ACT Attorney General, Simon Corbell, has questioned the value of extended warranties offered at extra cost by retailers on the grounds consumers are already protected under Federal laws.
He said his staff would be "cracking down" on extended warranty providers this summer.
"This is particularly important post the busy retail period of Christmas and the post-Christmas sales," he said. "Office of Regulatory Services inspectors will be surveying extended warranties in the market place in the coming months and assessing whether they measure up to the Australian Consumer Law."
"Most consumers are offered an extended warranty, particularly when purchasing electrical equipment or whitegoods and, for a fee, this warranty can be extended beyond that provided by the manufacturer.
"In most cases consumers are already protected by consumer guarantees or statutory warranties under the ACL.
"Consumers considering any extended warranties should ask what they offer above and beyond their existing rights and (then) decide if they are worth the extra money."
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Under the Australian Consumer Law, which came into effect on January 1, 2011, consumers can ask for a repair, replacement or refund if goods or services "are not right".
The ACL applies to goods that are faulty, unsafe, look unacceptable, do not do what they are supposed to do, match the description provided or have any extra qualities the seller may have promised before the sale.
It applies to services that are not delivered with adequate care or skill, do not fit the purpose or provide the desired result or are not delivered within a reasonable time when there is no agreed date.
Major retailers, including Harvey Norman and Billy Guyatts, spell out consumer entitlements under the ACL on their websites.
"Australian Consumer Law" is the first item in Billy Guyatt's six page "Customer Care Plan" or extended warranty offer.
It states: "Our goods come with guarantees that cannot be excluded under the Australian Consumer Law. You are entitled to a replacement or a refund for a major failure and for compensation for any other reasonably foreseeable loss or damage. This Customer Care Plan provides some benefits which are additional to your ACL rights, however some of the benefits may overlap with your ACL rights."
Harvey Norman's website lists even more detailed information on consumer rights under the ACL.