Its probibly your technique. To get the maximum out of an inline heater it is best to only pull the wand trigger on the back stroke, do no more than 5 strokes before returning back over that area with dry strokes. This will do two things. 1, it will not allow any excess moisture left in the carpet to soak in and 2, it will give the heater time to reheat for the next 5 strokes.
Other things which can help an inline heater to produce the maximum heat possible are 1, put in the hottest water you can to the tank, then the heater does not have to raise the temperature so far. 2, use the lowest psi possible while still getting a good clean. I find between 250 and 350 psi is ideal for 99% of jobs. This will help as the heater will have less water to heat each time you pull the trigger. The less pressure means less flow which means higher temperatures.
After all that if you are still having problems with the heater check the thermostat is up full. If you still have problems after that you may need to send it back.