Blog

One of Australia’s biggest retailers is being sued for allegedly selling extended warranties to customers that offer benefits they already receive for free.

A lawsuit lodged in Victoria’s Supreme Court on Friday will seek compensation from JB Hi-Fi, with hundreds of thousands of customers potentially owed millions.

Miranda Nagy, the principal lawyer from Maurice Lawyers, said the Australian Consumer Law already offers customers most of the benefits included in JB Hi-Fi’s extended warranties, which have been sold to shoppers since 2011.

‘These warranties are in most cases little more than a junk add-on to consumers’ purchase of the household goods they actually want,’ Maurice Blackburn Lawyers principal Miranda Nagy said.

The lawsuit alleges JB Hi-Fi broke the law when it used deceptive or unconscionable conduct when selling the extended warranties to its customers.

A JB Hi-Fi spokesperson said: ‘JB Hi-Fi takes compliance with its legal obligations very seriously and considers that it has complied with relevant laws at all times.

‘JB Hi-Fi intends to vigorously defend the proceedings.’

One of Australia’s biggest retailers is being sued for allegedly selling extended warranties to customers which offer benefits they already receive for free (stock image)

‘JB Hi-Fi’s warranties never lasted more than three to six years after the date of purchase,’ Ms Nagy told media.

‘So when you think about buying, for example, a $2,000 fridge, you’re expecting a fridge like that … to have a much longer life than six years.

‘Australian Consumer Law remedies were likely to last longer in most cases,’ she explained.

The lawsuit will seek to reimburse customers who purchased in some cases ‘incredibly expensive’ plans like ‘customer care’, ‘extended care’ or ‘extra care’. 

The wording of JB Hi-Fi’s extended warranty plans states it provides customers with benefits that are not already available to them under Australian Consumer Law. 

One of the plans states customers provided ‘certainty as to the period of coverage and the remedy you will receive’ while others said they protected customers if the item suffered mechanical or electrical failure. 

Ms Nagy said some of JB Hi-Fi’s plans failed to adequately explain how they differed to basic consumer law protections that were free for customers. 

The lawyer said JB Hi-Fi was ‘far’ from being the only retailer offering their customers extended warranties with little to no value. 

A number of factors have to be considered for shoppers to get a faulty product replaced or refunded without an extended warranty. 

These include whether it’s been a reasonable amount of time, how expensive the product was and how serious the fault is or if the product is unsafe. 

Customers who are offered an extended warranty plan in-store have been urged to ask a lot of questions – as employees may be working for a commission. 

The Australian Competition and Consumer Commission said consumer guarantees apply whether or not an extended warranty has been purchased. 

Consumer guarantees is a customer’s rights to get a repair, replacement or refund for a product within a ‘reasonable’ period of time.  

The product needs to be in reasonable condition without any defects and be safe, durable and fit for purpose. 

A lawsuit lodged in Victoria’s Supreme Court on Friday will seek compensation from JB Hi-Fi with hundreds of thousands of customers potentially owed millions

It comes after JB Hi-Fi celebrated record sales and earnings in the first half of 2022/23 amid a strong demand for electronics and appliances.

The retailer said overall sales were up 8.6 per cent to $5.28b in the six months to December 31, compared to a year prior.

Unaudited earnings before interest and taxes were up 14 per cent to $479.2 million, while net profit after tax came in at $329.9m, up 14.6 per cent from a year ago.

‘We are pleased to report record sales and earnings for HY23 as trading conditions started to normalise following two years of Covid related disruptions,’ said Group CEO Terry Smart.