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Harvey Norman, one of Australia’s biggest retailers, is facing a massive class action lawsuit that could cost them millions. The lawsuit, led by Echo Law, claims the extended warranties Harvey Norman sold to customers since 2018 are virtually worthless, leaving consumers feeling ripped off. So, what’s the deal with these warranties, and why does it matter to both businesses and consumers? Let’s break it down. 

What Are Extended Warranties Really Offering?  

An extended warranty is an extra promise made by a product or service provider that is meant to go above and beyond what is already offered under the Australian Consumer Law. For example, this might mean a lifetime guarantee that a product will not break down, and an offer of a no-fee replacement if it does.  It may also extend the period of protection beyond the manufacturer’s standard warranty. In the event of failure or defects, the warranty provider may cover the cost of repairs or replacement parts. 

The Class Action Explained: What’s at Stake?  

Under Australian Consumer Law (ACL), businesses must comply with specific consumer guarantees when selling products and services. These guarantees ensure that goods meet quality standards, are fit for their purpose, and match any description provided. Importantly, these guarantees are automatically included in every transaction and cannot be waived. Therefore, extended warranties should provide assurances beyond consumer guarantees.  

In the case of Harvey Norman, a product warranty known as Product Care was sold alongside goods like electronics and whitegoods. The warranty typically costs between 10% and 40% of the product’s price, depending on the item and the duration of the coverage. However, the class action claims that the extended warranty offers little to no additional value to customers since it largely overlaps with the rights and protections already provided under Australian Consumer Law. 

Essentially, customers have been paying for protection that they are legally entitled to for free. If proven in court, this could constitute misleading conduct, as businesses are not allowed to sell extended warranties that only duplicate consumer guarantees. 

How to Keep Your Business Safe from Legal Claims  

To avoid falling into the same alleged legal traps as Harvey Norman, it’s crucial to ensure that your extended warranties or any additional products/services offer clear, tangible benefits beyond the consumer guarantees already provided by law.
 

The Consequences of Misleading Claims on Extended Warranties  

If your business is found to be offering warranties that do not add value beyond existing consumer rights, you could face significant legal consequences. These include: 

• Fines and penalties; 

• Class actions; and 

• Reputational Damage. 

Key takeaways  

• Ensure your business understands the distinction between consumer guarantees and extended warranties to avoid unwanted legal action! 

Gladwin Legal are experts in Consumer Law and have extensive experience in advising businesses. If you require assistance in understanding your legal obligations, please contact us at or 1300 033 934.