Don’t be sucked in by manufacturers’ warranty claims

Thursday, 28 December 2023

Manufacturers and retailers like to highlight limited time warranties on their goods, but cases that came before the Disputes Tribunal this year reveal they may not be worth the paper they are printed on.

One case brought before the tribunal, which hears small money claims, detailed a claim by a man who had bought a second-hand hearing aids and a charger unit. When the items were about 18 months old, faults developed in both the hearing aids and the charger.

The shopper took the items to his audiologist, which sent them to the manufacturer for repair.

The manufacturer, who was not named in the case note, repaired the hearing aids under warranty, however, charged for the charger repair, claiming it was outside the 12 month warranty for that unit.

The man was not pleased. New, the charger cost over $400, and he felt it should last for more than a year. The audiologist offered to waive the charge, however, the man felt they should not have to suffer a loss either.

The manufacturer, who was not named, claimed the Consumer Guarantees Act (CGA) limits claims to the original purchaser alone.

It also claimed its warranty statement disavowed liability under its warranty, or the CGA, if products had not been sold by an approved dealer.

The tribunal did not agree. It ruled that the warranty did not allow the manufacturer to opt out of the CGA, if it had made goods that were not of reasonable durability.

The buyer said five years was the minimum length of time a $400 charger should last.

The tribunal referee did not validate the man’s minimum expected timeframe for reliability, but found “a reasonable consumer paying the retail price would expect such an item to last longer than 18 months. I therefore find the charger was not of acceptable quality as it failed within 18 months.”

In a second case this year, the link between price and lifespan was explored.

In it, a woman expressed her annoyance at the short life of a pair of expensive ear buds she bought to listen to music on in October 2019.

In late 2022, it was clear there was something wrong with one of them. It would keep charge for just 20 minutes. She thought that such an expensive pair of ear buds should last longer than three years and eight months, though she claimed the problems with them went back further than that.

The unnamed manufacturer offered to repair them, if she paid half the cost.

It argued in the tribunal that the woman’s product was too old to fall within the scope of the CGA. It felt its product should only be expected to work without problems it was legally bound to fix within that two years.

The tribunal decided the woman was right, and three years and eight months was a timeframe in which such expensive ear buds should still be functioning well.

“I find that [the woman] purchased a relatively expensive brand of earbuds and started experiencing issues with the right earbud approximately three years after purchase,” the referee said.

“The evidence she provided which she obtained from internet forums with users discussing the exact same problems occurring with the right earbud shows that others also experienced the same issue with the product, with the left earbud continuing to working normally.”

The referee ordered the maker to refund her the $334.99 cost of the appliance.

Manufacturers generally set their warranties on electronics and are generally claimed to be for 12 to 24 months, though some makers of top of the range items give manufacturers’ warranties of five years.

Consumer NZ said under the CGA many electronic items should last a lot longer than 12 to 24 months.

The referee in the tribunal ear bud case said “the CGA does not specify a time limit that products should last. Instead, it says products must last a ‘reasonable’ amount of time. What ‘reasonable’ means varies, and factors that can be considered include the cost of the item and how it was used.”

Based on a mid-range price, with a reasonable level of use and care, a washing machine should last at least 10 years, Consumer NZ says. A fridge or freezer should last at least 11 years.

Consumer NZ head of testing Paul Smith said “don’t be fobbed off by a retailer telling you it doesn’t have to fix a faulty product because it’s ‘out of warranty’.”

There’s a legal sleight of hand that goes on in manufacturers’ warranties, which routinely contain a clause to say nothing in them limits people’s rights under the CGA.

The existence of the warranties underpins the sale of “extended warranties” by retailers, which sometimes get dubbed junk insurance by critics.

Following misselling in New Zealand, laws were passed requiring retailers to give buyers a written, dated document setting out their legal rights, including their rights under the CGA, and a comparison of the protections offered by the CGA and the extended warranty.

That has not stopped misselling, however. Just last year, The TV Shop was fined $123,500 after a Commerce Commission investigation into its sale of extended warranties.

Brand Developers Limited, trading as The TV Shop, pleaded guilty after failing to comply with the extended warranty disclosure requirements of the Fair Trading Act between May 1, 2020 and March 1, 2021.

In 2016, vacuum cleaner seller Godfreys pleaded guilty to five charges of failing to give the written documents to people it sold extended warranties to.

In December, JB HiFi in Australia said it would defend a class action lawsuit which claimed consumers had been sold junk insurance which law firm Maurice Blackburn Lawyers said were “of little to no value”.

But as the government’s Consumer Protection website says: “The CGA still applies after the manufacturer's warranty expires.”