JB Hi-Fi class action puts spotlight on 'junk' warranties

Are extended warranties worth it? That's one of the questions at the heart of a new class action launched by law firm Maurice Blackburn on behalf of eligible customers of electronics retailer JB Hi-Fi.

The class action alleges that JB Hi-Fi misled customers on the value provided by its extended warranties (often called Extra Care or Extended Care Plans) for more than a decade - plans which are actively promoted by the retailer with purchases of electronics and other appliances.

Maurice Blackburn states that the plans offer "little or no value" to customers beyond the consumer rights they are already entitled to under Australian Consumer Law.

"These warranties are in most cases little more than a junk add-on to consumers' purchase of the household goods they actually want," says Miranda Nagy, principal lawyer for Maurice Blackburn.

"JB's extended warranties expire just 3-6 years after purchase, but they add substantially to the cost. 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 class action is seeking compensation for customers who purchased an extended warranty plan from JB Hi-Fi between January 2011 and November 2023.

In a statement released on Monday, JB Hi-Fi said that it believes it has complied with the relevant laws at all times and would therefore be defending the proceedings.

The right to repair, replacement or refund  

According to the Australian Competition and Consumer Commission (ACCC), if someone purchases a product which ends up being faulty, doesn't work at all, is unsafe or simply doesn't appear as it should, they are entitled to a repair, replacement or a refund. The same applies to services.

There are caveats though. In some situations the customer will be able to choose their preferred remedy, while in others the business will be able to choose - it depends on whether the problem is related to a product or service, and whether the issue is a major or minor one.

Importantly, these rights can't be taken away by businesses - no matter what the fine print may say. Nor can a business direct customers to a manufacturer if something goes wrong, for example, if a television stops working. The retailer is responsible for solving the issue.

Mark Serrels, spokesperson for consumer advocacy group Choice, says that many Australians are simply not aware of these rights though.

"A lot of people just don't know. The last research we did in June 2023 found that seven in ten people thought they wouldn't be able to receive a refund, repair or replacement for a faulty product after their manufacturer's warranty had expired.

"So a lot of people aren't really aware of what their rights are here, which is one of the big reasons why companies like JB Hi-Fi are able to so easily convince consumers to buy extended warranties."

Are extended warranties worth it?

One point of confusion for some consumers in this realm comes in the difference between consumer rights on the one hand and warranties on the other.

Simply put, rights and guarantees are enshrined under law, while warranties are essentially promises made by businesses about the standard of a product or service they offer. Warranties don't negate or supersede consumer rights.

One of the most common types of warranties is a manufacturer's warranty which may promise that if a product (e.g. a toaster) becomes defective during a certain timeframe after purchase, they will fix or replace it. These are generally included as part of the purchase.

Then there are extended warranties. These typically extend the period of cover provided by a manufacturer's warranty for an extra cost, and are sold by retailers and manufacturers.

Serrels believes that because they don't always provide additional cover that is not already guaranteed under Consumer Law though, extended warranties are hardly ever worth the money.

"There's a handful of times when an extended warranty might be worth it, but they're very, very rare. And I would say, as a baseline, it's usually just best to say no to them.

"Australian Consumer Law is quite good and it really covers you in almost every way that you would expect an extended warranty to cover you, so there's really no need to go ahead and buy one of those extended warranties."

Avoiding the extended warranty upsell

Saying no to an extended warranty can be hard though, especially if you're shopping in-store and talking to someone face-to-face. After all, sales agents can often play on your emotions and uncertainty.

In fact, in their research, Choice found that 39% of customers who ended up purchasing an extended warranty hadn't planned to do so beforehand.

For Serrel, this highlights the importance of consumers being privy to their rights and then, should they wish to, using this information to push back against unwanted warranties.

"Very recently I had to return a broken laptop. I just had my phone ready with a tab open with Australian Consumer Law on it, so as soon as I got pushback and was told to take it back to Apple, I just opened that tab and told them that they either had to give me a refund or fix it in-store.

"That did the job, and they just backed into the bushes like Homer Simpson."

How to join the JB Hi-Fi class action

While JB Hi-Fi customers who purchased an Extra Care or Extended Care Plan between 2011 and the end of November won't need to sign up to be part of the class action, they can register their interest with Maurice Blackburn to receive updates in the future.

Get stories like this in our newsletters.