Warranty — Read this before You purchase!
It seems that the word “Warranty” has become an all-encompassing term to describe just about anything which is service or insurance related. However, when you look into it the way the term “Warranty” is used by suppliers, it can be more than a little misleading, and the term is often distorted to fit the narrative of the party that is offering it.
There are also various terms used, either in place of, or in association with the term “Warranty” such as: Guarantee; Endorsement; Extension to Manufacturers; Discretionary Warranty; Mechanical Breakdown Insurance. When considering the protection which is being offered to you, it is very important to get behind the words and to understand just what level of protection (both in practical and legal terms) is being offered?
The Cambridge Dictionary definition of “Warranty” is :-
“a written promise from a company to repair or replace a product that develops a fault within a particular period of time, or to do a piece of workagain if it is not satisfactory”
The first thing we need to recognise is that the law requires retailers to repair or replace goods for up to six years, if a product can be shown to have developed a fault due to a defect at the point of sale. However, very rarely can a consumer prove such a defect existed — hence the development of “Warranties” (whatever the retailer may call them) designed to give the customer some greater assurance that, if something goes wrong with what they have purchased, it will be put right.
The next thing we need to know is that, for a period of six months after the purchase of goods, a consumer does not have to prove that a defect existed at the point of sale — the law says that, if something goes wrong in that period, this will be assumed to be the case, unless the seller can prove to the contrary.
Another factor in the “Warranty” equation is that manufacturers of products often offer “Warranties” in support of their products — of certainly one year, often three years and sometimes much longer. It is important to realize that the manufacturer’s “Warranty” is not a promise from the retailer to repair or replace — if a retailer does do this under a manufacturer’s “Warranty” this is simply because the manufacturer will support this.
So, you might think that there is no need for any “Warranty” to cover the first six months after the purchase of goods — or at any time whilst goods are subject to a manufacturer’s “Warranty”?
Well, that depends on what the “Warranty” offers, and what protection or “peace of mind” the consumer wants.
Clearly if there is no manufacturers warranty and/or the goods have been owned for more than six months, a “Warranty” will be valuable protection for a consumer if it offers legally (and easily) enforceable rights of repair/replacement of defective goods.
And here is the rub.
Notice those words — “legally and easily”?
Let us imagine, first, that a retailer offers a really full and complete “Warranty”, when selling their goods, which offers the consumer all the support of the manufacturer’s “Warranty” (if any) and a great deal of “cover” from the retailer if things go wrong, That’s good isn’t it?
Well. It may be. It might not be.
Let’s first look at the “might not be”.
We have seen, above, that a “Warranty” is a promise to repair or replace.
A promise is only as good as the person giving the promise — if, indeed, they promise anything?
There are many “Warranties” offered by retailers which are not promising anything. These look just like any other “Warranty” until you read the small print — where you discover that the retailer has a “discretion” as to what level of repair or replacement (if any!!) it offers to the consumer.
Such a “Warranty” should not be called a “Warranty” — or any other name which implies a promise from the retailer which the law would, or could, enforce. To do so would be a trade mis-description and unlawful, but such products are worryingly prevalent. They are prevalent because, often, they are offered with the look and feel of an insurance, and the retailer may think that this will give a consumer some comfort — but the provider does not want to be subject to the huge consumer protection obligations to which any provider of insurance must be subject.
And this brings us to — insurance.
Let us now imagine that the retailer really does promise repair and replacement — and offers a product which seems to be complete and comprehensive protection to give the customer peace of mind when buying the product.
That’s fine isn’t it?
Not if the retailer either goes bust or, for any other reason, is not able to fulfil their promise.
We are not talking here of crooked promises or breach of promises — we are talking about consumers who might have purchased a high value used vehicle, for example, on which a serious and expensive defect appears within the terms of the retailer’s “Warranty”. If the retailer is no longer in business — or is no longer in a position to support its promise under the “Warranty” (or indeed if it just refuses to do so) the consumer is left with no recourse — other than (if the retailer is still in business) expensive court action.
And this is the reason why consumers purchasing goods should carefully check whether the “Warranty” they are offered is just the promise from the retailer (with all the attendant risks described here) — or is it an insurance?
If the “Warranty” is an insurance, then the consumer does not have to worry if the retailer is no longer in a position to support its promise — because the consumer’s contract for the protection under the “Warranty” is a contract of insurance with an insurance company. The insurance company is heavily regulated and must, at all times, behave in the customer’s best interests. If it does not, complaining does not involve going to Court — it is free and ultimately handled (still for free) by the Financial Ombudsman Service.
What is more, any retailer, which arranges a “Warranty” which is insurance, will itself be directly or indirectly regulated by the Financial Conduct Authority (the FCA) and, again, must operate at all times in the customer’s best interests and, if it does not, suffers being fined (or worse) by the FCA.
We hope this blog will give you cause for thought. Not all “Warranties” are the same by any means — and some are not worth the paper they are written on.
Our aim is to be as transparent as possible:-
- to create or support products and services that are customer focused;
- to provide as much information as possible for the customer to make an informed decision before purchasing;
- to support our customers throughout the life cycle of their purchase.
Further reading:
- Consumer Rights Act 2015 (Sales of Good Act 1979):
- Consumer Rights Act 2015 (Which Magazine)
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