Is a commercial warranty worth the money?

3/27/2015

It gets more and more common that expensive products like refrigerators are offered paired with – according to vendor – an indispensable commercial warranty. But is it really that necessary, in addition to the legal protection already guaranteed? Probably not, according to a European survey where ECC Sweden has contributed.

The legal guarantee called directive 1999/44/EC was introduced byt the EU in 1999, and amongst other things it states that every citizen of the EU, Norway and Iceland are entitled to at least a 2-year legal guarantee of conformity. But despite the fact that most Europeans have far-reaching rights when it comes to getting help if a product proves defective, it is the rule rather than the exception that especially technology companies market their products along with a commercial warranty.

The ECC-Net, where the ECC Sweden is included, have therefore examined whether or not the commercial warranties that are increasingly being offered to consumers, really gives value for money. The ECC-Net has conducted a total of 342 inspections in 25 countries, and also checked 104 online retailers, contacted 127 shops and made in-depth interviews with 543 consumers. And the results are pretty clear – very few commercial warranties offers more protection than what is already covered by the legal protection. Many of the guarantees are also full of exceptions. Nevertheless, 56% of the consumers surveyed have paid for a commercial warranty at least one time.

The traders are not following the rules

As a trader, you are obliged to inform the consumer about what the legal protection means of obligations and rights. Yet, only 21% of the surveyed online shops and 30% of the surveyed businesses clearly referred to the legal protection in connection with a purchase. The survey also showed that it was common for traders to make it seem like the commercial warranty was the only protection applicable to their own products.

– All extended warranties are obviously not a bad thing, but the result of the survey shows that consumers should not pay for anything extra before having compared the warranty deal with their statutory rights. We also recommend consumers to make sure if there is an extra insurance included when buying expensive goods owing to your home insurance or credit card provider, says Jolanda Girzl, director of ECC Sweden.

Beware of geographical restrictions

Consumers should be particularly wary of commercial warranties offered on products purchased in other EU countries, Norway or Iceland. It could well be that the extended warranty contains a geographical restriction, which can make it impossible for the consumer to get use of the conditions in the warranty. The ECC-Net survey also showed that only 1 out of 5 salesmen were aware of the geographical limitations in their own commercial warranty. This further demonstrates how important it is for the consumer to keep track of their own rights. 

The ECC-Net has developed a checklist for consumers where you easily can see which questions you should ask yourself, if faced with the choice of paying for a commercial warranty or not. Also available is a separate checklist for businesses, which lists what you should consider if you want to offer commercial guarantees to consumers. Furthermore, we have produced an overview of how the legal guarantee is applied in Sweden. A summary of the survey in its entirety is also attached.