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Warranties – Who’s responsible?

We buy and sell goods and services throughout the year – but especially at Christmas time, at Boxing Day Sales, Black Friday Sales, and end of financial year run outs. Warranties apply to all goods and services sold in Australia and in addition to manufacturer’s warranties, store warranties and express warranties, there are a set of overarching consumer guarantees that protect consumers of goods and services in Australia.

According to the ACCC:

The Australian Consumer Law aims to protect consumers and ensure fair trading in Australia. It is a national, state and territory law from 1 January 2011 and includes unfair contract terms legislation introduced on 1 July 2010. Under the ACL, consumers have the same protections, and businesses have the same obligations and responsibilities, across Australia.

Consumer Guarantees – a Guide for Businesses and Legal Practitioners

(Note: This article refers to the rules as they apply to Queensland businesses and consumers. If you are in a different state, refer to your local regulator (these are listed below).)

Obligations on Retailers/Rights of Consumers

One of the most common complaints to the Office of Fair Trading Queensland is retailers refusing to honour warranties on faulty electronics. Apparently some retailers had wrongly told buyers the manufacturer was responsible for the warranty and if the purchaser was regional, or the manufacturer overseas, chances of a resolution were slim.

In the past the Federal Court of Australia issued hefty fines to Harvey Norman franchisees who made false or misleading representations about consumer guarantee rights. In one case the consumer was told the business had “no obligation to provide a remedy while the relevant product was still covered by the manufacturer’s warranty”. In another that it had “no obligation to provide the consumer with a choice of remedy if the relevant product was supplied more than three months ago”. In a third case the business misrepresented that “the consumer would have to pay a postage and handling fee before the relevant product could be returned from the manufacturer”. And in a fourth case, the businesses made the representation that it had “no obligation to provide remedies for damaged goods unless notified within a short specified period, such as 14 days”. 

All of these representations were made verbally by sales staff, and all resulted in fines being imposed on the businesses. 

It’s important then to know what your rights are as a consumer, and what your obligations are as a retailer.

As a consumer you have a set of legal rights called consumer guarantees. There are nine different types of consumer guarantees applying to goods and a further three to services. Basically they say the goods must be of acceptable quality, match their description and be fit for their normal purpose, match samples or demonstration models, and have no pre-existing debt; services must be performed with due care and skill, are fit for purpose, and are completed within a reasonable time.

As a consumer, if you have a problem with a good or service the type of remedy will depend on whether the problem is classed as minor or major. Definitions of major problems are listed on the Fair Trading Website.

The point to note is if the problem is ‘major’ the consumer has the right to choose the remedy, NOT the business.

In the case of goods with major problems, examples of remedies might include:

  • asking for a refund;
  • asking for an identical replacement or one of similar value if available;
  • asking for repair; or
  • keeping the goods and seeking compensation for the drop in value caused by the problem.

For minor problems the business can either refund, replace or repair.

Refunds aren’t always automatic – so if you change your mind, pick the wrong size or decide you don’t like the colour, the business does not have to give you a refund under these circumstances. But if a consumer guarantee isn’t met you are always entitled to a refund if the issue is major.

Despite what a business might tell you, you can insist on a refund if a consumer guarantee entitles you to one. 

If the business changes hands, the new owner is not liable to provide a refund if they were not responsible for the original sale. However, retailers have certain obligations under the consumer guarantee rules. The trader you bought the goods from must help you resolve the problem either by arranging an exchange, refund or other deal with the manufacturer on your behalf. They can’t tell you just to go to the manufacturer.

Whilst you are generally responsible for returning the goods if it can easily be returned you are entitled to recover your costs – and if the product is too large, heavy or difficult to remove, the business is responsible for paying shipping costs or collecting the item – and you don’t have to return goods in the original packaging.

It is illegal in Queensland for retailers to display ‘No Refund’ signage. Similarly they should not make statements such as ‘no refund on sale items’; ‘no refunds after seven days’; ‘exchange, repair or credit only’; and ‘no returns on swimwear’.  There are recommended signs available on the Fair Trading site for businesses selling goods as well as those providing services which you can find here.

Other Types of Warranties

Suppliers and manufacturers can also make extra promises about goods and these are known as ‘express warranties’. They are over and above the legal rights consumers have under consumer guarantees and do not replace them. The express warranty can be verbal or in writing.

A manufacturer’s warranty is a warranty against defects in the manufacturing of a good. These warranties simply state what the manufacturer will do in the event of a defect within a certain time period. These warranties must be in writing. Again these types of warranties are on top of your protections under consumer guarantees and cannot exclude them.

What about ‘extended warranties’? These are warranties offered by the retailer for a fee extending the manufacturer’s warranty beyond the standard term. If you are considering purchasing an extended warranty the OFT recommends ensuring the additional cost is worth the expected benefit – your legal rights under the consumer guarantee laws may protect you, for example, against a $3000 flat screen TV failing within 18 months because it failed to meet the acceptable quality condition and your extended warranty purchase would not even factor in. Make sure you’re not paying for something that is already your legal right.

For more information on types of warranties visit the OFT site.

Complaints

If you have tried to discuss the issue with the business providing the goods or services and you are not happy with the response you can make a complaint to the Office of Fair Trading using the complaint form on their site.

It’s really important that as a consumer and a business you are across what the legal rights and obligations are so that you save yourself a lot of trouble and potential fines down the track.

© Lyn Prowse-Bishop – www.execstress.com

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