Australians could be due for over $70m* worth of refunds each year for insurance and warranty products they don’t even know they’ve bought.
The latest insurance scandal is brewing, as the Consumer Action Law Centre launches the Stop Selling Junk campaign and DemandARefund.com – a tool to help Australians demand refunds for junk add-on insurance and warranties.
The products (Consumer Credit Insurance, Gap Insurance and Used Car Extended Warranties) are typically sold with cars, credit cards and loans. Recent investigations by the corporate cop ASIC and Consumer Action’s insurance experts show Australians have been ripped off to the tune of at least $70m and many may not even know they’ve purchased the products.
At a public protest today to demand that insurers stop selling junk, Consumer Action CEO Gerard Brody will send a strong message to these companies.
“Our message to these companies is simple: stop selling junk” says Brody.
“Either make these products worth something or stop selling them. After the CommInsure scandal, Australians are already furious with insurance companies and we think they’ll be outraged once they find out they’ve been sold junk. Anyone who has bought something in a car yard, taken out a loan or got a credit card needs to check their paperwork and if they think they’ve been duped they should visit DemandARefund.com.”
Consumer Action’s insurance expert David Leermakers says the problems lie in the sales tactics used and products designed to pay out very little, if at all.
“When you walk into a car yard, you mightn’t know that the car trader could earn up to 90% commission for selling you some of these products. With such high and tempting commissions, do you really think the salesperson cares about the product meeting your needs or your eligibility to claim? In the worst cases, car traders or financers will slip it into your loan paperwork and rush it through so you don’t notice thousands of extra dollars” says Leermakers.
“If the commissions aren’t bad enough, some of the products are designed with so many limitations that they’re almost completely worthless. The worst payout rate we’ve seen has been as low as 6.6 cents in the dollar in a recent ASIC report. We believe there’s strong legal arguments for thousands of Australians to demand a refund. With this new website, and the availability of free and easy-to-use Ombudsman schemes, people who have been duped have the power to get their money back.”
DemandARefund.com helps Australians to generate a complaint letter to demand their money back. The tool will also be used by Community Legal Centres and Financial Counsellors to help vulnerable Australians who’ve been sold junk.
*$70m figure is based on Consumer Action calculations of industry and regulator data of consumers who bought consumer credit insurance without realising.
A media pack is available on request.