Harvey Norman faces class action over ‘unnecessary and worthless’ extended warranties

Retailer Harvey Norman says it will “vigorously” defend a class action alleging it sold “unnecessary and worthless” extended warranties to tens of thousands of customers over the past six years.

Melbourne-based Echo Law issued the claim in the Federal Court on Wednesday on behalf of Harvey Norman, Domayne and Joyce Mayne customers who were sold extended warranties between September 2018 and today.

It accuses Harvey Norman of breaching the law by engaging in misleading or deceptive conduct, as well as unconscionable conduct by selling the warranty.

In a brief statement to the Australian Securities Exchange hours later, Harvey Norman confirmed it had received an originating application and statement of claim about the class action.

The company said Harvey Norman and its wholly-owned subsidiary Yoogalu have “complied with all relevant laws at all times and each intends to defend the proceedings vigorously”.

Harvey Norman’s ‘Product Care’ is an extended warranty sold with products such as electronics and white goods, which claims to offer additional protection to consumers where there is a fault with the item.

The class action also alleges the warranty provides no value to consumers as the “protection” it offers is no more than the rights and remedies already provided under the Australian Consumer Law.

The warranty costs about an extra 10 to 40 per cent of the product price.

Echo Law estimates customers paid hundreds of millions of dollars for the “junk protection” since September 2018.

“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,” Echo Law senior associate Lauren Meath said on Wednesday.

“They feel like they’ve been tricked. Harvey Norman has been making its customers pay extra for rights that they already have for free.”

The major electrical and white goods retailer last month reported net profit slid $187.07 million, or 34.7 per cent, to $352.5m in the year to the end of June.

Total sales fell to $8.86 billion compared with $9.19b reported a year ago.

The competition watchdog has previously identified issues with Harvey Norman’s Product Care and has accepted a court enforceable undertakings from the retailer’s group of companies.