Argos to refund over £500k to 114,000 customers after breaking extended warranty rules

by

Argos will refund more than £500,000 to 114,000 customers in e-card vouchers after breaking rules over extended warranty

  • Argos will refund £570,010 in total to 114,002 customers in £5 e-card vouchers
  • Retailer broke rules on extended warranty deals for more than a year, CMA found
  • Sainsbury’s owned chain failed to remind shoppers of options to shop around
  • Shoppers who bought warranties for electrical products online will be contacted

By Mark Duell for MailOnline

Published: | Updated:

Argos will refund more than £570,000 in total to 114,000 customers after breaking rules on extended warranty deals for more than a year.

The high street chain, which is owned by Sainsbury’s, breached a legally-binding commitment by failing to remind shoppers of their options to shop around.

All affected customers will get refunds as £5 e-card vouchers and will be contacted by Argos after the intervention by the Competition and Markets Authority watchdog.

Extended warranties allow customers to pay for increased and longer protection when buying products, which has a greater coverage than standard guarantee.

In 2012, Argos promised to provide a link to a price comparison website when it offers an extended warranty for domestic electrical products online.

All affected customers will get refunds as £5 e-card vouchers and will contacted by Argos

The idea of this legally-binding agreement was that customers could compare the price of the warranty and possibly get a better deal from another company.

The CMA said its routine monitoring found that Argos was not displaying this link – and the company then admitted it had not been doing so for more than a year.

What to consider before buying an extended warranty 

The Competition and Markets Authority has issued these four top tips on what to consider before buying an extended warranty:

  1. Extended warranties are optional – remember that products typically come with a manufacturer’s guarantee which might be enough for your needs.
  2. Don’t feel pressured to buy an extended warranty straight away – shop around to find the best deal for you.
  3. You might already be covered – your home contents insurance provider can advise what you are covered for. Or check with your bank, as some bank accounts also cover gadgets.
  4. There might be better options out there – for example, if you have lots of gadgets, it might be better for you to buy multiple item insurance, which could cover a range of your items.

The breach affected sales of 414,578 extended warranties, and 114,002 of those customers with ‘Breakdown Care’ cover may have found a cheaper deal.

Argos will contact all customers who may have missed out on a lower price to make them aware and give them the chance to cancel their extended warranty.

Everyone affected will also receive a goodwill gesture of a £5 gift card, amounting to £570,010 in total.

Argos has also now reinstated the link to the website and agreed to carry out regular internal checks to avoid breaching the undertakings again.

Adam Land, the CMA’s senior director of remedies business and financial analysis, said: ‘We welcome Argos’ promise to provide a goodwill gesture of over half a million pounds to customers who may have missed out on a cheaper extended warranty deal, after it failed to remind shoppers of their options.

‘It’s only right that Argos is now taking steps to fix its error and make sure that something similar doesn’t happen in the future. Any breaches of this kind must be put right immediately, or we will take action.’

The CMA has also written a public letter to Argos, outlining the steps the retailer has agreed to take, and will now monitor Argos’ compliance.

It said it will consider formal enforcement action should Argos fail to do as agreed, and the issue has also been logged on the CMA’s register of breaches.

The CMA can take companies to court if they refuse to put right any breaches, but it cannot impose financial penalties on businesses for breaches such as this.

However the watchdog is calling for the powers to fine companies, saying this would allow it to take quicker action against companies that break the law.

The breach affected sales of 414,578 extended warranties, and 114,002 of those customers with 'Breakdown Care' cover may have found a cheaper deal

The breach affected sales of 414,578 extended warranties, and 114,002 of those customers with ‘Breakdown Care’ cover may have found a cheaper deal

A woman collects a vacuum cleaner from an Argos store in Glasgow on January 13, 2021

A woman collects a vacuum cleaner from an Argos store in Glasgow on January 13, 2021

The CMA said that anyone who thinks they have been incorrectly sold an extended warranty should first ask the business to look into the complaint.

Citizens Advice, Consumer Advice Scot and Northern Ireland Consumerline can also be contacted for additional help depending on the customer’s region.

An Argos spokesman told MailOnline today: ‘We’re contacting customers to apologise after an error with our website meant our link to a comparison website was not as accessible to customers as it should have been when purchasing Argos Care product insurance.

‘We’ve put this right and customers affected can continue with their extra protection or cancel and receive a refund.’

It is though that the comparison website was two web pages away for customers instead of one. 

Last month Sainsbury’s said it would increase salaries for staff at its supermarkets and Argos stores and pay a bonus to frontline workers. 

Argos workers had received £9 an hour, but this rose to £9.50 from March. Staff at Central London stores saw their hourly pay rise to £10.10.