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Faulty goods survey

Nobody wants to end up buying a dud product. But our latest survey shows it happens more often than you might expect. Of the 9555 members who took part, 35 percent had returned an item to a retailer in the past two years because it was faulty or performed poorly.

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Responses echo complaints we receive about failed goods. Our advisory service deals daily with inquiries about products that aren’t up to scratch or have given up the ghost before their time.

The bright spot amidst the faulty phones and failed fridges is the Consumer Guarantees Act (CGA). The Act requires goods to be of acceptable quality. If they’re not, you’re entitled to ask the retailer to fix the problem.

Of the 35 percent of respondents (3386) who had returned a faulty item, most successfully used their CGA rights to have the product repaired (18 percent) or get a refund or replacement (67 percent).

But knowing your rights is the trick. Respondents who felt confident about the protections provided by consumer law (73 percent) were significantly more likely to get a refund or replacement when they returned a faulty good. Those who weren’t confident were more likely to get a raw deal.

The brush off

About 15 percent of respondents who returned a faulty product were given the brush-off or didn’t get the remedy they were entitled to under the Act.

In about half of these cases, the retailer claimed it couldn’t do anything because the product was “out of warranty” or told the customer they had to contact the manufacturer.

Both claims are misleading. Consumers’ rights under the CGA are on top of any manufacturer’s warranty and don’t end when the warranty does. If a product isn’t of acceptable quality, the retailer is obliged to provide a remedy.

Some respondents also got caught in the “store credit” trap. Instead of getting a refund when they returned a faulty item, they were offered store credit. Others received a partial refund or had to contribute towards the costs of repair.

Retailers using these practices aren’t meeting their CGA obligations. Under the Act, a refund means a refund. You don’t have to settle for store credit and the retailer can’t insist on it. The store also has to meet the costs of repairing or replacing a faulty good.

The brick wall

Some respondents hit a brick wall when they went back to the retailer: the store refused to acknowledge there was a problem and members had to argue their case. One member had to take their claim, which they won, to the Disputes Tribunal.

Several respondents complained about the long waits they’d had before getting a response from the store, if they got a reply at all.

The CGA requires retailers to deal with problems in a reasonable time. If they refuse or fail to do so, you have the right to get the good fixed elsewhere and recover the costs from the retailer. You can also reject the item and claim a refund. If the store refuses to play ball, you can lodge a claim in the Disputes Tribunal.

Extended warranty push

Respondents who weren’t confident about the protection provided by consumer laws were more likely to buy extended warranties. These warranties are heavily promoted by retailers. But in most cases, you're paying for protection you already have.

Mis-selling of extended warranties resulted in consumer laws being strengthened last year. New rules mean retailers who sell these warranties must give customers information about their legal rights to a repair, replacement or refund if a product is faulty.

Sales reps also have to tell consumers who buy a warranty in store that they have a cooling-off period of five working days to cancel if they change their mind.

Most respondents said they never bought extended warranties (57 percent) or used to but had stopped (24 percent). Eighteen percent bought a warranty occasionally. But the purchase rate jumped to 27 percent among respondents who didn’t feel confident about the law.

Fifty percent of respondents who had bought a warranty in the past year said the sales rep hadn’t told them about the cooling-off period. Just 21 percent of warranty purchasers had been given this information by the sales rep, despite it being a legal requirement.

Shoppers buying home appliances at Harvey Norman and Noel Leeming were the most likely to be offered an extended warranty with their purchase. Seventy-seven percent of respondents who shopped at Harvey Norman said they’d been offered a warranty. The figure was 68 percent for Noel Leeming.

About two-thirds of those who shopped at retail stores owned by the Smiths City Group were also offered a warranty. The Smiths City Group includes Powerstore, Smiths City and LV Martin.

Survey results

Store% of shoppers who were offered an extended warranty[bar]
Harvey Norman77%
Noel Leeming68%
Powerstore64%
Smiths City64%
LV Martin62%
Dick Smith55%
Appliance Shed54%
JB Hi-Fi46%
Heathcote Appliances43%
100% Appliances34%

Guide to the table
Our survey was carried out in August 2015. The table shows the percentage of respondents offered an extended warranty at 10 home appliance stores.

Your rights

The Consumer Guarantees Act covers goods and services purchased for personal, domestic or household use. The Act obliges retailers to guarantee their products are of an acceptable quality, fit for purpose, and match the description. If a product fails to meet one of these guarantees, and you haven’t caused the failure, you have the right to insist the retailer puts it right.

If the problem is minor and can be fixed, the retailer can choose to repair or replace the item or give you a refund. If the problem can't be fixed, can't be put right within a reasonable time, or is substantial, you can:

  • Reject the product and choose a replacement (of the same type and similar value) or a full refund of the purchase price.
  • Keep the product and claim compensation for any drop in its value caused by the failure.

A "substantial" failure means:

  • A reasonable consumer wouldn't have bought the product if they'd known about the fault.
  • The product is significantly different from its description, the sample or demonstration model.
  • The product is substantially unfit for purpose.
  • The product is unsafe.

What should you do?

Ask the retailer to fix the problem. If it’s unable to do so within a reasonable time, or refuses to do so, you can ask for a replacement or a refund. A refund under the Act means exactly that – a full cash refund – not a credit note, and not a refund less deductions for anything related to the failure of the goods.

No. Manufacturers’ warranties are in addition to your rights under the Consumer Guarantees Act. A washing machine subject to normal domestic use shouldn’t break down after three years. The store should repair the machine for free. If the fault is major, you have the right to reject the washing machine and get a replacement or a refund.

The shop. In addition to replacing the heater with one suitable for bathroom use, it should reimburse you for the fire damage. The Consumer Guarantees Act gives you the right to claim compensation from the store for any loss or damage resulting from a product’s failure where it was reasonably foreseeable.

Return it and get a refund or replacement. Goods must match the description or photograph shown. The company must also cover the cost of the return postage.

No. You can return a product only if it fails to live up to the guarantees in the Act. If you simply change your mind, then all you can do is tell the store and politely ask for your money back. It’s under no obligation to refund you, but some will, to promote good relations with customers.

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