Extended Warranty – Part II

When purchasing an expensive product, one of the first things consumers check is the whether the product comes with a warranty period or not. Certain products tend to come with
27 Mar 2018 11:44
Extended Warranty – Part II
Fijian Competition and Consumer Commission chief executive officer Joel Abraham.

When purchasing an expensive product, one of the first things consumers check is the whether the product comes with a warranty period or not.

Certain products tend to come with short term warranty, hence, retailers offer extended warranty to consumers which come with a cost.

Given that consumers already investing their hard earned money into purchasing the product, they have to be certain that buying the extended warranty is beneficial and not a waste of money.

Before buying an extended warranty, consumers should decide whether the services and protection being offered are worth the money, and in particular whether the extended warranty provides protection beyond their statutory rights.

Because an extended warranty is usually a separately sold contract, what is covered in the ‘fine print’ may not be the same as in the manufacturer’s warranty.

Therefore, consumers should be clear about what protection is being offered, and should not be pressured into purchasing one on the spot.

There are number of questions you as a consumer should ask to determine whether an extended warranty is good value:

i.Does the extended warranty offer a higher level of protection than consumers’ statutory rights?

Consumers should be certain that an extended warranty does not simply duplicate the protections available under their statutory rights.

  1. Are there any important restrictions or conditions? For instance, is the warranty only valid if the goods are regularly serviced?

iii. When does the extended warranty start?

Some extended warranties start from the date they are bought, not when the manufacturer’s warranty expires.

iv.Will any remedy be equal to the goods’ original price?

The remedies offered under some extended warranties may depreciate (reduce in value) over time.

This means that if there is a problem, only part of the purchase price may be refunded or lesser value goods offered as a replacement.

  1. If the goods have to be sent for repair, who pays freight costs and other associated running cost?
  2. Are there some kinds of problems the warranty does not cover? Some extended warranties may not cover damage caused by accidents or water damage, for example.


Misleading consumers about extended warranties:

Retailers and suppliers must not mislead or deceive consumers about the need for an extended warranty or their benefits.

For instance, it is misleading for a business to represent that they will only replace or repair a faulty product if a consumer buys an extended warranty, since a consumer’s statutory rights may entitle them to the same remedy.

The FCCC treats misleading conduct very seriously and will not hesitate to take action against businesses that mislead or deceive consumers.


Case Study:

In one particular case which was lodged with FCCC, a consumer bought a product from a trader and after using it for a year and half it stopped working.

The manufacturer’s warranty had lapsed but the consumer was still covered as he had bought an extended warranty which was still active.

The consumer took the product back to the trader for repair and was advised that they no longer sold the model as it was outdated. The customer requested for a replacement product as it could not be repaired due to unavailability of parts.

The trader agreed to replace the product but was not willing to provide any further warranty on the new replacement product.

Feeling frustrated with the turn of events, the consumer sought FCCC’s assistance.

FCCC informed the trader that firstly the consumer had certain months of warranty available on the product which should continue, and also provide a new manufacturer’s warranty which comes with the new product. After FCCC’s intervention the trader agreed and offered the consumer one (1) years’ manufacturer’s warranty plus the continuation of residual extended warranty which the consumer had purchased.


Advice for consumers:

Being well-informed about any product or service is one of the best ways you can protect yourself as a consumer.


Before buying you should:

  • Think about what you want the product or service to do.
  • Shop around for the best deal.
  • Compare quality and price.
  • Ask for advice.
  • Inspect goods thoroughly.
  • Read the terms of any extended warranty carefully.

In the case of an extended warranty, consider whether it is value for money, and be careful about buying one at the point of sale.

Next week we look at the aspect of Retailers Warranty.


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