New protection for consumers taking out extended warranties welcomed

9.52.26am BST (GMT +0100) Tue 12th Apr 2005

Simon Davey, County Council Candidate for Congleton West has welcomed new government measures to protect consumers against the mis-selling of extended warranties for electrical goods - but added that there are still a great number of warranties on the market that represent little value for money to consumers. He is calling for further crackdowns on the selling and marketing of these warranties.

Extended warranties can cover things like mechanical breakdown and accidental damage for items such as vacuum cleaners, DVD players or washing machines.

The new rules have been put in place to combat the hard sell associated with these extended warranties. Until now retailers have had an anti-competitive advantage because they can sell warranties when the consumer is in the shop, buying the goods. These new rules should give consumers better information and choice and important cooling off rights. Simon would like to see further pressure brought to bare on retailers as happens in many other EU countries.

However Citizens Advice is concerned that some warranties offer consumers no more protection than their entitlements under normal consumer protection legislation. In some cases consumers may already be covered by their household contents insurance and have no need for a warranty. Sometimes it is very unlikely that the product will break down, leaving little need for an expensive warranty.

Citizens Advice Bureaux around the country report many cases where consumers have fallen victim to high-pressure sales of warranties, offering poor value.

DVD Player

In one case a CAB client from Holmes Chapel paid £310 for an extended warranty on a TV and video. As part of the agreement if no claims were made on the five-year warranty the premium would be repaid. No claims were made but the retailer is now refusing to repay the cost of the warranty.

In another case a Citizens Advice European Consumer Centre client found the extended warranty he paid for when he bought his computer was invalid when he moved to Portugal to work. When the computer broke down he found that the warranty he thought gave him added security only covered use in the UK.

Susan Marks ECC Social Policy Officer at Citizens Advice said

"We welcome these new measures which should protect consumers from pushy sales people when taking out warranties and improve consumer choice.

"However, we are urging people to think very carefully about whether they really need to take out an extended warranty when buying goods. Consumers should think realistically about whether the product is likely to break and then take into consideration the cost to repair or replace the item before forking out extra for a warranty. People must remember that they have a right to goods that work, and to choose between a refund, repair, replacement or part refund if they are faulty. Retailers must provide these rights anyway.

"We are advising people to take the time to ensure that they fully understand the terms of the agreement and what extra protection the warranty has to offer before they decide to buy. This is particularly important for people who purchase goods for use in other European Union states."

Under the new rules retailers must now:

· give consumers information about their statutory rights, cancellation rights and details of the warranty, including whether or not their warranty provides financial protection if the company goes bust and whether it terminates in the event of a claim;

· show the price of the extended warranty alongside electrical goods; in store, in catalogues, on websites and in print adverts;

· offer the extended warranty on the same terms for 30 days if the consumer chooses not to buy it there and then. Any discounts tied to the purchase of the extended warranty would also be available for 30 days.

· inform customers of their rights to buy a warranty elsewhere, and that the electrical item they bought may already be covered by their own household contents insurance.

Consumers also have new rights to cancel the warranty within 45 days and get a full refund, if they have not made a claim. If people make a claim on the warranty, they can still cancel and get a pro-rata refund at any time up until the end of the warranty agreement.