Extended Warranties vs Consumer Guarantees Act

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openmedia

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#43105 16-Oct-2009 23:59

There has been some discussion on this forum recently about how most extendd warranties are worthless under the consumer guatantees act. So I'm wondering with a new LCD/Plasma TV how long would you expect to be able to make a claim under the Consumer Guarantees Act vs a 5 yr extended warranty.

Also would there be any cases where you would only be covered for repair / replacement under an extended warranty and not the consumer guarantees act?

If you were replacing a CRT with a new LCD/Plama TV what would you consider to be a reasonable repair free period for your new applicance?

Generally known online as OpenMedia, now working for Red Hat APAC as a Technology Evangelist and Portfolio Architect. Still playing with MythTV and digital media on the side.

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#264436 17-Oct-2009 00:55

If you subscribe to consumer.org.nz online you can get access to reports about their survey results on this kind of thing:

http://www.consumer.org.nz/reports/appliance-life-expectancy/introduction
http://www.consumer.org.nz/reports/appliance-reliability/introduction

I think it's pretty safe to say if your tv crapped out after say 6 years of regular usage you would still be covered under the CGA, the generally accepted expected lifetime of a TV is actually very high.

The only benefit of an extended warranty is convenience, typically retailers will honor their extended warranties straight away and dodgy retailers may try to give you the run around if you're asking for repair or replacement under the CGA.

The consumer site has tons of infomation on the disputes tribunal process and quite a lot of the information about your rights is public and not subscriber only.

http://www.consumer.org.nz/category/legal-rights

bazzer

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#264453 17-Oct-2009 02:20

Also, often extended warranties will cover other events (such as power surge) which CGA wouldn't cover. However, maybe you have contents cover that for that? I think you'd find it a struggle to get resolution under CGA after 5 years but that's not to say you couldn't. It wouldn't be straight forward though I wouldn't think. These days, I'd say 5 years for a TV is pretty good.

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#264470 17-Oct-2009 08:21

Well i have jsut gone through the process with a 3.5yo plasma that was well outof warranty and it ended up being a fairly painless procedure that took just only two weeks from failure to replacement new TV being delivered

8d52797c436

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#264569 17-Oct-2009 14:45

The thing with the CGA though is that the manufacturers can state how long the life expectancy of the device is, as long as it is reasonable, and sometimes that can be pretty low. Look at some game consoles, back when I was at DSE they only had a 3 month warranty period, which was set by the people who made them. They were a pretty extreme case but with most things you would have to prove that the device should have lasted longer than it did from normal use and that the price you paid for it meant that it should last as well.

alasta

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#264591 17-Oct-2009 15:22

8d52797c436: The thing with the CGA though is that the manufacturers can state how long the life expectancy of the device is, as long as it is reasonable, and sometimes that can be pretty low. Look at some game consoles, back when I was at DSE they only had a 3 month warranty period, which was set by the people who made them. They were a pretty extreme case but with most things you would have to prove that the device should have lasted longer than it did from normal use and that the price you paid for it meant that it should last as well.

As I understand it the 'reasonable' lifetime of a particular product is determined largely by legal precedent, but even then it's hard to clearly define. It's further complicated by the fact that the legislation is intended to factor in the purchase price and perceived quality of an item such that consumers don't avoid high quality goods on the basis of getting the same statutory warranty on a cheaper low quality alternative.

Although I appreciate that many people have achieved positive outcomes from CGA related disputes, I do hold some concerns that the legislation is based around a high degree of subjectivity and limits the choices of consumers, as costs incurred as a result of the CGA are inevitably passed on to consumers at the end of the day.

RustyGonad

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#264616 17-Oct-2009 17:02

Although I appreciate that many people have achieved positive outcomes from CGA related disputes, I do hold some concerns that the legislation is based around a high degree of subjectivity and limits the choices of consumers, as costs incurred as a result of the CGA are inevitably passed on to consumers at the end of the day.

And this compares to say the costs of manufactures dumping substandard crap on the unsuspecting public or releasing equipment with a known short life span due to design flaws?

Why should the consumer pay via extened support services for manufactures using shortcuts in either the design, or build process based entirely on lowest cost economics, with little or no consideration of the product shelf life?

I realise there are some people on here who have spent large sums of money of extended warranties, but when you speak of the CGA are you actually speaking from experience, or just pushing out FUD, based on hearsay, and a whole lot of sour grapes. On what do you actually base the concerns?

You say the cost is borne by the consumer, but what are extended warranties doing? Who bears the cost of those??? Someone on Mars maybe??? And what do they actually achieve, other than being an exceptionally high profit item for some insurance/risk management company.

I did some fairly extensive research when my TV died after 2.5 years. As others have mentioned Consumer is probably the biggest/best single source of information for the average Joe.

There is a significant amount of information around that details the "historical" average life of a TV to be around 10-12 years. While I'm in no way suggesting you'll achieve success this far out, if you think back, how many of us grew watching the same TV, 10-12 years seems about right.

This period may have reduced, but I would suggest that even at 5 years if the TV becomes unfixable due to lack of parts, you will have an easy resolution.

Many sucessful disputes tribunal cases based around PC, and like equipment (Xbox 360/PS3 included here), have suggested 5 years as being the normal expected life. I got my 5 year old fridge replaced, research indicated that 10 years was the expected norm for those.

Think about it a bit, if the salesperson told you at the time of purchase "I fully expect this TV to be a useless lump of plastic within 3 years" would this change you opinion, and accordingly the price you would pay? Would you still pay $4000-$6000 bucks like I did last time I bought one?

Consider this when you pick up any of the TV brochures which bestow the virtues of the "long life" panel etc etc, often quoting xx,xxx thousands of hours, 10 years plus panel life... The reality is they dig their own holes... Lets not forget the technology Plasma/LCD replaced on the whole used to be very very reliable. I've got two old ones sitting downstairs collecting dust, both of which still go, both are teenagers.

Remember also, according to Consumer, if you are delivered a new replacement item, the warranty restarts from that point, in order to prevent the continued deployment of substandard crap on the consumer.

What it does do is make you change your shopping habits... The CGA will provide you with no protection if the manufactuer/retailer have gone... If your looking at using it, it would pay to stay name brand, from a well financed retailer.

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Wade

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#264622 17-Oct-2009 17:24

Samsung replaced my 3.5yo faulty plasma without any legal DT battle in fact without any arguement at all, this tells me at least one of the following;

a) They are focused on keeping me the end-user happy
b) That it is an unacceptable timeframe to fail in
c) If it went legal they would most likely lose the case so save everybody the hassle and resolve it now

I don't understand the full workings of hte extended warranties but i have a theory that overall the retailer hedges their potential after sales costs which offsets any loose attributed to people exercising their consumer rights, that said, if i had paid the then $800 for an extended warranty, the retailer would have pretty much banked that and subsequently put the cost of resolving my issue back onto distributor.

alasta

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#264624 17-Oct-2009 17:25

RustyGonad:
And this compares to say the costs of manufactures dumping substandard crap on the unsuspecting public or releasing equipment with a known short life span due to design flaws?

Why should the consumer pay via extened support services for manufactures using shortcuts in either the design, or build process based entirely on lowest cost economics, with little or no consideration of the product shelf life?

The consumer needs to undertake some responsibility for ensuring that the product that they are buying is up to standard. Otherwise it's just the "legislation will take care of me" nanny state attitude.

You say the cost is borne by the consumer, but what are extended warranties doing? Who bears the cost of those??? Someone on Mars maybe??? And what do they actually achieve, other than being an exceptionally high profit item for some insurance/risk management company.

With an extended warranty the consumer has the choice as to whether they want the extra protection or not. The CGA does not grant that choice.

Think about it a bit, if the salesperson told you at the time of purchase "I fully expect this TV to be a useless lump of plastic within 3 years" would this change you opinion, and accordingly the price you would pay? Would you still pay $4000-$6000 bucks like I did last time I bought one?

Nothing will be a "useless lump of plastic" three years after purchase, but there is always a risk of that occurring and the level of that risk depends on the product being purchased. Smart consumers will ensure that they purchase an item which presents an acceptable level of risk to them.

RustyGonad

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#264644 17-Oct-2009 18:44

alasta:
RustyGonad:
And this compares to say the costs of manufactures dumping substandard crap on the unsuspecting public or releasing equipment with a known short life span due to design flaws?

Why should the consumer pay via extened support services for manufactures using shortcuts in either the design, or build process based entirely on lowest cost economics, with little or no consideration of the product shelf life?

The consumer needs to undertake some responsibility for ensuring that the product that they are buying is up to standard. Otherwise it's just the "legislation will take care of me" nanny state attitude.

You say the cost is borne by the consumer, but what are extended warranties doing? Who bears the cost of those??? Someone on Mars maybe??? And what do they actually achieve, other than being an exceptionally high profit item for some insurance/risk management company.

With an extended warranty the consumer has the choice as to whether they want the extra protection or not. The CGA does not grant that choice.

Think about it a bit, if the salesperson told you at the time of purchase "I fully expect this TV to be a useless lump of plastic within 3 years" would this change you opinion, and accordingly the price you would pay? Would you still pay $4000-$6000 bucks like I did last time I bought one?

Nothing will be a "useless lump of plastic" three years after purchase, but there is always a risk of that occurring and the level of that risk depends on the product being purchased. Smart consumers will ensure that they purchase an item which presents an acceptable level of risk to them.

This isn't about consumer choice - its about manufacturers making products fit for consumtion. This also has nothing to do with "nanny state" your way off the beaten track there... Brands I have personal experience with include Fisher and Paykel, and Samsung... Should be good quality kit.

My TV was a useless lump of plastic after 2.5 years. It had an design fault, which no amount of extended warranty protection would have fixed. I could have fixed the TV, but it was "guaranteed" to fail again. Why should this be a cost borne inherintly by any consumer, implied or otherwise.

Some other examples for you to consider - XBox 360 first generation (yes I've got one, and two others that won't break), 54% worldwide failure rate, once again - where's the consumer choice you advocate???
It has been said that every single first gen console will fail - its simply a matter of time. Consumer choice??? How could someone have been a "smart consumer" here??? Please give us all some suggestions...

Extended warranties add around $700 to the cost of the TV over 5 years, this is a true and real costr. Got any facts to back up your statement that the CGA adds cost to the consumer???

Consumers have plenty of choice on this issue - you don't need to use the CGA - I would argue its costing the consumer nothing. Remember, this isn't about someone getting a free TV just because they don't like it, its about product being fit for the intended purpose. Its not about buying wisely or using reputable gear - I could list hundreds examples of Sony, Samsung, Panasonic all dieing... many of these end up being worldwide manufacturing issues.

I'm also keen to hear more about this "extra protection" consumers get buying an extended warranty - or is it too hard to put a value on "that warm fuzzy feeling"... Making you feel better or "making the process easier" is otherwise known as Fear, Uncertainty and Doubt. Many people refer this affectionately as FUD. Could someone list something you can value (ie put a price on) and touch? What happens after 5 years - buy another one at twice the price - or head back to the good old CGA...

Smart Consumers as you put it, buy wisely - others just hand over their money, and try to justify it later... Every single consumer has choice - use the CGA or spend $700 - sounds like choice to me...

Personally if I had taken out an extended warranty on everything electronic I'd bought in the last 20 years, I'd be roughly $6000 out of pocket. History tells me this would have gained me absolutely nothing - zero, zilch, nada - Now you tell me - who's the smart consumer?

amorangi

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#264681 17-Oct-2009 21:14

As I understand it the 'reasonable' lifetime of a particular product is determined largely by legal precedent, but even then it's hard to clearly define. It's further complicated by the fact that the legislation is intended to factor in the purchase price and perceived quality of an item such that consumers don't avoid high quality goods on the basis of getting the same statutory warranty on a cheaper low quality alternative.

Unfortunately it's not determined by legal precedent - resolutions in the Dispute Tribunal are not precedent setting, which means everybody has to argue their case from scratch. That said taking along a printout of expected life spans of products from Consumer would be very helpful.

timestyles

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#264685 17-Oct-2009 21:43

These discussions have been going for ages here, and on Trademe's forums as well. Anyway, I'll be buying an LCD in the future, and I'm thinking... about discussing it with the retailer before I buy the goods. I'll ask how will I be treated 2, 3, 4, 5, 6 etc years from now. Depending on their response, I'll decide whether to buy from them or not.

I've always considered TV3's Target rather low quality, yes it's important to see whether the quality of jams is high, or a motel that I will never stay at in a town I'll never drive through in the next 20 years passes the UV lamp test, but if they did hidden camera trials of people trying to get CGA rights on faulty goods, then they'll have my praise. Tradesmen sniffing undies is so passe these days.

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8d52797c436

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#264686 17-Oct-2009 21:48

timestyles: These discussions have been going for ages here, and on Trademe's forums as well. Anyway, I'll be buying an LCD in the future, and I'm thinking... about discussing it with the retailer before I buy the goods. I'll ask how will I be treated 2, 3, 4, 5, 6 etc years from now. Depending on their response, I'll decide whether to buy from them or not.

I hate to be pessimistic, but they will lie to you. Most of the time people who work at these places will tell you all the wonderful things they will do for you, and I know from some of the people that I used to work with that a lot of the time they dont actually have a clue about the product they are selling or the legal rights of the people they are selling to.

It's something that I feel is a huge problem with retailers these days. People demand lower prices on products, and the easiest way for a retailer to decrease their costs enough to meet those prices is to pay minimum wage, which usually results in people who are underqualified or uninterested in the actual products.

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#264838 18-Oct-2009 15:35

So when you are utilising the CGA, what are you mainly using it for?

Say a TV is 2 years old and has a 12 month warranty (pretty std I would think), and it just wont go one day, do you push for free repair under the CGA? What if its 3 years old? How much would you expect it reasonable to pay for your own repairs and when might it not be reasonable?

If its say 2-5 years old and you are told that its not fixable then I can see the CGA would be on your side for sure because you own a brick.

I guess "reasonable" is in the eye of the beholder.

Nothing is impossible for the man who doesn't have to do it himself - A. H. Weiler

alasta

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#264852 18-Oct-2009 16:21

RustyGonad: This isn't about consumer choice - its about manufacturers making products fit for consumtion. This also has nothing to do with "nanny state" your way off the beaten track there... Brands I have personal experience with include Fisher and Paykel, and Samsung... Should be good quality kit.

If these products are failing then clearly the manufacturers are not deserving of a reputation for quality. Incidentally I happen to believe that Fisher and Paykel and Samsung products are of relatively poor quality and would not buy them personally, CGA or no CGA.

My TV was a useless lump of plastic after 2.5 years. It had an design fault, which no amount of extended warranty protection would have fixed. I could have fixed the TV, but it was "guaranteed" to fail again. Why should this be a cost borne inherintly by any consumer, implied or otherwise.

Determining the party who bears the costs of repairing a faulty product should be part of the contract of supply. Common practice for a retail purchase involves a contract of supply under which the retailer bears that risk for a fixed period of time, and the consumer bears the risk thereafter. As it stands the CGA overrules that contract of supply, hence negating the rights for buyers and sellers to engage in a contract of supply as they see fit.

Some other examples for you to consider - XBox 360 first generation (yes I've got one, and two others that won't break), 54% worldwide failure rate, once again - where's the consumer choice you advocate???
It has been said that every single first gen console will fail - its simply a matter of time. Consumer choice??? How could someone have been a "smart consumer" here??? Please give us all some suggestions...

Do you seriously think that a manufacturer like Microsoft is going to leave their customers high and dry in a situation like that? Case in point - my G3 iBook died out of warranty a few years ago and Apple came to the party without any objection. As a result Apple have retained my ongoing business in the years that followed, meaning that a mutually beneficial resolution was able to take place without resorting to throwing the book at them.

Extended warranties add around $700 to the cost of the TV over 5 years, this is a true and real costr. Got any facts to back up your statement that the CGA adds cost to the consumer???

Fact: retailers have to achieve a sufficient return to their investors. Fact: Achieving that return requires that costs are recovered to such an extent that targetted gross margin can be maintained. Fact: This means that some or all of the compliance costs of the CGA will ultimately be handed down to consumers.

I'm also keen to hear more about this "extra protection" consumers get buying an extended warranty - or is it too hard to put a value on "that warm fuzzy feeling"... Making you feel better or "making the process easier" is otherwise known as Fear, Uncertainty and Doubt. Many people refer this affectionately as FUD. Could someone list something you can value (ie put a price on) and touch? What happens after 5 years - buy another one at twice the price - or head back to the good old CGA...

I am no apologist for extended warranties. When I make a purchase I take or leave the extended warranty depending on the cost of the warranty, the value of the item, and the likelihood of a failure. It is my right to make that choice for myself.

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clevedon

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#264957 19-Oct-2009 07:35

alasta: Samsung products are of relatively poor quality and would not buy them personally, CGA or no CGA.

I'd agree with that as well.

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