Should you buy those 'extended warranties'?

Over the last 4 years, I have purchased a number of electrical and IT products – Apple Mac’s, iphones, ipads, new hand held vacuum cleaners, a robo vacuum cleaner (that I quickly fell out of love with).  You will be familiar with the sales pitch in the shop or on line – ‘would you like to purchase an extended warranty for that for an extra $59’.

For risk averse people (like me), the initial instinct is to think – oh yes, I wouldn’t want to be caught out by something happening to my new purchase.

But – if that is your instinct, I encourage you to think again.

New Zealand has a Consumer Guarantees Act that covers those situations, and it means that you are covered by law for the first three years of your purchase.  Even with Apple products.  Although all the literature states that there is only a one year warranty, and the service centres are based overseas, with our multitude of Apple products, I quickly discovered that as a New Zealand resident, the Consumers Guarantee Act covers those products for 3 full years.

In summary, this is how the act works:

The Consumer Guarantees Act (CGA) protects consumers by, among other things:

  • allowing them to seek repairs, replacements or refunds when goods are faulty
  • setting minimum guarantees that apply to all products and services.

Everyone from garden store owners to electricians have to meet their responsibilities under the CGA. This means if you have a problem with a product or service, you can do something about it.

An excellent summary from a report on ‘buying extended warranties’ from Consumer New Zealand says:

The Consumer Guarantees Act

Under this Act, manufacturers and retailers are obliged to guarantee the products they sell are of an acceptable quality and fit for their purpose. Most appliances, certainly the big ticket ones, can be expected to perform well for many years, not just the period covered by the manufacturer’s warranty.

This means that if your product fails when it’s still reasonably new, you can have it repaired or, if that isn’t possible, replaced, even if the manufacturer’s warranty has expired. So there’s no value in having an extended warranty if the only thing it gives you is cover beyond the period of the manufacturer’s warranty.

The Consumer Guarantees Act also offers broader cover than some manufacturer warranties imply. For example, if a product fails when it’s still reasonably new, and hasn’t been misused, the manufacturer can’t say the fault is because of “wear and tear” and refuse to repair it – even if the warranty says wear and tear isn’t covered. So, there is no additional benefit from an extended warranty that gives cover for “normal wear and tear”.

Here is more detail on the official MBIE Website: https://www.consumerprotection.govt.nz/general-help/consumer-laws/consumer-guarantees-act/

When the CGA doesn't apply

Consumer guarantees do not apply if you:

  • buy products or services privately
  • buy commercial products or services, eg industrial machinery and trucks
  • buy products for resale or to use in a manufacturing process
  • are in business and dealing with another business, and you have a written agreement to contract out of the CGA
  • got what you asked for but simply changed your mind
  • misused or altered a product in any way that caused the problem, eg not following manufacturer’s instructions for use
  • disposed of, lost, destroyed or damaged products after delivery
  • knew of or were made aware of particular faults before you bought the product
  • relied on anyone else's advice or conduct that caused the problem other than the service provider or their agent.

Contracting out of the CGA

A retailer or supplier must not tell you the CGA does not apply, or try to get you to sign a contract saying it doesn't apply.

The only exception is where products or services are for a business purpose and:

  • you as the buyer and the seller are in trade and agree to this
  • the agreement is in writing
  • it is fair and reasonable to do so.

For more information on the Consumer New Zealand report on Extended Warranties – click here - https://www.consumer.org.nz/articles/extended-warranties


Therefore, given that you are covered for many situations by the Consumer Guarantees Act – any extended warranties that you are being encouraged to purchase has to offer additional services, over and above what you are already entitled to.


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