The Office of Fair Trading (OFT) has forced several retailers – Comet, Dixons and Argos – to make radical changes to the way they sell extended warranties to their customers.
On 27 June 2012, the OFT announced that it has accepted several undertakings from the retailers and will therefore not refer the market for extended warranties on domestic electrical goods to the Competition Commission. This follows the publication of its market study in February 2012, which identified concerns about the operation of the extended warranties market.
Dixons, Comet and Argos have agreed to:
1. Maintain and publicise an independently operated extended warranties price comparison website;
2. Provide more easily available information via in-store leaflets and retailer websites, including on the availability of alternative warranty providers;
3. Conduct regular independent mystery shopping exercises to ensure shoppers get more accurate information from sales staff. The results will be reported to the OFT; and
4. Provide clear, on-shelf information about the annual equivalent prices of “Pay As You Go” warranties.
These undertakings are intended to facilitate ‘shopping around’ and ensure that consumers have the information they need to make informed choices.
This is only the second time that the OFT has accepted undertakings in lieu of a market investigation reference.