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Don't be duped by extended warranties

Hon Judith Tizard
Minister of Consumer Affairs

31 July 2008 Media Statement

Minister warns, don't be duped by extended warranties

Consumer Affairs Minister Judith Tizard is calling on retailers to be honest about the real value of extended warranties and for consumers to understand that they are frequently a waste of money.

"I have received a stream of complaints from consumers who are concerned about the true value of extended warranties," says Judith Tizard.

"I have sought advice, and it is clear that often when you buy goods for personal use you don’t actually need an extended warranty. You are already covered by the Consumer Guarantees Act, so why pay more for rights you already have?"

When you buy a new television, fridge, washing machine or iPod, you’re more than likely to be confronted by an eager sales person offering to sell you an extended warranty.

"Ask yourself, and the salesperson; what does this warranty offer me above and beyond the protection of the Consumer Guarantees Act — if the sales person gives you a puzzled look, the answer may well be 'nothing'," says Judith Tizard.

If you do decide to purchase an extended warranty get a copy of the warranty and read it - see for yourself whether it offers you more protections than the Consumer Guarantees Act. For example, does it cover wear and tear, or faults you cause through misuse as these things are not covered by the Act.

All consumer goods sold in New Zealand are covered by the Consumer Guarantees Act. The Act says that all goods must be of acceptable quality (and hence last for a reasonable time), be fit for a particular purpose, match the description, match any samples and have spare parts and repair facilities available.

More information on the Consumer Guarantees Act can be found at www.consumeraffairs.govt.nz/consumerinfo/ or in the Ministry's publication Your Consumer Rights (Goods) – A Guide to the Consumer Guarantees Act which is available from your local Citizens' Advice Bureaux or by calling 04 474 2750.

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Questions and Answers – Extended Warranties and the Consumer Guarantees Act

Should I get an extended warranty?

Remember you are already covered by the Consumer Guarantees Act - so why pay more for rights that you already have? The Consumer Guarantees Act says that you have the right to a repair, replacement or refund if goods are not durable - in other words, if they do not last without fault for a reasonable length of time.

Most manufacturers provide a warranty to cover things like parts and labour, normally for a year or two. But be careful with warranties from traders, some traders may charge you a $60 ‘bond’ before they will even consider a claim under your warranty.

And this reason is so good we are going to repeat it…you are already covered by the Consumer Guarantees Act!

So what does the Consumer Guarantees Act say?

All consumer goods sold in New Zealand are covered by the Consumer Guarantees Act. This act says that all goods must:

• Be of acceptable quality – fit for the purpose they are made for, be safe, last for a reasonable time, have no minor defects and be acceptable in look and finish.

• Be fit for a particular purpose – if there is something special you want a product to do, make sure you describe the ‘particular purpose’ to the trader so they can make sure you get the right product.

• Match the description – if you buy a refrigerator that is described as having automatic defrost, it must have that feature.

• Match any samples – if you order a car based on a showroom model, the one you receive has to match the model you saw.

• Have spare parts available – unless you’ve been told that it’s not possible, you have access to repair facilities and spare parts for goods you buy. Be careful if you buy discontinued models, as the spare parts may not be easily available.

• Have the right to be sold – the trader must be able to pass all the ownership rights or title over the goods to you. The trader must tell you when someone else has rights over the goods, such as a security interest over a car.

Are there times when I should consider buying an extended warranty?

You should think about whether you will need extra cover. But remember to read the fine print; there may be some exclusions that the warranty doesn’t cover, like certain parts, faults or costs.

If you’re going to use the goods for your business, a warranty may be useful because you won’t have the protection of the quality guarantees given under the Act. Also, if you’re buying goods at an auction or by tender a warranty may be useful as, again, you won’t have the protection of the Consumer Guarantees Act.


ENDS

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