JB Hi-Fi faces class action lawsuit for allegedly tricking customers into paying more
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The thrill of purchasing a new gadget or appliance can often be overshadowed by the worry of potential breakdowns or malfunctions.
This is where extended warranties come into play, offering peace of mind for consumers.
But are these warranties really worth the extra cost?
This question is at the heart of a new class action lawsuit against retail giant JB Hi-Fi, one of Australia's most popular retailers, with sales exceeding $6.5 billion last financial year.
The suit, filed by law firm Maurice Blackburn, alleges that since 2011, JB Hi-Fi has been selling extended warranties that offer little to no value to consumers.
'What we're alleging in the class action is that JB Hi-Fi has been selling extended warranties that essentially offer Australian consumers the same thing as what they already get for free under the Australian Consumer Law,' Miranda Nagy, Principal Lawyer for Maurice Blackburn, claimed.
The Australian Consumer Law already provides basic legal rights, known as 'consumer guarantees', to all consumers when purchasing a product.
These guarantees include the right to a repair, replacement, or refund if there's a problem within a reasonable period after purchase, even after a manufacturer's expired warranty.
The product must also be of acceptable quality, free from defects, safe, durable, and fit for purpose.
The lawsuit claimed that JB Hi-Fi had been misleading consumers by selling extended warranties that offered the same protections already provided by these consumer guarantees.
The case, lodged in the Victorian Supreme Court, sought compensation for customers who signed up for 'extended care', 'customer care', or 'extra care' plans.
Extended warranties are often marketed as an additional layer of protection for consumers, promising coverage for mechanical and electrical failures. However, the lawsuit alleges that JB Hi-Fi's warranties, which never lasted more than three to six years after the date of purchase, were misleading.
'So when you think about buying, for example, a $2,000 fridge, you're expecting a fridge like that…to have a much longer life than six years,' Nagy said.
'Australian Consumer Law remedies were likely to last longer in most cases.'
The lawsuit also alleges that some of JB Hi-Fi's brochures failed to include important information about how basic consumer law protections compare to those offered by extended warranties. Key details that JB Hi-Fi allegedly did not make clear include the right of the customer—not JB Hi-Fi—to choose a remedy in certain situations, cover for some defects, and the right to a monetary refund and not just store credit.
Consumer groups have long been sceptical of the value of extended warranties.
Margaret Rafferty from consumer group Choice says extended warranties 'very rarely' offer value for money.
In a mystery shop conducted by Choice last year at 80 JB Hi-Fi, Harvey Norman and The Good Guys stores, it was found that most sales staff misrepresented consumer rights.
'In 71 per cent of cases, they misrepresented the rights of a mystery shopper about what would happen if a product broke down and used the opportunity to try and sell us an extended warranty,' Rafferty said.
'They gave us excuses such as, “If it's over two years, you have to pay for repairs yourself.” That's not right.'
'They told us that, “After a manufacturer's warranty, there's nothing we can do.” That's incorrect.'
'It was really quite shocking to see how poorly the rights of consumers were represented by the salespeople.'
The Australian Competition and Consumer Commission (ACCC) advised consumers to be aware that a business or salesperson could get a commission for selling an extended warranty. They also reiterated that consumer guarantees apply regardless of any warranties.
While JB Hi-Fi declined to comment on the case, Paul Zahra from the Australian Retailers Association said extended warranties added something to products.
'Many shoppers prefer extended warranty just purely for the peace of mind,' Zahra said.
'Extended warranties can often add…longer life to a product.'
However, Zahra also emphasised that retailers need to clarify what extra rights they are offering.
'There's no doubt if there's a crossover between consumer law or manufacturer's law and the extended warranty is just restating that, then that's not really in the spirit of actually an extended warranty,' he said.
As a consumer, it's crucial to understand your rights when purchasing a product. If a product has a minor problem that can be quickly and easily fixed, the retailer can decide to repair or replace your product. However, if it's a major problem, you're entitled to your money back.
'For example, if the product is unsafe, if it doesn't do what it should or it has a fault that would have prevented you from buying it if you'd known about it, you're entitled to your money back,' Rafferty from Choice said.
She advised consumers to ask many questions before considering an extended warranty.
'Really drill down to ask questions about what this product gives that they aren't already covered by.'
'Ask them if you'll have to pay any extra if you make a claim, find out about the limits on the claim, ask about who's providing the extended warranty.'
'Be really wary of the tactics that the retailers will use, the extra pressure they put on you to convince you [that you] need it.'
Have you ever purchased an extended warranty? Did you ever avail of the service? What are your thoughts on this case? Share your experiences and opinions with us in the comments below.
This is where extended warranties come into play, offering peace of mind for consumers.
But are these warranties really worth the extra cost?
This question is at the heart of a new class action lawsuit against retail giant JB Hi-Fi, one of Australia's most popular retailers, with sales exceeding $6.5 billion last financial year.
The suit, filed by law firm Maurice Blackburn, alleges that since 2011, JB Hi-Fi has been selling extended warranties that offer little to no value to consumers.
'What we're alleging in the class action is that JB Hi-Fi has been selling extended warranties that essentially offer Australian consumers the same thing as what they already get for free under the Australian Consumer Law,' Miranda Nagy, Principal Lawyer for Maurice Blackburn, claimed.
JB Hi-Fi allegedly tricked customers into paying more for their extended warranty offering. Image source: Shutterstock.
The Australian Consumer Law already provides basic legal rights, known as 'consumer guarantees', to all consumers when purchasing a product.
These guarantees include the right to a repair, replacement, or refund if there's a problem within a reasonable period after purchase, even after a manufacturer's expired warranty.
The product must also be of acceptable quality, free from defects, safe, durable, and fit for purpose.
The lawsuit claimed that JB Hi-Fi had been misleading consumers by selling extended warranties that offered the same protections already provided by these consumer guarantees.
The case, lodged in the Victorian Supreme Court, sought compensation for customers who signed up for 'extended care', 'customer care', or 'extra care' plans.
Extended warranties are often marketed as an additional layer of protection for consumers, promising coverage for mechanical and electrical failures. However, the lawsuit alleges that JB Hi-Fi's warranties, which never lasted more than three to six years after the date of purchase, were misleading.
'So when you think about buying, for example, a $2,000 fridge, you're expecting a fridge like that…to have a much longer life than six years,' Nagy said.
'Australian Consumer Law remedies were likely to last longer in most cases.'
The lawsuit also alleges that some of JB Hi-Fi's brochures failed to include important information about how basic consumer law protections compare to those offered by extended warranties. Key details that JB Hi-Fi allegedly did not make clear include the right of the customer—not JB Hi-Fi—to choose a remedy in certain situations, cover for some defects, and the right to a monetary refund and not just store credit.
Consumer groups have long been sceptical of the value of extended warranties.
Margaret Rafferty from consumer group Choice says extended warranties 'very rarely' offer value for money.
In a mystery shop conducted by Choice last year at 80 JB Hi-Fi, Harvey Norman and The Good Guys stores, it was found that most sales staff misrepresented consumer rights.
'In 71 per cent of cases, they misrepresented the rights of a mystery shopper about what would happen if a product broke down and used the opportunity to try and sell us an extended warranty,' Rafferty said.
'They gave us excuses such as, “If it's over two years, you have to pay for repairs yourself.” That's not right.'
'They told us that, “After a manufacturer's warranty, there's nothing we can do.” That's incorrect.'
'It was really quite shocking to see how poorly the rights of consumers were represented by the salespeople.'
The Australian Competition and Consumer Commission (ACCC) advised consumers to be aware that a business or salesperson could get a commission for selling an extended warranty. They also reiterated that consumer guarantees apply regardless of any warranties.
While JB Hi-Fi declined to comment on the case, Paul Zahra from the Australian Retailers Association said extended warranties added something to products.
'Many shoppers prefer extended warranty just purely for the peace of mind,' Zahra said.
'Extended warranties can often add…longer life to a product.'
However, Zahra also emphasised that retailers need to clarify what extra rights they are offering.
'There's no doubt if there's a crossover between consumer law or manufacturer's law and the extended warranty is just restating that, then that's not really in the spirit of actually an extended warranty,' he said.
As a consumer, it's crucial to understand your rights when purchasing a product. If a product has a minor problem that can be quickly and easily fixed, the retailer can decide to repair or replace your product. However, if it's a major problem, you're entitled to your money back.
'For example, if the product is unsafe, if it doesn't do what it should or it has a fault that would have prevented you from buying it if you'd known about it, you're entitled to your money back,' Rafferty from Choice said.
She advised consumers to ask many questions before considering an extended warranty.
'Really drill down to ask questions about what this product gives that they aren't already covered by.'
'Ask them if you'll have to pay any extra if you make a claim, find out about the limits on the claim, ask about who's providing the extended warranty.'
'Be really wary of the tactics that the retailers will use, the extra pressure they put on you to convince you [that you] need it.'
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