/ Money, Shopping

Push back on the warranty pushers

Cartoon showing salespeople in shop

In the world of extended warranties, I can see why some salespeople might exaggerate the benefits of buying one, since it’s often their job to persuade you to purchase something that is, in fact, poor value.

Over the years, Which? has consistently highlighted reasons why extended warranties are usually bad value.

For one thing, our surveys show that many products are so reliable that there’s a very slim chance you’ll ever need the warranty; for another, the price can be well on the way to the cost of a whole new product.

Extended warranties offer poor value

TV repairs and extended warrantiesA Currys premium five-year warranty on a 32-inch Panasonic TV costs £139. That’s half as much as buying the same model new.

Yet our latest investigation shows that only 2% of Panasonic TVs were repaired in the first five years – making it highly unlikely you’ll need to use the warranty.

Last year, we highlighted a £170 warranty for a washing machine that cost £260. In the past, we’ve shown how the cost of repairs was far less than the cost of the warranty. We’ve even found cases where the warranty costs about the same as the product itself – which is totally ridiculous.

Some of you tell us that you like warranties for the peace of mind and the convenience of getting repairs sorted out quickly. However, you won’t get repairs if the warranty doesn’t cover the cause

Some people will say anything to get a sale…

When we tested Currys/PC World recently, one member of staff told our researcher that its ‘Whatever Happens’ warranty covers everything. It doesn’t – anything deemed to be due to neglect, misuse or weather damage is ruled out.

It’s 10 years since the Competition Commission investigated the extended warranty industry, including hard-sell tactics, and concluded that the market wasn’t acting in consumers’ interests. That wasn’t the first investigation, either. An optimistic review in the mid-90s recommended self-regulation, which failed.

You may be surprised to hear that not all warranties are classed as insurance, so in some cases you don’t have the same rights as you would with insurance to complain or get compensation if things go wrong. We think it’s high time warranties were treated the same way, and we’re asking the Financial Conduct Authority to take action on this issue.

Comments
Guest
Stuart B says:
13 September 2013

I worked at PC World many years ago.

The sales staff had two targets:

1) Product Sales
2) Extended Warranty Sales

From memory the second attracted bigger commission payments and was just as important as the first for a sales guy to hit.

Often the sales guy (when facing an unsure customer) would discount the product by the cost of the warranty – that way they still hit their targets.

I found some morals in the end and left.

Guest

I cannot remember ever having bought an extended warranty. In the 80s I recall telling sales assistants about Which? saying they were very poor value for money. Nowadays I would just tell them about my rights under the Sale of Goods Act, and they get the idea that I am not interested.

Guest

“Currys/PC World …..told our researcher that its ‘Whatever Happens’ warranty covers everything. It doesn’t – anything deemed to be due to neglect, misuse or weather damage is ruled out.” Surely you would not expect any warranty to cover these? Indeed, neglect can invalidate a claim on, for example, car and house insurance (and, in the case of a car, may lead to prosecution).

Providing extended warranties are not mis-sold – by pushing them onto the purchaser, concealing exclusions for example – then it is up to the purchaser to decide whether they suit them. I, in general, agree they offer no real value – checking the insurance cost against the item price usually gives a clear answer. However, as I reported elsewhare, I have recently bought one extended warranty – 10 years (actually 8 extra years) on a Miele dishwasher for all labour and parts costs, or replacement, for £149. Given the high cost of Miele parts I thought this offered reasonable value. Only time will tell.

Surely there is here an opportunity for a reputable insurer to offer repair insurance for all your domestic appliances at mutually-satisfactory rates, without the excessive commissions for shop staff? Is there anyone out there?

On the same tack, has Which? reported on 3rd party extended car warranties – are they fair and value for money? Peace of mind on a high value item is worth more than on a wahing machine.

Guest

re “Surely there is here an opportunity for a reputable insurer to offer repair insurance for all your domestic appliances at mutually-satisfactory rates”

British Gas already offer this option under the HomeCare plan. Have had many a dishwasher repair and washing machine repair over the years. It is fairly expensive, but I am a happy customer.

Guest

Colin, which Homecare plan is is? I’ve looked at Homecare 400 that covers electrics, but does not mention appliances. That costs £204 a year.

Guest

I would like to see all domestic appliances covered by a manufacturer’s 10 year guarantee. If manufacturers were responsible for the cost of repairs during this time, poor quality products would soon disappear off the market because it would cost the manufacturers too much to pay for repairs.

To protect themselves from claims for appliances that have been heavily used, the warranty could cover 10 years or a specified number of hours use (which is easy to measure), just like a car warranty usually covers so many years or miles, whichever comes first.

I would like to see the length of manufacturers’ warranties as a factor in the selection of Which? Best Buys. Manufacturers and retailers need to know that the length of warranty provided helps provide customers with confidence and sell their products.

Guest

Whilst I agree (as said in other conversations) that extended warranties would be beneficial in supporting and promoting good quality manufacturer’s products, cheaper (and maybe less good) products could not be expected to last as long – certainly not 10 years. Either way, some failures would happen within the warranty period, and this would inevitably be at some cost to the manufacturer and passed on to the purchaser.

On the whole, though, as with cars and JLP TVs it’s high time warranties were better-related to expected trouble free life. Better components, quality control and design can achieve this, not necessarily at much extra cost. You would think it would be a “competitive advantage” but maybe it’s a case of who dares make the first move. It took around 100 years with cars.

Guest

Fair comment, Malcolm. If we assume that the main reason for failure is amount of use rather than age, an expensive washing machine could come with a warranty covering 10 years or a certain number of hours use. A cheaper machine might have a ten year warranty and half this number of hours use.

We cannot afford to carry on using up finite resources and creating waste at present rates, so consumers should be expecting products to last longer. Obviously that would not be appropriate for products such as phones, where the technology is developing fast and there is a big demand for the latest product, but most domestic appliances don’t really change much. Most faults occur during the warranty period, so I am not convinced that a ten year warranty is impractical, though manufacturers would have to stop using penny pinching and using cheap components, whereby failure of a small part often results in a large appliance being scrapped.

A ten year warranty would save consumers struggling to exercise their rights under the Sale of Goods Act.