nothing meaningful to the strong rights for repair, replacement or refund under the Australian Consumer Law rights that consumers already enjoy.”

The claim further alleges JB Hi-Fi failed to give customers important information about their rights under the consumer law “which they needed to make a properly informed decision” about buying an extended warranty.

Ms Heir said the cost of extended warranties could often seem “out of proportion” for what was being purchased.

She referenced major issues in warranties offered by retailers like used car sales.

“There’s all sorts of exclusions that might appear in those documents, and sub-limits for specific issues that could well be much less than what is required to fix the problem,” Ms Heir said.

“It also provides an avenue for the car dealer to refuse to comply with their obligations under Australian Consumer Law by using the extended warranty claim as an out.”

In Maurice Blackburn’s claim against JB Hi-Fi, the disputed warranties relate to offers by JB Hi-Fi for purchases on electronics, home appliances and home entertainment products.

They were at times called extended care plans or extra care plans.

In a statement, a JB Hi-Fi spokeswoman said: “JB Hi-Fi takes compliance with its legal obligations very seriously and considers that it has complied with relevant laws at all times.

Extended warranty ‘absolutely a waste of money’

“JB Hi-Fi intends to vigorously defend the proceedings,” the spokeswoman said.

The spokeswoman said it was not appropriate to comment further due to legal proceedings starting.

Australia’s consumer watchdog has a long-standing policy on the sale of extended warranties, stating businesses must meet a set of basic rights when they sell products or services.

The Australian Competition and Consumer Commission (ACCC) says it is unlawful for businesses to mislead customers about their rights under Australian Consumer Law.

“Businesses engage in problematic conduct where they either imply or expressly state that the only relevant consideration when dealing with a product fault is found under the terms of the warranty,” an ACCC spokesman said.

“Businesses need to ensure that they consider consumers’ rights under Australian Consumer Law when responding to claims for remedies.”

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