SUBJECTS: Statutory Warranties, conditions and 'lemon laws'
MIKE SMITHSON:
We've got Federal Consumer Affairs Minister Chris Bowen on the line, hello Minister?
CHRIS BOWEN:
Good morning Mike, how are you?
SMITHSON:
Very well thank you. Now it's a review at this stage what you are looking at, let's pin point those 'bread and butter' issues that do affect people.
BOWEN:
Sure, well look the big issue Mike is that when you buy a good you're told the manufactures warranty, it might be a year or two years, whatever it is in that case. Sometimes and I've been in this position, you buy the good and the year's over and a week after the year is over the good dies on you and you think 'oh no it's out of warranty there is nothing I can do'.
Well that's not necessarily the case. The Trade Practices Act has a statutory warranty for all goods regardless of what the manufacturer say and the Trades Practices Act says the good must be fit for purchase, so if you pay a lot of money for a good and it fails after a period of time which is not reasonable regardless of the warranty - the manufacturers warranty - you may be covered under the Trade Practices Act.
Now a lot of people don't know that and frankly there are some businesses that rely on people not knowing that and pulling the wool over peoples eyes. The other problem we have is that some people buy extra warranty, you know you go down and you buy a large good and they say to you would you like to extend the warranty for another twelve months and we'll charge you x amount of dollars? Often you don't need to because the Trade Practices Act gives you that warranty.
So we are reviewing that whole system because I think there is a real concern that a lot of people aren't aware of their rights, they think its working properly and I want to make sure that it is working properly to protect consumers.
SMITHSON:
You've mentioned in the release about a possible 'lemon law' that applies to cars, I guess cars are one thing and a big ticket item that some has invested a lot of money and you go along and the dealer would hope you would come back as a repeat customer and they tend to want to look after you.
Mobile phones might be a slightly different topic in terms of people chew through them reasonably quickly, and they are quite affordable, but they are an essential part of everyone's day to day life and we get dozens and dozens of calls on this program with people who are dissatisfied with the service that they have had from their provider, right from the time they purchased the phone to the time that they part with it.
So will the new warranty system for instance if you had a one year warranty on a phone but a two year contract on the phone, if the review turns up changes to the laws that could cover you for the full two years?
BOWEN:
They are certainly the sorts of things we are looking at wether we need to be more specific in our statutory warranties. What sort of protections exists and how they are communicated and whether we need to enhance them. One of the specific things we are looking at as you say the lemon law. After the family home what most people spend most of their money on, their biggest expense in their lifetime is their cars and you hear from time to time - most people have a wonderful experience when they buy their car they are happy with it and everything is fine - but you do hear from time to time that somebody who just gets a lemon it just doesn't work. They keep on taking it back to the dealer or the mechanic and no matter how many times they try it's just not right.
Now in the United States, for some years, in most states in America, there is what is called a 'lemon law', which is if the car keeps breaking down and the attempts to repair are most instances its three times in twelve months or two years, then the consumer has the right to a new car, if they've got a lemon.
Now I don't know if that's the right solution in Australia, I don't know if it is a major problem yet or whether we need to go down that path, but I want to put it on the table and let people put their views forward and it maybe that we need these laws or it maybe that our other statutory warranty laws can apply and cover motor vehicles and their maybe people that want to argue that its wider than motor vehicles, that it covers other big purchases.
That's what we are going to go through in consultation with the community, just what we need to do here and how big a problem is it and what's the right solution.
SMITHSON:
So Minister, do you think that in the past it's been that those who sell these or other items, the retailers, if they pull the wool over the consumers eyes that they try to extend a warranty that isn't needed or isn't necessary or does this, when you say the 'lemon law' is that going to show the mechanic down the road or the car company that you've bought the car from. If there is a glitch fix it properly the first time.
We don't want to keep on coming back if you have basically stuck a bandaid over the problem and know full well that it might break down after the warranty period is up.
BOWEN:
They are the two issues. In general terms what are your rights when you buy a good and don't have the wool pulled over your eyes and as I say it concerns me that a lot of people don't know about their rights. They think if their warranty is up, that's it, bad luck no matter how much money you have spent on the good you are going to have to get a new one, or pay from extensive repairs. Not necessarily the case, sometimes it is but not necessarily the case and also in cars whether – or in other large purchases - particularly cars, where these people should just be given the right to say look three strikes and you're out you haven't fixed it, I just don't want the hassle, I just want another one please.
It may be appropriate, it certainly worked in the United States for some time, there will be strong views both ways, and there will be cars dealers and manufacturers who strongly oppose it. I want to get it all on the table and work through the issues.
SMITHSON:
12 minutes past 10 on 5AA, I have the Federal Consumer Affairs Minister Chris Bowen on the line. Chris just before we let you go, if you're working on it now and it's a review, how long will the review take if it goes down a path of less resistance, how long until its set in stone and these new laws will actually be working in the market place?
BOWEN:
Well, the review is being done by the Consumer Affairs Advisory Council; it's a very small group of consumer affairs experts. They will be doing public consultation, et cetera, it's up to them how they do it, but they will be doing those public consultations. They'll give me a report during the year, by the middle of the year, by July; they will give me a report on their recommendations. I'll then obviously need to consider it and take it to the cabinet and it will then need to progress through both houses of parliament, if there are legislative changes, changes to the law that are required.
So look it won't happen over night, you need to consult properly and then the process you have got to go through to get it through the parliament both houses, it does take time, but we are starting the process.
SMITHSON:
And I'll almost guarantee you that pest from South Australia Senator Nick Xenophon, when it gets to the Senate stage won't stand in the way of this one.
BOWEN:
Nick certainly holds strong views on these things, we have had a number of discussions about consumer affairs and competition matters and I tend to agree with you that he will be strongly supportive of those changes, but that's up to him of course - at the end of the day a matter for him.