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Harvey Norman to face class action over ‘worthless’ warranties
A class action lawsuit has been filed against major retail company Harvey Norman over allegations that an extended warranty that supposedly offers more protections provides no value to consumers.
Kace O'Neill
Tens of thousands of Harvey Norman, Domayne, and Joyce Mayne customers who were sold extended warranties between September 2018 and the present day will be covered in a class action lawsuit issued by Echo Law in the Federal Court of Australia.
The class action alleges that Harvey Norman’s “Product Care”, which is an extended warranty, is in fact “worthless”. The extended warranty is sold with products such as electronics and whitegoods and claims to offer additional protection to consumers where there is a fault with their product.
Echo Law alleges, however, that Product Care provides no value to customers, as the “protection” it supposedly provides to its customers is no more than the rights and remedies already provided to those consumers under the Australian Consumer Law.
“We have heard from hundreds of Harvey Norman customers who are furious that they’ve paid thousands of dollars for Product Care over the years and for little or no benefit,” said Dr Lauren Meath, Echo Law senior associate.
“They feel like they’ve been tricked. Harvey Norman has been making its customers pay extra for rights that they already have for free. It’s a practice that is hugely profitable for the retailer.”
The added price that customers often pay for this extended warranty is allegedly an additional 10 to 40 per cent of the product price, depending on the length and coverage of the warranty.
“However, when you look at the rights all consumers are guaranteed under the Australian Consumer Law and the long list of fine print exclusions to Harvey Normans’ Product Care, it becomes clear there is nothing substantially ‘additional’ or ‘beneficial’ about this product,” said Meath.
Although the total revenue collected from the practice of selling extended warranties isn’t included in Harvey Norman’s financial reporting, Echo Law alleges that Harvey Norman customers have paid hundreds of millions of dollars for the “junk” protection since September 2018.
“In reality, Harvey Norman is packaging up the obligations it already has to repair, replace or refund faulty products sold in its stores and is selling this to its customers at a premium. Harvey Norman needs to be held accountable, do the right thing, and refund that money with interest,” said Meath.
Overall, the class action alleges Harvey Norman engaged in misleading or deceptive conduct and unconscionable conduct when selling products that had minimal or no value.
In the past, the Australian Competition and Consumer Commission (ACCC) has reported a number of issues with Harvey Norman’s Product Care and previously accepted a court enforceable undertaking from the Harvey Norman group of companies.
Issues were identified by the ACCC in regard to Harvey Norman’s selling practices and misleading conduct in relation to the overlap of existing consumer rights under the Australian Consumer Law.
Through the class action, Echo Law seeks to recover compensation for customers who purchased Product Care from 17 September 2018 at either a Harvey Norman, Domayne, or Joyce Mayne store. This also includes a refund of the money customers paid for Product Care and interest.
According to Echo Law, the litigation is supported by an experienced Australian litigation funder, CASL.
“This case is an example of how class actions are an important enforcement mechanism for Australia’s consumer protection laws. CASL is proud to support Echo Law’s work to seek remedies for consumers who were allegedly sold junk extended warranties,” said Siobhan Moore, CASL senior litigation manager.
