Consumer confusion relating to automotive warranties is widespread

The Australian Automotive Aftermarket Association (AAAA) has welcomed the publicity surrounding Maurice Blackburn’s extended warranty class action against JB Hi-Fi and is pushing for further consumer awareness around the broader issue of consumer warranty rights.
The AAAA has long argued that extended warranties often offer Australian consumers the same rights that they already receive for free under the Australian Consumer Law, rights that they should not be required to pay for.
Consumers are entitled to a solution of a repair, replacement, or refund if a product or service they buy doesn’t meet its description.
The popularity of extended warranty services reveals that many consumers are uneducated on their rights relating to product purchases, and this extends to new car warranties.
A Manufacturer warranty is a promise to the consumer that a vehicle will be free from defects for a certain period of time and that any defects will entitle the consumer to a repair or other compensation.
“We are constantly receiving complaints from consumers about new car warranties, stressed about their rights,” AAAA Chief Executive Officer, Stuart Charity, said.
“Car owners are confused about what happens when the manufacturer’s warranty period expires as most people believe that’s when their right to repair or replacement ends. It doesn’t.
“The warranty may end, but that’s not the end of the manufacturer’s obligations to the purchaser of that vehicle.
“Why are consumers afraid that their statutory rights will not be honoured? That’s the real question here.
“The power imbalance is immense. It is daunting for a car owner to negotiate a warranty claim and that’s often why consumers purchase extended warranties – it takes out the fear of warranty rejection.
“This class action, if successful, will be a great start to encourage large multi-national companies to honour their consumer right obligations, however we need a comprehensive consumer campaign to inform everyone that extended warranties often don’t offer additional protection.
“More importantly consumers need to know what rights are already covered under the Australian Consumer Law.”
Much of the confusion comes from the language used. While most people know the word ‘warranty’ there is less universal understanding of ‘consumer guarantee.’ Most people don’t know that their consumer guarantees may last longer than the manufacturer’s warranty.
“It’s so confusing because some car manufacturers offer and even encourage an extended warranty and whilst these generally don’t offer any additional consumer benefit, they can be conditional – often tying the consumer to the dealer and car company branded parts,” Stuart said.
Consumer confusion relating to automotive warranties is widespread. Up to 40 percent of new car owners are under the misunderstanding that they must take their vehicles back to the dealer to maintain the warranty. This is despite the fact that there is no requirement under Australian Law for a vehicle to be serviced by an authorised dealer to maintain the manufacturer’s warranty.
Consumers have the right to use an independent automotive service centre to service their new vehicle and maintain the logbook schedule whilst the car is within the manufacturer warranty period.
“We need to have a complaints system that offers consumers time critical support and easy to understand information. A good source of information should mean that customers can take that to the business they purchased the car from with confidence,” Stuart said.
“The AAAA has produced several guides to help consumers including our Truth About New Car Warranties – but it is a drop in the ocean.
“It is disappointing that consumers need to join a class action to have their rights enforced – government should be doing more.
“Consumers will continue to feel that they need to pay extra to have their consumer rights honoured until there is a serious education campaign, greater enforcement and a quicker response to complaints.”

To view the AAAA’s Truth About New Car Warranties Guide, visit www.aaaa.com.au/your-car-your-choice/

To learn more about consumer rights when buying products and services, visit www.accc.gov.au