The Supply of Extended Warranties on Domestic Electrical Goods Order 2005

Citation commencement and interpretation

1.—(1) This Order may be cited as the Supply of Extended Warranties on Domestic Electrical Goods Order 2005.

(2) This Order shall come into force on 6th April 2005.

(3) In this Order—

“domestic electrical good” means a product designed to be connected to an electricity supply or powered by batteries and used for domestic purposes, but does not include watches, jewellery or fixed installations (other than integrated appliances);

“domestic electrical good cover” means cover which at least provides cover against the cost of repairing or replacing a domestic electrical good in the event of a breakdown and which may also provide additional cover against eventualities such as accidental damage, loss or theft and assistance in setting up and operating a domestic electrical good;

“extended warranty” means a contract for domestic electrical good cover entered into by a consumer for monetary consideration;

“further relevant information” means information indicating in general terms—

(a)

the relevant statutory rights of a consumer relating to the purchase of a domestic electrical good and where further information may be obtained in relation to such rights,

(b)

that extended warranties may be available from other persons,

(c)

that household insurance may be relevant to the purchase of a domestic electrical good,

(d)

that an extended warranty does not have to be purchased at the same time as a domestic electrical good,

(e)

any cancellation and termination rights pursuant to article 8,

(f)

the nature of the financial protection provided to a consumer who purchases an extended warranty offered by the supplier in the event of the provider going out of business, and

(g)

whether or not an extended warranty offered by the supplier will be terminated in the event of a claim being made;

“offer” includes an invitation to treat;

“provider” means the person who enters into a contract with a consumer for the provision of an extended warranty;

“supplier” means a person who offers to supply a consumer with an extended warranty, either directly or on behalf of a third party, at the same time as offering to supply a consumer with a domestic electrical good (to which that extended warranty relates) or immediately subsequent to the sale of a domestic electrical good (to which that extended warranty relates); and

“Tax” means Value Added Tax or Insurance Premium Tax.

(4) For the purposes of articles 3 to 6, the price and duration of an extended warranty that is applicable to a range of domestic electrical goods shall be treated as displayed, advertised or published in close proximity to that range if the price and duration may be seen when looking at any of the domestic electrical goods in that range.

Scope of Order

2.  Article 8 (cancellation and termination rights) shall not apply to the supply of extended warranties that are distance contracts to which the Directive 2002/65/EC of the European Parliament and of the Council concerning the distance marketing of consumer financial services(1) applies.

Obligation to display the price of an extended warranty, provide further relevant information and provide a written quotation: in store

3.—(1) Whenever a supplier displays the price of a domestic electrical good in store, the supplier shall—

(a) subject to paragraph (2), display the price and duration of one applicable extended warranty adjacent to the price of the relevant domestic electrical good or, where the price and duration of that applicable extended warranty apply to a range of domestic electrical goods, in close proximity to that range, in a manner that—

(i) is clear and legible; and

(ii) makes clear that the purchase of an extended warranty is optional;

(b) ensure that leaflets providing further relevant information are prominently displayed in a manner that ensures, so far as is reasonably possible, that they are likely to come to the attention of consumers, and that such leaflets are freely available to consumers;

(c) subject to paragraph (3), provide a written quotation for an extended warranty in accordance with paragraph (4)—

(i) upon request by a consumer if the request is made at the same time or immediately subsequent to the sale of the domestic electrical good to which the extended warranty relates; and

(ii) in any case before a consumer purchases an extended warranty if that purchase is made at the same time or immediately subsequent to the sale of the domestic electrical good to which the extended warranty relates.

(2) Paragraph (1)(a) shall not apply where the price of the domestic electrical good is displayed on—

(a) a device used for ascertaining whether a domestic electrical good is in stock; or

(b) an automated self-service machine used for purchasing a domestic electrical good.

(3) Paragraph (1)(c) shall not apply where—

(a) the price of an extended warranty is £20 (inclusive of Tax) or less; or

(b) the extended warranty is purchased through an automated self-service machine.

(4) The written quotation referred to in paragraph (1)(c) shall prominently state—

(a) the price and duration of the extended warranty and the domestic electrical good to which it relates;

(b) 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;

(c) that extended warranties may be available from other persons;

(d) that the extended warranty does not have to be purchased at the same time as the domestic electrical good to which it relates;

(e) the consumer’s cancellation and termination rights pursuant to article 8; and

(f) whether or not the extended warranty will be terminated in the event of a claim being made.

(5) In this article “in store” means in the retail premises from which domestic electrical goods and extended warranties are offered for sale.

Obligation to advertise the price of an extended warranty: newspaper advertisements and other printed publicity

4.—(1) Subject to paragraph (2), whenever a supplier advertises the price of a domestic electrical good in a newspaper advertisement or in other printed publicity, the supplier shall advertise the price and duration of one applicable extended warranty adjacent to the price of the relevant domestic electrical good or, where the price and duration of that applicable extended warranty apply to a range of domestic electrical goods, in close proximity to that range, in a manner that is clear and legible.

(2) This article shall not apply in respect of newspaper advertisements and other printed publicity where the supplier has sold less than £10,000 (inclusive of Tax) of extended warranties in the previous business year.

(3) In this article—

(a) “business year” means a period of more than six months in respect of which the supplier publishes accounts or, if no such accounts have been published, prepares accounts;

(b) “newspaper advertisement” includes an advertisement in a magazine or periodical; and

(c) “printed publicity” includes promotional publications and posters.

Obligation to publish the price of an extended warranty and provide further relevant information: catalogues

5.—(1) Whenever a supplier publishes the price of a domestic electrical good in a catalogue the supplier shall—

(a) publish the price and duration of one applicable extended warranty adjacent to the price of the relevant domestic electrical good or, where the price and duration of that applicable extended warranty apply to a range of domestic electrical goods, in close proximity to that range, in a manner that is clear and legible;

(b) publish at the beginning of the catalogue, or where the catalogue is divided into sections, at the beginning of each section offering domestic electrical goods, a statement containing the following information–

(i) that further relevant information relating to the purchase of extended warranties offered by the supplier can be found in the catalogue; and

(ii) where in the catalogue such information can be found;

(c) ensure that further relevant information is published in the catalogue.

(2) In this article “catalogue” means a catalogue in printed form.

Obligation to publish the price of an extended warranty and provide further relevant information: websites

6.—(1) Whenever a supplier publishes the price of a domestic electrical good on his website the supplier shall—

(a) subject to paragraph (2), publish the price and duration of one applicable extended warranty adjacent to the price of the relevant domestic electrical good or, where the price and duration of that applicable extended warranty apply to a range of domestic electrical goods, in close proximity to that range, in a manner that is clear and legible;

(b) ensure 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; and

(c) ensure that further relevant information is published on his website.

(2) Paragraph (1)(a) shall not apply if the price of a domestic electrical good is published on the website after the consumer has selected that domestic electrical good for purchase.

Written quotation offers to be kept open for 30 days

7.—(1) Whenever a supplier has provided a written quotation to a consumer pursuant to article 3(1)(c), it shall be unlawful during the relevant period for that supplier to supply (whether directly or on behalf of a third party) that consumer with an extended warranty specified in that quotation unless—

(a) the consumer is permitted to purchase the extended warranty at the price quoted in the written quotation, or at a lower price;

(b) the consumer is permitted to benefit from any discount or other incentive contingent on the purchase of the extended warranty, whether that discount or incentive relates to the extended warranty or to the domestic electrical good specified in the written quotation; and

(c) the consumer has acknowledged in writing, prior to the purchase of the extended warranty, that he has received the written quotation.

(2) In this article “the relevant period” means the period of 30 days beginning with the day on which the written quotation is issued.

Cancellation and termination rights

8.—(1) It shall be unlawful for a supplier to supply (whether directly or on behalf of a third party) a consumer with an extended warranty which has an initial duration of more than one year unless—

(a) the consumer is permitted to cancel the extended warranty, by notice, within the period of 45 days beginning with day on which the extended warranty is purchased, and is permitted to obtain a full refund of the price paid where no claim has been made under the extended warranty;

(b) subject to paragraph (2), the consumer is permitted to terminate the extended warranty, by notice, at any time after the expiration of the period referred to in paragraph (1)(a), regardless of whether a valid claim has been made under the extended warranty, and is permitted to obtain a pro rata refund of the price paid; and

(c) subject to paragraph (3), the supplier gives notice in writing to a consumer who has purchased such an extended warranty, at least 20 days before the end of the period referred to in paragraph (1)(a), informing the consumer of the right to cancel or to terminate the extended warranty pursuant to paragraph (1)(a) or (b).

(2) Paragraph (1)(b) shall not apply where the extended warranty terminates on the making of a claim.

(3) Paragraph (1)(c) shall not apply where the price of the extended warranty is £20 (inclusive of Tax) or less.

(4) The pro rata refund referred to in paragraph (1)(b) shall be calculated by reference to the remaining period of full unexpired months of cover provided by the extended warranty.

(5) The supplier shall not take into account any discounts which were linked to the purchase of the domestic electrical good to which the extended warranty relates when providing a full refund or pro rata refund pursuant to paragraph (1)(a) or (b).

(6) In paragraph (1)(a) and (b)—

(a) “notice” means a notice given orally or in writing; and

(b) “refund” does not include a refund in vouchers or credit notes unless payment or partial payment for the extended warranty was made in vouchers or credit notes and only to the extent of such payment.

Requirement to furnish information to the Office of Fair Trading

9.—(1) A supplier or provider shall, upon request by the Office of Fair Trading in writing, furnish the Office of Fair Trading with any information of the kind described in paragraph (2).

(2) For the purposes of paragraph (1) the information is information which is necessary for monitoring compliance with this Order and which the supplier or provider (as the case may be) holds.

Directions by the Secretary of State as to compliance

10.—(1) The Secretary of State may give directions to a person specified in the directions, or to the holder for the time being of an office so specified in any company or association—

(a) to take such steps within his competence as may be specified or described in the directions for the purposes of carrying out, or securing compliance with, this Order; or

(b) to do or refrain from doing anything so specified or described which he might be required by this Order to do or refrain from doing.

(2) In paragraph (1), “steps” includes steps to introduce and maintain arrangements to ensure that any person carries out or secures compliance with this Order.

(3) The Secretary of State may vary or revoke any directions given under this article.

Gerry Sutcliffe,

Parliamentary Under Secretary of State for Employment Relations, Competition and Consumers

Department of Trade and Industry

11th January 2005