Extended Warranty: A Hoax or a Truth

Running head: EXTENDED WARRANTY: A HOAX OR A TRUTH
Extended Warranty: A Hoax or a Truth
Name of the Student
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Author Note

1EXTENDED WARRANTY: A HOAX OR A TRUTH
Extended warranty
The study aims to discusses about extended warranty, ACCC’s view on it and the
counter-argument regarding the topic. Extended warranty refers to a warranty insurance benefit,
which is made available to particular credit card holders. It extends the duration of the
manufacturing warranty of the product or service purchased with such credit card. The extended
warranty cover stretches the manufacturer’s expressed Australian warranty on goods and
services purchased with an eligible or selected credit card. The warranty does not exhaust the
rights or scope of an extended warranty holder to prosecute against a manufacturer in case a law
is infringed under Australian Legislation. Extended warranties differ based on their different
time durations. The duration of the extended warranty generally matches with that of the
Australian Warranty, up to a maximum period of 12 months. It is not applicable when the
American Warranty is itself 5 years or above.
Australian Competition and Consumer Commission’s claim on extended warranty
Under the Australian Consumer Law (ACL), a new product comes with a guarantee,
which is of an acceptable quality. The ACL guides the people and calls out to them saying that
they should not be misled by suppliers as they already buy the warranty along with the product,
which comes under the theory of ‘consumer guarantee’ under Consumer Law1. Delia Rickard,
the Deputy Chairman of the Australian Competition and Consumer Commission (ACCC) is of
the view that the extended warranty offers nothing extra that the automatic consumer guarantee
1 National Warranty Company Agrees To Change Extended Warranties (2018) Australian Competition and
Consumer Commission <https://www.accc.gov.au/media-release/national-warranty-company-agrees-to-change-
extended-warranties>.

2EXTENDED WARRANTY: A HOAX OR A TRUTH
or the Australian warranty provides with no additional cost to the consumers. She says that it
might just provide a little extra tweak additional to what the consumer gets out of the Australian
warranty, which is not at all substantial in nature2. The commission says that if a product is
guaranteed with a 3 years manufacturer’s warranty but the seller promises a warranty of 10
years, he is liable to put it in writing. In such case, the seller is bound to provide the after-sale
service and refusal to do would amount to breach of consumer law. The seller or the retailer
holds the duty to repair, replace or refund the faulty product even if such product does not have
an extended warranty, as it already bears an Australian Warranty that comes along with the
product, if the product is in returnable shape and condition. Moreover, it is claimed by the
Commission that faulty products, which are beyond manufacturer’s warranty are still eligible to a
remedy under the consumer law. Under the ACL, retailers or sellers who try to sell extended
warranties to consumer by befooling them with false promises are prosecuted under the
consumer law and may be liable to a fine over $1 million3.
The ACCC commission tries to educate the citizens of their rights and therefore lays
down the following guideline:
 The consumers are advised to ask for a written confirmation from the sellers regarding a
claim or a promise about an item’s longevity or performance made by the seller or by his
agents.
 The consumers are always advised to retain their purchase receipts, as that is the primary
evidence of a purchase and its manufacturer warranty.
2 Extended Warranties Not Worth It (2018) NewsComAu <https://www.news.com.au/finance/money/costs/why-
extended-warranties-are-not-worth-it/news-story/e806700959101b117f16d7c2657d67d3>.
3Money For Nothing On Needless Warranties (2018) Adelaidenow.com.au
<https://www.adelaidenow.com.au/news/south-australia/millions-wasted-on-needless-warranties/news-story/
c8cae04448f26c448615e16c01b8e821>.