/ Money, Shopping

Have we really got time for extended warranties?

Keyboard with plasters on it

Extended warranties are under the spotlight again – this time the OFT is investigating their value for money. But do we really need a study to find out what we already know – that warranties are largely not worth buying?

Earlier this month, the Office of Fair Trading (OFT) announced it was going to launch a market study into the warranties sold with domestic appliances, such as computers, TVs and washing machines.

It wanted to find out whether its suspicions – that basically, they’re poor value for money – were true.

Look to Europe for answers

Well, it doesn’t need to do a market study to do that – all it needs to do is look to Europe. Over here, domestic appliances tend to come with a one-year manufacturers’ guarantee. Whereas in Germany, most domestic appliances come with a five-year manufacturers’ guarantee.

This simple fact explains why the extended warranty market in this country is worth well over £750 million.

To make matters worse, according to EU Directive 1999/44/EU, a minimum two-year guarantee should apply to the sale of all consumer goods everywhere in the EU.

Might the OFT’s time be better spent getting a government department to force product manufacturers to comply with EU law? There’s a little saying that I like to live by, which goes something along the lines of: doing the same thing over and over again and expecting a different result is madness.

What about the Sales of Goods Act?

It was only in 2008 that an OFT evaluation showed that ‘the Supply of Extended Warranties on Domestic Electrical Goods Order 2005, introduced to improve competition, was by that time only addressing around £19m per year of an estimated annual consumer detriment of £366m’.

How many more market studies and evaluations does it need to carry out before it changes tact, and does something effective? Let’s not forget that under the Sale of Goods Act you have a legal right to a repair or replacement if a product you’ve bought breaks down.

The Act states that goods must be of a ‘satisfactory quality’ and last a ‘reasonable’ amount of time. So, here at Which? we believe that, in most cases, extended warranties aren’t worth buying. Do you agree that they’re poor value for money, or do you feel more secure if you have bought one?

Comments
Member

Overall, I have saved a fortune by not taking out extended warranties, though I can understand why many people use them for larger purchases. I’m sure that campaigns by Which? and others have helped decrease the outrageous prices of extended warranties that were offered in the 1980s.

I am aware of the Sale of Goods Act, but have not had much success in trying to get retailers to face up to their responsibilities. Major electrical retailers don’t want to know, and I’ve been told several times that I should have taken out an extended warranty.

My top tip is to go back to a shop when a different manager is on duty. Some are more obliging than others.

Member

So far I have never used extended warranties as the cost outweighed the possibilities of the need of repair – most equipment in my experience is likely to go wrong within the normal warranties. However I have never had any difficulty whatever in getting an item replaced if it went wrong in say a few weeks of purchase – or repaired if it was longer – always of course providing one has the receipt.

But the number of items going wrong within warranty has been tiny – just two a fridge and a washing machine repaired in warranty period – and just one a faulty DVD player replaced within one month – in thirty plus years.

Member

An utter waste of money. Nuff said. If they were worth having they would be included in the overall price without being a bolt on. We have a 10 year old washing machine, a 15 year old fridge/freezer, a 15 year old dishwasher, all going great guns at the moment. I would rather take my (rather good) chances than pay out £££ for nothing.

Member
Sirgeoffrey says:
3 May 2011

If I have to use the sale of goods act if a tv breaks down within the five or six year period what are the hassles that I may have to go through. Richer Sounds in their 5 year warranty warn:After 6 months it is up to you prove that the product was faulty when supplied:this may involve you taking legal proceedings :

Is this true?

If so why does Which not warn about this and give advice?

If not What is Which going to do about it?

Member

Hello Sirgeoffrey, I’ve had a chat with our legal team to respond to your question. If goods are faulty or unfit for their purpose there is a presumption in the first 6 months that they were like that when they were sold. This means the seller has to show that the problem has been caused since the consumer has had the goods e.g. by neglect, misuse, accidental damage etc.

After 6 months the burden switches and it is for the consumer to show the goods weren’t as they should have been when they got them. The 6 month burden of proof on the seller is relatively new, being introduced in 2003, before that the onus was on the consumer from the outset. So, in a way, we feel that its introduction was good news for consumers

However, you wouldn’t necessarily have to go to court to prove the item was faulty. You could, for example, get an expert report that concludes that the item was faulty when the seller supplied it – you may though need to go to court if the seller refuses to accept the item was faulty, which is what Richer Sounds probably meant.

In terms of the hassles you may have to go through – in practice it all depends on the seller. Some will accept that goods are faulty without question, others may want to inspect the goods before making a decision, others may expect you to produce evidence of the faults. In the same way, assuming you can prove the item was faulty, some sellers will fix/replace it willingly, others may not, preferring instead to resist your claim in which case you may have to take them to court.

Hopefully our Sale of Goods Act guide will be helpful http://www.which.co.uk/consumer-rights/sale-of-goods/understanding-the-sale-of-goods-act/ and there’s also a guide on taking claims to court here: http://www.which.co.uk/consumer-rights/making-a-complaint/taking-a-dispute-to-the-small-claims-court/

Thanks.

Member
HarryMonmouth says:
3 May 2011

I think a lot comes down to how much the extended warranty costs. For instance at Currys an extended warranty (which covers accidents and breakage as well) on a TV might cost as much as a new TV over a 15 year period if renewed every five years. On their LG 2762D which I bought a few months ago doing the same thing would have seen you spend as much as a new television somewhere between 25-30 years. Nowadays I don’t expect TVs to last like they did in the days of my 1960s Sony Trinitron (still working). I might think that replacing in 15 years would be likely. I would be extremely surprised for a TV to last for 25 years. If I have only doubled my outlay to get a TV that will be repaired for free or replaced even if it gets knocked off the table by the dog for 25 years then I think that kind of peace of mind is worth it.

Member

Since I moved into this house in 1971 not one TV has gone wrong – though I have relegated or replaced two or three as new facilities have been added to newer TVs – or the newer Flat screens. I even still have my old 9″ black and white portable which I bought when 405 lines was replaced by 625 lines!

In all honesty I don’t think I would want a very old TV repaired anyway as most facilities I now take for granted are not on the old TVs – and new TVs are comparatively inexpensive. .

Member
David Hague says:
3 May 2011

Actually, though I also had a 1960s Sony that lasted years, I think today’s TVs probably last longer, due to more solid-state technology. But that isn’t the point.

How long before you want to buy a new one due to the fact that the technology changes faster? I suspect many people will be replacing their TV after no more than ten years hese days.

Member
Maurice says:
3 May 2011

I have used extended warranty on my washing machine and when it broke down needing a new drum they said they would replace it with a new machine and so they did, new machine came 10 days later, I have taken out new extended warranty to cover my new machine I have now for five years, the extended warranty was cheaper than having to buy a new machine, I have saved money about £300 I shall bank that saving and use it If I ever need to, I call it peace of mind.

Maurice