From 6th April 2005 all UK retailers promoting extending warranties for electrical goods will have to follow strict new rules and give prescribed disclosures.
Topic: Consumer protection
New Law: The Supply Of Extended Warranties On Domestic Electrical Goods Order 2005
In 2003 the UK Competition Commission reported on the marketing and supply of extended warranties on domestic electrical goods. Following this report, the Government issued consultation papers on measures to implement the remedies recommended. Amongst other things, the proposed new law related to the ways in which extended warranty products were promoted in store and elsewhere and the information given in that regard pre-purchase.
Following the publication of a supplementary consultation document in November 2004, the final rules have now been laid before parliament.
What will change:
There will be specific rules relating to the promotion of extended warranty products in the media, and in store.
In press advertising, whenever a supplier advertises the price of domestic electrical goods in a newspaper advertisement or in other printed publicity, the supplier must advertise the price and duration of "one" applicable extended warranty adjacent to the price of the relevant domestic electrical product, or, where the price and duration of that applicable extended warranty applies to a range of domestic electrical goods, in close proximity to that range, in a manner that is clear and legible.
Print ad exception
This is not the end of the story so far as print ads are concerned. Paragraph 4(2) of the order states that the rules for showing the price and duration of an applicable extended warranty adjacent to the price of the electrical product will NOT apply in respect of newspaper ads and other printed publicity where the supplier has sold less than £10,000 (inclusive of tax) of extended warranties in the previous business year.
A further rule relates to prices in catalogues. At the beginning of the catalogue, or when a catalogue is divided into sections, the beginning of each section offering domestic electrical goods, a statement containing certain information must be included. The information in question is that further relevant information relating to the purchase of extended warranties offered by the supplier can be found in the catalogue and an indication as to where in the catalogue such information might be found.
Online sales rules
In respect of online sales, there is again a similar rule, but specifically in relation to sales on websites, there is an obligation to ensure that there is a link on the home page of the website and on each introductory page offering domestic electrical goods, directing consumers to further relevant information relating to the purchase of extended warranties offered by the supplier.
For in-store, there are similar obligations, and the price and duration of one applicable extended warranty that is available in respect of the relevant domestic electrical product, must be shown clearly and legibly. It must also make clear that the purchase of an extended warranty is optional.
Also in-store, there will be obligations to provide written quotations for any extended warranty that is available in respect of the relevant products. The written quotation must prominently state the price and duration of the warranty and the domestic electrical goods to which it relates and a statement that the extended warranty can be purchased at the price quoted in the written quotation for a period of 30 days (or more if that is the case) beginning with the day on which the written quotation is issued.
The written quotation must also state that extended warranties may be available from other providers, and that they do not have to be purchased at the same time as the domestic electrical product to which they relate. The quotation must also deal with the customer's cancellation and termination rights and state whether or not the extended warranty will be terminated in the event of a claim being made.
This written quotation must be supplied to the consumer in any case before the consumer purchases an extended warranty if the purchase is made at the same time as, or immediately after the sale of the domestic electrical product to which the extended warranty relates. The written quotation must also be supplied at the request of the consumer, if the request is made at the same time as or immediately after the sale of the relevant domestic electrical product.
Date New Law Comes Into Force: 6th April 2005