/ 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

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.

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.

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.

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?

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.

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.

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. .

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.

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

Malcolm Chisholm says:
3 May 2011

Please could we have a page on how to use the Sale of Goods Act, including specimen letters to use?

Malcolm

Hello Malcolm, we do indeed have a guide on how to use the Sale of Goods Act, which you can find here: http://www.which.co.uk/consumer-rights/sale-of-goods/understanding-the-sale-of-goods-act/ as well as sample letters for you to use and adapt: http://www.which.co.uk/consumer-rights/sale-of-goods/understanding-the-sale-of-goods-act/sample-letters/

I hope they’re of use to you!

Terry says:
3 May 2011

Essentially these are just an insurance policy, so you take a calculated risk if you need or think you’re likely to need one or not – based on the type of product, amount of usage, the brand and it’s reliability, etc. As long as you have shopped around for the warranty, like most insurance policies, the moment you need to claim, generally (excluding poor insurers !) , you recoup the money pretty much straight away.

I paid approx £20 for an extended warranty which also covered accidental damage on a digital camera, and when it was damaged, the camera was collected free, repaired via the manufacturer and returned perfect. Thus would easily have cost more than the warranty fee, and it still has 2 more years to run !

reg says:
4 May 2011

bosch combi boiler 2 weeks out of garrantee engineer plus parts £250
hoover washer 2 weeks out of garrantee engineer plus parts £115 currys £149
??

Like Terry says extended warranties are just insurance policies. At existing prices they are very poor value with high margins for retailers. They could be a good product for those for whom the risks covered are a real problem, those with limited incomes. As it stands those who actually need them end up paying far too much. Just another way of soaking those less well off.

Jay says:
4 May 2011

Most of the time extended warranties are pointless, and it’s disappointing to read that just about every manufacturer is in breach of the EU laws. Seems the UK follow European law when it’s barmy and not in the public interest, and ignore it when money is on the table – I doubt the Government is going to turn away tax on 750million.

I have bought extended warranties where it made sense, or I had been burnt in the past. The Xbox360 and PlayStation 3 are both great examples where I had failures just outside of warranty, but no matter how many times I quoted (or emailed them) sale of goods, fit for purpose etc info, it got me nowhere. Since then I have taken out extended warranties through the retailer for my replacement consoles – but other than that I avoid extended warranties.

I agree, some years ago I bought a computer at P C World at Lakeside and was harassed so agressively by the salesman to buy this insurance (which included the assistance of a senior colleague)that I almost cancelled the transaction. Thankfully I did not give in to this bullying and have not purchased from this store since.I never buy this extra insurance on any item when offered ,which leaves behind a disgruntled salesperson.

bechet says:
5 May 2011

The few extended warranties I have bought were a complete waste of money and I have learned my lesson. If it doesn’t go wrong within the first year (the usual manufacturer’s guarantee period) it probably won’t fail within five. My TV (inherited from my mother in law) is at least 20 years old and has never received any remedial attention. And for smaller items the warranty often costs almost as much as the goods.

ali says:
18 May 2011

i think extended warrenties are SOMETIMES worth the money. for example i have a large family and i a washing machine is vital to me. most washing machines last me about 2 years at most. i do not have the money to fork out £300+ on a washing machine every time it goes wrong. most companies dont want the money strait away anyway and some prices are negotiable. its peace of mind not to worry about washing machines. they’re not fun to shop for anyway.

wildgunman999 says:
3 November 2011

I have successfully used the Sale Of Goods Act. I got a microwave from Argos which packed up after 16 months. I called up and I was told to get it examined by an expert (i.e. a microwave-repair shop), and a letter saying it was the manufacturer’s fault. I was told they would even pay for the cost of the expert’s examination. Luckily I wasn’t charged by the ‘expert’, but I got a letter, took it in and got a refund. 2 points to note:
1. You won’t get a full refund; you get a refund of the value of the product over its expected lifetime of 6 years, minus the time you’ve had it already. e.g £100 item is worth £1.38 per month of the six years, so they subtracted abt £22 for the period I had it in good condition.
2.At every stage some zonker will try to tell you it’s ‘out of warranty’, or ‘go back to the manufacturer’. You have to educate them, stand your ground and get them to bring out the knowledgeable person, even it it turns out to be the 4th person as in my case.
The shops seem to call it the ‘Six Year Care Plan’.

Congratulations on achieving what many have tried and failed. I am impressed that you got a free expert’s report, but maybe they were sympathetic to the case of the consumer.

Experts’ reports do not normally come cheap.

Some of us would like to purchase extended warranty cover on certain types of appliances ie: dishwashers, washing machines which only have a one year guarantee and do not want the hassle of going through purchasing expert reviews etc. I am not capable of repairing these and it costs £100+ for a call out inside the M25. It would be most useful if “Which?” could provide reviews of the market for these types of policies to give us a guide as to which are worth buying and which are not. I have just been offered a 4 year extended warranty on a dishwasher for £69 via the Cooperative Electrical website – it looks good – but is it? For this price I am tempted to give it a go!

Carl says:
15 March 2012

I totally agree that would be a useful article!

s.gibbo says:
1 February 2012

Many of the mid-high end price items come with 5 year warranty as standard, the reason to buy one on cheap items is that most parts are made in china and to pay a call out from most companies is rediculous, i recently purchased a cooker from my local euronics store, the cooker was £449 and the 5year warranty cover was £79, which i thought was very good, especially as i had paid £50 call out on my old one just to find out it was beyond repair, i would never buy one for laptop/tv because they are so expensive in relation to the original purchase price, white goods cover seems reasonable from my own experience.

I bought a LG60PX990 last January which developed a fault within 2 weeks and was replaced by the seller no problem. The replacement has just powered off last night, 2 weeks over its warranty. Any help would be much appreciated.
Thanks

‘… 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’

This question may be slightly off the extended warranties topic but it is related. Can anyone tell me why some manufacturers and retailers are still insisting that you only get a one year warranty and that is that. Surely under this EU law manufacturers and retailers re legally obliged to adhere to the two year warranty period?
I have a printer that is not functioning after only 19 months of moderate use and Amazon are refusing point blank to entertain any repair or replacement, I don’t understand how they can deny responsibility under EU law, much less under the ‘quality’ clause that things should last a reasonable time, with the UK’s six year claim period.
Fact is that this printer cost £152.99, and so I would expect a longer life than 19th months – if I had bought a £50 printer and it only lasted 19 months I could now still buy two more £50 printers and have a further three years use for the same money. Can anyone advise?

HarryMonmouth says:
23 August 2012

As the chap has said above after the first six months you have to prove that the fault was with the device when you bought it. Some companies are fine with helping you out with replacements up till the end of the first year anyway just for good customer relations. After that first year it always seems to get a bit tricky with almost all companies. The important thing is that you do not wait. As long as it can be shown that you have started arguing against them in good time this will go in your favour even if it does take a long time to get a replacement.

I would suggest you look for some form letters here on the which website. I know they have some, you can find the url if you look further up this thread of comments. Try those before anything because they won’t cost you anything. After that I would say make use of your CAB and if that fails a lot of local MPs can be very helpful, particularly if you are in a libdem area. For all the bad that is said about them they are often very helpful to constituents because they know they need to be.

The company should give in by that point. Of course there may be help available from certain computer related publications that do a page for consumer advice. The negative publicity there can often force a company’s hand. Unfortunately it is not simply a matter of companies doing the right thing though. A lot of these companies have become so successful by relying on the fact that consumers often can’t afford to take them to court and will often not bother to chase up the money.

As Harry says, it is the responsibility of the consumer to provide evidence that the fault existed at the time of manufacture.

In many cases the fault may not have existed at this time but may have resulted because of poor quality components or bad design. Goods are expected to be of merchantable quality and fit for their purpose.

While I applaud Which? for all they do achieve, I really wish they would fight for more protection of the consumer, remembering of course that manufacturer’s must not be expected to foot the bill for goods that have been abused.

I think the way forward may to encourage manufacturers to provide longer warranties, including parts and labour. This would lead to better quality products because the manufacturers would not want to foot the cost of repairs.

Jan’s message about the EU requirement for a 2 year warranty is interesting, and I had not heard of this. Maybe I’m not alone!

Hi Jan, the EU laws relating to a 2 year warranty weren’t incorporated into English law on the basis that, regardless of a length of warranty, consumers have longer rights to enforce against a retailer under the Sale of Goods Act.

The main problem here for consumers is that the burden lies with them to prove that the printer has an inherent defect that has taken time to manifest itself i.e. it is not something they have done to cause the fault.

Hopefully our Consumer Rights guide to the Sale of Goods Act will help: http://www.which.co.uk/consumer-rights/sale-of-goods/understanding-the-sale-of-goods-act/
And template letters are here: http://www.which.co.uk/consumer-rights/sale-of-goods/understanding-the-sale-of-goods-act/sample-letters/

Wavechange, we’ve been working hard on feeding into the Consumer Bill of Rights consultation to make sure rights in the UK are tightened up and can be easily understood by everyone. Consumer Affairs Minister Norman Lamb is looking for feedback on the Consumer Bill of Rights and bringing the Sale of Goos Act into the 21st Century n this guest Conversation, so you can tell him what you think here: https://conversation.which.co.uk/consumer-rights/norman-lamb-returning-faulty-games-downloads/

Thank for your replies guys. I think there is a subtle difference between something being faulty at the time of purchase, and not of a sufficient quality […]. I contacted Mr Lamb by e-mail before seeing this post, and he replied very promptly from his holiday location to say he has passed my comment on to the relevant people looking into this.
I don’t understand why this has been so long in being investigated – the EU directive came out in 1999 and in 2004 there was an EU report stating that the UK had not assimilated the directive into law and that not doing so was a detriment to British consumers – I wonder why Which? haven’t been more vociferous on the matter – going back to the original theme of the thread, a lot of companies are charging for warranty rights we ought to have anyway.

Hello Jan, you can read about our latest on extended warranties here: https://conversation.which.co.uk/money/extended-warranties-oft-dixon-comet-argos/ The OFT is currently consulting on the matter.

Panasonic also changed its potentially misleading warranties after questions from Which?: http://www.which.co.uk/news/2012/08/panasonic-changes-potentially-misleading-warranties-293536/

Patrick

Perhaps Which? could do an article giving some examples of how members have gone about obtaining an expert report on items that have failed outside the guarantee period. It would be interesting to know how easy this is, how much it costs, where to get a report, and what the outcome of their claims has been.

I don’t know a single person who has even tried to get an expert report, but I know many who have have thrown out electrical and electronic equipment that has failed after a year or two.

I would also like to know whether problems reported repeatedly on websites (e.g. Sony TVs with dark band and shadows) can be used as evidence of a design fault.