Why does my extended warranty start on the day of purchase?

In recent years I have purchased a number of PCs and related items and bought extended warranties.

According to Dell, the warranty on my PC expires three years after I placed the original order – not three years after acceptance of the goods. I argue that it is the date I take possession, not the date they accept my order.

Again with Apple I noticed that my warranty runs out at a different date from the one I presumed it should. So, what is the correct timescale – does a warranty apply from the date of order, date of purchase or date of receipt of the goods?
James Craig

This issue is a minefield. An extended warranty is an insurance policy and is therefore a service. When buying online – as Mr Craig has – you have a cooling-off period under the Distance Selling Regulations, which normally ends seven working days after the day the order was made, or after written confirmation is received.

The date of order when buying online will usually be the date of purchase unless you are told otherwise. However, it can be up to a month, and even longer in some circumstances, until the goods are received.

Many companies such as Dell do start the warranty from the date of purchase but is this fair? After all, if you have to wait three to four weeks for delivery, which is not unusual, should you be paying for a service that you can’t use before you get the goods?

It is possible that these terms and conditions are unfair, and we have asked for legal clarification from the Office of Fair Trading (OFT) on this issue, as we feel it is something that is extremely important and should be made clear to consumers.

Even if it is legal to begin an extended warranty from the date of purchase rather than when the goods are received, there is a way you can get around this.

The OFT has been critical of extended warranties in the past and, following a market study it ran in 2001, the Competitions Commission concluded that the lack of competition between extended warranty providers resulted in unfairly high prices for consumers.

This led to the Supply of Extended Warranties on Domestic Electrical Goods Order 2005. This law gives consumers more rights when buying this insurance, such as time to ponder whether to purchase an extended warranty for up to 30 days before signing on the dotted line as well as the right to cancel.

What to know when buying an extended warranty
Under the Supply of Extended Warranties on Domestic Electrical Goods Order, the customer does not have to buy the warranty at the point of sale. They can go back to buy this insurance on the same terms for 30 days after purchase of the goods.

Any discounts tied to the purchase of the extended warranty must also be available for this time. They also have up to 45 days to cancel their extended warranty and receive a refund if the service hasn’t been used.

Case update
We put this question to Gemma Bowen, a lawyer specialising in consumer law at Consumer Focus. She told us that consumers should check the terms and conditions of any warranties prior to purchase. As we have explained before, warranties are offered by manufacturers to show that they have faith in their product’s reliability. Any promises made in a warranty are legally binding but they do not override statutory consumer laws such as the Sale of Goods Act.

When it comes to buying extended warranties the issue gets more contentious. Unlike free warranties, you are paying for the service. Again Ms Bowen said people need to check the terms and conditions of the warranty carefully.

“I think that if the terms are silent on this point, it would be possible to argue that it would be unfair to use the purchase date as the start date for the warranty, given that so many businesses make it clear that the guarantee or warranty starts on the date of receipt. It would be prudent to keep some kind of proof of the date of receipt if you order an item online,” she told us.

With extended warranties however, there is an easier way to deal with this problem. Protection for consumers was introduced under the Supply of Extended Warranties on Domestic Electrical Goods Order in 2005.

This Order says consumers do not have to buy the warranty at the point of sale. The offer must be valid on the same terms for 30 days after purchase of the goods. So if you want to buy an extended warranty and don’t want an argument with the retailer about when it starts, don’t buy it until you have received the goods. A full explanation of warranties and the law can be read on our website.