JB Hi-Fi is facing a landmark civil court case that could force it to refund countless customers who forked out money for extended warranties on electrical and homewares products that have been branded as “junk”.
The class action suit filed in Victoria by Maurice Blackburn Lawyers last Friday alleges the expensive cover offered little or no value because customers were already protected by the same rights for free under Australian Consumer Law.
The legal pursuit relates to extended warranties JB Hi-Fi offered customers over a more than 10-year period when they bought goods including consumer electronics, home appliances and home entertainment products.
At different times the cover was called Extended Care Plans or Extra Care Plans.
Maurice Blackburn principal Miranda Nagy said the class action would seek refunds for consumers affected between January 1, 2011 and December 8, 2023.
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“These warranties are in most cases little more than a junk add-on to consumers’ purchase of the household goods they actually want,” Ms Nagy said.
“JB’s extended warranties expire just three-six years after purchase, but they add substantially to the cost. Our case alleges they added nothing meaningful to the strong rights for repair, replacement or refund under the Australian Consumer Law rights that consumers already enjoy.”
JB Hi-Fi said it would “vigorously” defend the claims.
“JB Hi-Fi takes compliance with its legal obligations very seriously and considers that it has complied with relevant laws at all times,” it said in statement to the Australian Securities Exchange. Its shares were little changed from Friday’s close in early trade and at 9am stood up just 0.3 per cent to $49.20.
The class action after a survey by consumer advocates Choice found 32 per cent of consumers had bought extended warranties at one time or another, often after being pressured by aggressive sales techniques.
Maurice Blackburn suit alleges JB Hi-Fi used “misleading or deceptive conduct or unconscionable conduct” to sell the extended warranties, including telling customers either directly or by implying that they operated for longer than the rights under the Australian Consumer Law, provided benefits the law did not, and were of value to customers.
It also alleges JB Hi-Fi failed to give customers information about their rights under the Australian Consumer Law, “which they needed to make a properly informed decision about whether to buy an extended warranty”.
JB Hi-Fi in October reported a fall in first-quarter sales for its Australian operations amid what it describes as a challenging retail environment as shoppers looked to maximise value from their purchases.