Simon warns about extended warranties

johnboy 16 January 2013 45

Simon Corbell is warning that extended warranties are mostly rubbish:

“Fair trading agencies across Australia have raised serious questions about the value of extended warranties, and whether they offer any greater protection than that already provided by the Australian Consumer Law (ACL).

Most consumers are offered an extended warranty, particularly when purchasing electrical equipment or whitegoods and for a fee this warranty can be extended beyond that provided by the manufacturer.

Mr Corbell said that in almost all cases consumers were already protected by consumer guarantees or ‘statutory warranties’ under Australian Consumer Law.

“Office of Regulatory Services inspectors will be surveying extended warranties in the market place in the coming months and assessing whether they measure up to the ACL and any claims made by retailers,” he said.

“In the meantime, consumers considering any extended warranties should ask what they offer above and beyond their existing rights, and decide if they are worth the extra money.”


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screaming banshee screaming banshee 10:27 am 19 Jan 13

Insurance is for things you couldn’t afford to replace/repair out of pocket. If my MacBook dies once out of warranty and the cost to repair is more than a quarter of its original value I’ll just buy a new one.

c_c™ c_c™ 1:32 am 19 Jan 13

Flippant said :

They way I see it, it is insurance, if your product breaks it will save you money, if your product doesnt break you have spent your money, You dont buy house insurance hoping your house burns down….. you buy it just incase it does.

If I bought a $600,000 TV, sure I’d pay $150 for warranty!

c_c™ c_c™ 1:16 am 19 Jan 13

Comic_and_Gamer_Nerd said :

Link?

Look it up yourself. Apple AU website would be a good start.
But if you didn’t already know this stuff, you obviously weren’t an informed customer in choosing to buy AppleCare, are in no position to say it’s an essential purpose. Fool + money = soon parted.

RedDogInCan said :

Any product that they are willing to discount by 25% without any haggling obviously has a pretty healthy profit margin!

Extended warranties are almost entirely margin. On many big ticket items now like televisions and laptops, warranty is where the profit comes from, not the product itself (due to heavy discounting). At Harvey Norman, the warranty firm is actually owned by Harvey Norman itself, so pure profit, while others like Good Guys contract it out. Either way, bulk of the money is margin for the retailer. Only a small fraction goes to the warranty ‘policy’.

thatsnotme thatsnotme 11:45 pm 18 Jan 13

Flippant said :

Its good to see that Simon Corbell doesn’t have anything better to do with his time than to kick retailers in the guts when they are already down, retailers are struggling to survive and he decides to create a witch hunt to make it seem like they are ripping people off.

What a joke, isnt there anything better he can do that will actually make a difference to Canberra.

I used to work in an electrical retailer and it really annoys me when people rubbish extended warranties, I buy them personally on purchases and occasionally they come in handy.

They way I see it, it is insurance, if your product breaks it will save you money, if your product doesnt break you have spent your money, You dont buy house insurance hoping your house burns down….. you buy it just incase it does.

If you wanted to make a ‘statutory warranties’ claim and the retailer didnt want to come to the party then your only legal option is to take them to small claims court, pay the lodgement fee which im sure is a couple of hundred dollars then wait to have your case heard which can take months… and in the end that decision is made by a single judge and can go either way depending on how they feel on the day, as the ‘statutory warranties’ under Australian Consumer Law is a very grey area and has been written that way so that it is open to interpretation.

What you are paying for in an extended warranty is assurance that it will be fixed or replaced as quickly and hopefully as painless as possible.

Someone also made a comment regarding commission on warranties, yes you are right salespeople do recieve commission on them as well as everything else they sell, which i hope comes as no shock to anyone…
I also hope that the same people are not shocked to hear that real estate agents get paid a commission as do car salesmen.

Biased much?

Also, saying your only recourse if you make a claim and the retailer doesn’t want to know about it is small claims court is bullshit. In the ACT, the Office of Regulatory Services deals with Fair Trading, and if you’ve tried to resolve your dispute with the retailer and failed, you can lodge a complaint with them. Jumping straight to small claims court isn’t necessary.

And please…comparing extended warranties to insurance is ridiculous. With some exceptions, insurance is about protecting yourself from accidents and disasters. Warranties are about being protected when at item that shouldn’t break, does. You shouldn’t have to buy extra protection just to make sure that something you’ve spent a lot of money on actually lasts a reasonable amount of time.

RedDogInCan RedDogInCan 9:37 pm 18 Jan 13

Flippant said :

If you wanted to make a ‘statutory warranties’ claim and the retailer didnt want to come to the party then your only legal option is to take them to small claims court, pay the lodgement fee which im sure is a couple of hundred dollars then wait to have your case heard which can take months… and in the end that decision is made by a single judge and can go either way depending on how they feel on the day,

Pretty easy to see which side your bread is buttered on…

Taking a retailer to the small claims court is simply. Yes, you pay a small lodgement fee but that fee plus any other costs are added to the amount claimed. The judge however doesn’t make arbitary decisions – their default judgement is always with the claimant unless the defendent presents a solid case against the claim, in which case it is decided on its merits. And the good thing is that the sheriff will enforce the judgement for you.

I recently overheard the following conversation between a salesperson and a consumer:

SP: I would recommend taking an extended warranty on that item.
C: How much is it?
SP: $75 for three years.
C: No thanks.
SP: What about $60?
C: Err, no.
SP: I could do it for $50.

Any product that they are willing to discount by 25% without any haggling obviously has a pretty healthy profit margin!

Flippant Flippant 8:44 pm 18 Jan 13

Its good to see that Simon Corbell doesn’t have anything better to do with his time than to kick retailers in the guts when they are already down, retailers are struggling to survive and he decides to create a witch hunt to make it seem like they are ripping people off.

What a joke, isnt there anything better he can do that will actually make a difference to Canberra.

I used to work in an electrical retailer and it really annoys me when people rubbish extended warranties, I buy them personally on purchases and occasionally they come in handy.

They way I see it, it is insurance, if your product breaks it will save you money, if your product doesnt break you have spent your money, You dont buy house insurance hoping your house burns down….. you buy it just incase it does.

If you wanted to make a ‘statutory warranties’ claim and the retailer didnt want to come to the party then your only legal option is to take them to small claims court, pay the lodgement fee which im sure is a couple of hundred dollars then wait to have your case heard which can take months… and in the end that decision is made by a single judge and can go either way depending on how they feel on the day, as the ‘statutory warranties’ under Australian Consumer Law is a very grey area and has been written that way so that it is open to interpretation.

What you are paying for in an extended warranty is assurance that it will be fixed or replaced as quickly and hopefully as painless as possible.

Someone also made a comment regarding commission on warranties, yes you are right salespeople do recieve commission on them as well as everything else they sell, which i hope comes as no shock to anyone…
I also hope that the same people are not shocked to hear that real estate agents get paid a commission as do car salesmen.

tuco tuco 9:28 am 18 Jan 13

Pork Hunt said :

Comic_and_Gamer_Nerd said :

No apple care is a great service!

The comma is the difference between helping your uncle Jack off a horse and helping your uncle Jack, off a horse.

Did you mean “No, apple care is great service”?

No screen shots please. Uncle Jack is clearly a busy man.

RadioVK RadioVK 8:57 am 18 Jan 13

POK said :

I treat extended warranty as being a bit like insurance. Yes its extra, but if I can’t afford the warranty, maybe I need to rethink what Im buying. There are a lot of laws out there meant to protect us, but good luck invoking them the correct way. An extended warranty is pretty hard to argue with, especially with consumer laws right behind it. But Id never buy extended from any business whose longevity was in question. Thats just throwing money away.

On the off-topic of Apple-Care, thats not just a warranty but a service. Chances are an Apple user is either not an IT Professional, or they are and don’t like wasting their time debugging their equipment. In either case there’d be benefit to having someone else do it.

I would suggest that you read the fine print of the extended warranty agreement very carefully. Pay particular attention to the exclusions in the agreement, the ways and means they can use to invalidate the agreement, and the conditions on who the gear needs to be sent to for warranty repair.

I think you’ll find that extended warranty agreements are very easy to argue with if you know what you’re doing. They have actually been written that way deliberately. You’re paying good money for an agreement that isn’t really woth the paper that it’s written on.

The other thing to remember is that these extended warranty companies have no relationship to the equipment manufacture at all, and are not endorsed or recommended by them.

Comic_and_Gamer_Nerd Comic_and_Gamer_Nerd 6:56 am 18 Jan 13

c_c™ said :

Comic_and_Gamer_Nerd said :

Can you also explain the costs to replace MacBook battery’s or hdd on your own?

Macbook Pro 15″ AppleCare – $429

Macbook Pro 13″ AppleCare – $399

Covers only original defects in manufacture of equipment. Excludes battery (except manufacture fault). Excludes plastic components of connector ports. Excludes defects expected with normal wear and tear and age of device.
___________________________________________________

Apple battery replacement for 13 and 15″ models, both built in and non built in – $149.
(Not covered by AppleCare anyway so will always be in addition to)

Power Brick (covered by AppleCare is included with notebook) – $99
(I’ve toasted two in 5 yrs, only the original would have been covered anyway).

Hard disk –

Default config for upper spec 15″ Macbook Pro has a 2.5″ 750GB, 5400rpm HDD.

Replacing it with a retail Seagate 750GB, 7200rpm, 2.5″ drive – $90.

Going for a higher spec or higher capacity drive, perhaps a 1TB SATA 6G/s would be closer to $200.

Screen –

If the screen is dodgy, then it will be apparent in the first year. If it breaks, chances are it’s due to accident or wear and isn’t covered anyway. Up to $700 for a 15″ screen in Australia if replaced by Apple.

RAM –

Under $100.

So even if I had a battery + the HDD + the power brick + the ram, all fail once each, I would have spent as much, or less, than the AppleCare. And given the stats, it’s unlikely that much would fail unless I damaged it accidentally, which isn’t covered anyway.

Link?

c_c™ c_c™ 11:20 pm 17 Jan 13

Comic_and_Gamer_Nerd said :

Can you also explain the costs to replace MacBook battery’s or hdd on your own?

Macbook Pro 15″ AppleCare – $429

Macbook Pro 13″ AppleCare – $399

Covers only original defects in manufacture of equipment. Excludes battery (except manufacture fault). Excludes plastic components of connector ports. Excludes defects expected with normal wear and tear and age of device.
___________________________________________________

Apple battery replacement for 13 and 15″ models, both built in and non built in – $149.
(Not covered by AppleCare anyway so will always be in addition to)

Power Brick (covered by AppleCare is included with notebook) – $99
(I’ve toasted two in 5 yrs, only the original would have been covered anyway).

Hard disk –

Default config for upper spec 15″ Macbook Pro has a 2.5″ 750GB, 5400rpm HDD.

Replacing it with a retail Seagate 750GB, 7200rpm, 2.5″ drive – $90.

Going for a higher spec or higher capacity drive, perhaps a 1TB SATA 6G/s would be closer to $200.

Screen –

If the screen is dodgy, then it will be apparent in the first year. If it breaks, chances are it’s due to accident or wear and isn’t covered anyway. Up to $700 for a 15″ screen in Australia if replaced by Apple.

RAM –

Under $100.

So even if I had a battery + the HDD + the power brick + the ram, all fail once each, I would have spent as much, or less, than the AppleCare. And given the stats, it’s unlikely that much would fail unless I damaged it accidentally, which isn’t covered anyway.

Comic_and_Gamer_Nerd Comic_and_Gamer_Nerd 9:04 pm 17 Jan 13

c_c™ said :

I note that toe pro-AppleCare and pro-warranty people are using wording that is almost identical to that used by some retailers and Apple’s own training materials.

What a surprise.

As for this insurance comparison and if you can’t afford warranty, don’t buy the product. What crap.

Work out the cost of buying extended warranty on all the gadgets in your house, and then work out the cost of repairing the one or two that may fail statistically speaking. You end up ahead paying for repairs, way ahead, compared to paying for warranties.

Your laptop for example only has a 1 in 5 chance of failing, and a good deal of those failures, about 1/3 are from accidental damage, specifically excluded by extended warranties.

Laptop hard disk – cheaper to buy your own replacement than buy warranty on the tiny chance it fails inside when the extended warranty would reply.

Laptop battery – these by their very nature fail, hence most extended warranties exclude them.

Can you also explain the costs to replace MacBook battery’s or hdd on your own?

c_c™ c_c™ 8:13 pm 17 Jan 13

I note that toe pro-AppleCare and pro-warranty people are using wording that is almost identical to that used by some retailers and Apple’s own training materials.

What a surprise.

As for this insurance comparison and if you can’t afford warranty, don’t buy the product. What crap.

Work out the cost of buying extended warranty on all the gadgets in your house, and then work out the cost of repairing the one or two that may fail statistically speaking. You end up ahead paying for repairs, way ahead, compared to paying for warranties.

Your laptop for example only has a 1 in 5 chance of failing, and a good deal of those failures, about 1/3 are from accidental damage, specifically excluded by extended warranties.

Laptop hard disk – cheaper to buy your own replacement than buy warranty on the tiny chance it fails inside when the extended warranty would reply.

Laptop battery – these by their very nature fail, hence most extended warranties exclude them.

POK POK 7:45 pm 17 Jan 13

I treat extended warranty as being a bit like insurance. Yes its extra, but if I can’t afford the warranty, maybe I need to rethink what Im buying. There are a lot of laws out there meant to protect us, but good luck invoking them the correct way. An extended warranty is pretty hard to argue with, especially with consumer laws right behind it. But Id never buy extended from any business whose longevity was in question. Thats just throwing money away.

On the off-topic of Apple-Care, thats not just a warranty but a service. Chances are an Apple user is either not an IT Professional, or they are and don’t like wasting their time debugging their equipment. In either case there’d be benefit to having someone else do it.

c_c™ c_c™ 7:13 pm 17 Jan 13

Comic_and_Gamer_Nerd said :

c_c™ said :

Comic_and_Gamer_Nerd said :

if you’d don’t get it on any apple computer then you are poor and probably should not be spending that cash on a top market product or a dumbass

haha, you’re a sucker. A total sucker. Maybe you don’t how to do maths, maybe you haven’t looked at industry failure rates. Either way, SUCKER!

And seriously – ‘top market product’ – I like Apple computers, I’ve sold them and use them myself, but they’re just circuit boards and cases put together in a Foxconn sweatshop.

Don’t really know much about computers, huh?

Your money sucker.

Comic_and_Gamer_Nerd Comic_and_Gamer_Nerd 6:16 pm 17 Jan 13

c_c™ said :

Comic_and_Gamer_Nerd said :

if you’d don’t get it on any apple computer then you are poor and probably should not be spending that cash on a top market product or a dumbass

haha, you’re a sucker. A total sucker. Maybe you don’t how to do maths, maybe you haven’t looked at industry failure rates. Either way, SUCKER!

And seriously – ‘top market product’ – I like Apple computers, I’ve sold them and use them myself, but they’re just circuit boards and cases put together in a Foxconn sweatshop.

Don’t really know much about computers, huh?

c_c™ c_c™ 4:44 pm 17 Jan 13

RadioVK said :

I don’t see what your problem is with their warranty service. Of course you’ll have to take it in to the repair agent to be assessed. They don’t know if you’ve tried to give the unit a drink of bourbon, or if your 3 year old has tried to play a piece of toast in it, or so on. All of this would void the warranty, obviously, and the manufacturer has the right to determine if something like this has happened.

Generally, when you take a piece of gear in for a warranty assessment there will be a fee, but it’s only payable if the warranty claim is rejected.

Your problem seems to be that they wouldn’t just accept your warranty claim without question. No manufacturer would.

On a similar note though, that is another issue with extended warranties. The warranties normally specify the item has to be taken to one of the extended warranty company’s own agents for repair, not the manufacturer’s. Normally these are centralised outlets serving large area, in Canberra, you have to send stuff to Sydney at your own expense. For bulky items like AV receivers, it can cost more to send it for assessment than to pay for a local repair out of your own pocket.

Buckaroo_Banzai Buckaroo_Banzai 4:37 pm 17 Jan 13

Leon said :

Several yerars ago we bought a TV from Harvey Norman, with an extended warranty.

It died after the standard warranty had expired.

Harvey Norman couldn’t repair the TV or replace it with the same model, so they gave us back our money. That was enough to buy a new TV.

The point Simon Corbell is making though is that even if Harvey Norman hadn’t sold you extended warranty, they would have had to repair/replace/refund it anyway under Australian law. If they can’t repair or replace, they have to refund. Ergo, the extended warranty was a waste of money.

RadioVK RadioVK 9:50 am 17 Jan 13

EvanJames said :

Deref said :

Comic_and_Gamer_Nerd said :

Region locking is bad bad bad.

I can’t remember that last time I had a DVD player that took any notice of region encoding. I seem to have a recollection that there was a court judgement some years ago that it was a “restrictive trade practice” and therefore illegal in Australia. Of course, since then we’ve signed the so-called “free trade agreement” (never was there a greater oxymoron) with the US.

The ACCC seems to have pulled back from taking strong action on this one. Some years back, the ACCC appeared as a witness in a case involving the PS3 (I think), during which appearance the ACCC said that in its opinion, region encoding was anti-competitive practise and therefore contravened our laws. It also said region encoding was clearly there to benefit the seller, not the buyer. Most retailers and some manufacturers took notice of this, and some took pro-active steps like Pioneer.

Oddly, the Samsung cheapie I got from Costco was actually manufactured to be region-free, and Costco in their American wisdom then had Region 4 installed. There were instructions on the web for getting rid of that. I later bought a Sony Blu-ray which according to the web was impossible to unencode without a special remote or a firmware upgrade, so I took it back.

Blu-Ray region encoding is hardware based and cannot be over-ridden on any device without actually opening the unit and modifying the circuit, not even with a special remote or firmware upgrade. Many Blu-Ray players will play DVDs from any region, but only local region Blu-Rays.

When you see a unit advertised as an all region Blu-Ray player, what they usually mean is that it’s a Blu-Ray player that will play DVDs from any region.

RadioVK RadioVK 9:22 am 17 Jan 13

EvanJames said :

c_c™ said :

Don’t buy them. Don’t buy them. Don’t buy them. They’re good for one thing and that’s dollar signs for the retailers.

agree. If you want a good extended warranty, buy from Costco.

Regarding statutory warranties, getting them observed by manufacturers is the tricky bit. I paid more than usual for a DVD player from Pioneer, because all Pioneer players have region encoding removed before shipping to the retailer, as standard (all should do it, but don’t).

A few months out of the 1 year warranty, the player died quietly in the night.

I contacted Pioneer, full of zeal about my rights under implied warranty etc, and they said I should take it to the Pioneer repairer (some mob in Belco), and when the repairer found what was wrong with it, they MIGHT cover it under warranty. But to book the gadget into the repairer cost about twice the price of a new cheapie DVD player. So I thought stuff it, and got a cheapie from Costco (which WAS region encoded but that was easily removed).

We have a lot of rights, but getting them enforced is sometimes quite problematical. But I won’t buy Pioneer anything ever again. And I’ve just told a bunch of people about it too.

I don’t see what your problem is with their warranty service. Of course you’ll have to take it in to the repair agent to be assessed. They don’t know if you’ve tried to give the unit a drink of bourbon, or if your 3 year old has tried to play a piece of toast in it, or so on. All of this would void the warranty, obviously, and the manufacturer has the right to determine if something like this has happened.

Generally, when you take a piece of gear in for a warranty assessment there will be a fee, but it’s only payable if the warranty claim is rejected.

Your problem seems to be that they wouldn’t just accept your warranty claim without question. No manufacturer would.

Leon Leon 9:08 am 17 Jan 13

Several yerars ago we bought a TV from Harvey Norman, with an extended warranty.

It died after the standard warranty had expired.

Harvey Norman couldn’t repair the TV or replace it with the same model, so they gave us back our money. That was enough to buy a new TV.

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