AO.com extended warranty – the hard sell

Our 1997 AEG Lavamat washing machine is demised. The motor finally gave up the ghost, and Electrolux (AEG) no longer stocks the spares – and even if they did, the cost of buying a new motor for such an old machine is debatable. AEG and Samsung make the machines that clean the best (according to Consumers Association tests), so another AEG it was. Unfortunately our local shop, Ruislip Appliances, is shut for the holidays so on-line shopping it was, and  AO.com had a suitable replacement that can be delivered next day. And helpfully, they agreed to take away an old dishwasher too, having paid to take away the old washing machine.

To get the latter deal, I had to order by telephone. After concluding this, the guy on the end launched in to explaining the fabulous after-care service they offered – at a price. Basically they’ll fix stuff that’s “not covered by the warranty”, such as accidental damage and bits wearing out – like bearings and door seals. Eh? Doesn’t the AEG warranty cover premature failure of non-consumable items? If a car was warranted for a year and you wheel bearings wore out just because you were driving it (reasonable distances) then you’d expect it to be fixed. Tyres are another matter; they’re consumable.

I checked the AEG warranty exclusions, and nothing like this was excluded. Basically commercial use, improper use and accidental damage. Anything else they’d fix. And their warranty lasts five years – which tells me they reckon their product won’t break down and have the data to prove it.

AO.com’s warranty excludes stuff covered by the manufacturers warranty, so that leaves very little to cover. “Ah yes, but if we can’t fix it we’ll give you a new comparable model!”. AEG would have to do the same, if it came to it. But if you read their T+C, AO.com will only do this as a last resort and they will automatically cancel your policy.

So for this little extra protection, how much did they want? Well to cover this £500 washing machine for five years it worked out at £450. Basically, where their warranty takes over from AEG’s, you’ll have already paid out the cost of a new one. If the machine was a write-off after ten years (reasonable for an AEG machine), you’d have paid for a new one twice over.

The warranties are actually called product protection plans internally, and they’re sold by AO on behalf of a third party – Domestic and General Services Ltd. They administer the plans, collect the money from the customers and pay a commission to AO

In Y/E 2014, AO.com sold £18m worth of these dubious warranties, and the value is increasing. They’ve been a bit coy about mentioning the figures in subsequent published accounts. If you’re the kind of person that’s totally unable to save up for a new appliance, it may be worth it as a saving scheme – a sort of pre-paid expensive credit option. If you pay up-front for what you buy it’s as much use as a cardboard washing machine.

I feel an OFT investigation coming on. Followed by “haveigotao.com” and similar sites.

One of the significant risks to AO Group’s future is desertion by customers (according to their Annual Report and Accounts 2015). I’m afraid the hard-sell of a dodgy product on the telephone during my first order left me questioning whether I wanted to deal with these people then, or ever again. They don’t have a price advantage over local independent dealers, and I don’t get taken for a fool by the locals either.

Other impressions of AO were good. But the washing machine hasn’t turned up yet!

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