Cumbersome Claims Procedures in Extended Warranty Plans Improvement Needed for Transparency of Household Electrical Appliance Maintenance Services

15 November 2018
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Cumbersome Claims Procedures in Extended Warranty Plans Improvement Needed for Transparency of Household Electrical Appliance Maintenance Services

Household electrical appliances like refrigerators, televisions (TV) and washing machines generally come with manufacturer’s warranty during purchase; and some retailers even offer their own Extended Warranty Plans to consumers as an option.  However, disputes from either manufacturer’s warranty or retailer’s Extended Warranty Plans are often attributable to slow repairing progress, misunderstanding of maintenance proposals and inadequate communication.

To avoid unnecessary disputes with customers, retailers have the responsibility to explain clearly and comprehensively on relevant main points regarding manufacturer’s warranty and self-provided Extended Warranty Plan, including particular Terms and Conditions (T&Cs) and claims procedures, as well as providing an explanatory leaflet for easy reference to consumers. 

In addition, manufacturers or agents offering maintenance services are urged to enhance their service transparency, quality and efficiency, including updating their customers proactively on the maintenance progress, ensuring sufficient supply of spare parts and tendering effective maintenance proposals, etc., with an objective to expedite the repairment and to avoid the need of purchasing new products due to overly awaited period, and put the concept of sustainable consumption into practice.

Case 1: Product damage not covered in warranty for maintenance

The complainant bought a 55-inch 4K TV with a 3-year warranty in the amount of $30,000.  After using it for nearly 2 years, the TV was found to show 2 vertical blue stripes and “afterimage” at the lower right corner.  A technician from Company A, the manufacturer, went up to his doorstep for inspection, and attempted to remove the “afterimage” through re-configuring the computer programme but failed.  Following the inspection, the technician stated that the “afterimage” was caused by habitually displaying a still image for a prolonged period of time.  Such unnatural damage was not covered in the warranty, and so even though the TV was within the warranty period, the complainant would have to pay for the maintenance fee.

The complainant maintained that he had all along used the TV properly and that it was normal to stick to a particular channel; coupled with the fact that the TV was so expensive, its quality should be guaranteed.  He sought the help from the Council demanding Company A for product replacement or refund.  

The company responded that the product manual on the company web had clearly stated that users should avoid displaying fixed image on the TV screen for a prolonged period of time to avoid the formation of “afterimage” and reiterated that such damage would fall outside the scope of warranty.  Despite the Council’s reconciliation, Company A would agree to only waive the inspection fee of $630 but the complainant had to bear the repair costs of about $10,000.

The complainant determined to pursue his case at the Small Claims Tribunal, and eventually, Company A reached an agreement with the complainant for free maintenance, as well as extended the product warranty for another 3 years; and that if the TV could not be successfully repaired, product replacement will be arranged.

Case 2: Product malfunction continues despite repeated repairs

In May, the complainant contacted Agent B for repair of her washing machine but when the mechanic turned up, he was without the necessary spare part and left leaving the task undone.  Several days later, Agent B called to inform that the spare part was out of stock until a month and a half, and suggested switching to an alternative spare part which the complainant consented.  But the malfunction persisted, the machine was subsequently sent back to the agent’s factory for repair.

Repeated enquiries by the complainant on the repairing progress drew a blank with no reply.  As the complainant had earlier extended the warranty for another 2 years with the Retailer, she demanded the replacement of a new washing machine in accordance with the T&Cs.  But Agent B’s staff declined assuring that the spare part would be shipped to Hong Kong in the latter half of June.  The complainant waited in vain as the company could not give a definitive date for the completion of the repair.  She approached the Council for assistance, requested Agent B to follow up at the earliest possible.

Later, the Retailer confirmed that the washing machine was beyond repair, and as stipulated in the T&Cs of the maintenance plan, offered the complainant a refund of $2,000 for the purchase of a new washing machine. 

Case 3: Extended Warranty Plan at variance with manufacturer's warranty

The complainant bought previously a refrigerator with a 5-year warranty by the manufacturer, and at the time further paid to Retailer C a sum of $468 for an Extended Warranty Plan.  The light bulb and thermostat of the fridge were found to be malfunctioned before, which was repaired by the manufacturer directly with no costs to the complainant. 

Recently, the same malfunction happened,  but when Retailer C was approached, the complainant was told the defect in question was not covered in the Extended Warranty Plan and in any case customers joining the plan had first to pay for the inspection and repair charges.  The customer could be refunded within a period of 15 weeks on after Retailer C validated the coverage.

The complainant asserted that when promoting the warranty plan, Retailer C had categorically stated that the scope of coverage would be exactly the same as that of the manufacturer’s warranty and even better.  She was never informed about paying first in the claims procedures nor the variance between the maintenance plan and the original manufacturer’s warranty.  The complainant deemed she had been misled, and sought the Council’s help for refund of warranty fee.

In response to the Council, at last after 2 months, Retailer C contended that its sale staff had clearly explained the T&Cs of the plan with a leaflet stating the scope of coverage and claims arrangements.  Since the fridge’s light bulb is a consumable item, it was not covered in the warranty hence the retailer refused for refund.

The Council pursued further on the issue of the defective thermostat.  After another 2 months, the retailer conceded that thermostat being an electronic spare part in damage was covered in the plan, but still insisted that the complainant to contact the repair centre for a price quote for their approval, and to pay the expense first.  The complainant did not contact the Council for further follow-up after.

Consumers purchasing household electrical appliances are advised to take heed of the following:

- Read with care the Terms and Conditions for maintenance, for example, the costs for inspection, labour and spare parts, etc., and pay attention to the exclusion clauses in the T&Cs;

- Clarify clearly with the agent/manufacturer of the variances between the Extended Warranty Plan and the original manufacturer’s warranty, for instance, the coverage T&Cs, the maintenance arrangements and procedures involved;

- In general, retailers do not offer actual repair service, so if the “Extended Warranty Plan” was provided by the retailer, be sure to understand beforehand the plan’s T&Cs, operation mode and claims procedures.

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