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!

How fraudulent sellers operate on Amazon

Mail order fraud is nothing new. There’s the apocryphal story from the 1950’s, and probably earlier, of the newspaper advert for Ever-lasting Slug Killer, “guaranteed to kill slugs indefinitely”. Respondents received two rocks, with instructions to place the slug on the first one and hit it with the second.

Consumer protection laws in the 1970’s and European distance selling regulations have rendered this kind of scam difficult. If the product you deliver isn’t what it’s cracked up to be, or even if it is, the purchaser has the right to reject it when they see it. Therefore there’s no point in delivering tat; you might as well not send anything. Ebay has been plagued by such scams, and there are now plenty on Amazon too.

To combat this, Ebay has policies that mean if the buyer complains, the seller doesn’t get the money. This has lead to the reverse-scam, where bogus buyers order something and then claim it didn’t arrive, and this has put a lot of sellers off using Ebay.

Amazon has a similar dispute resolution procedure, but in my experience, has a team of people with functional brains who can tell the difference between a wrong’un and a victim. Eventually.

You can see two common forms of scam on Amazon: Crazy price and Non-delivery.

Taking the second first; given that you don’t deliver the goods, how do you get the money? Without actually testing the theory I can’t prove this works, but I imagine it goes something like this:

  1. Set up as a seller, and pretend to be somewhere like China – long distance shipping.
  2. Find big-selling products and list them yourself, but at a slightly lower price than the other sellers.
  3. Wait for the orders to roll in, and then delay. Firstly, don’t ship immediately and then when you do, set as long a delivery window as allowed.
  4. Run off with the money.
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This works because of step 3. Amazon doesn’t allow you to report a seller when you spot something merely suspicious, so they can keep selling stuff for several weeks before Amazon has the chance to investigate. The complaints procedure only allows you to report non-delivery AFTER the last date specified by the bogus seller when they ship it.

The thing is that bogus sellers like this are possible to spot before this. The extended delivery time is a first warning, and you can then research the range of products sold and how plausible it is that they’re cheaper than anyone else for the same product. Picking the cheapest supplier is a perfectly reasonable thing to do, especially when there are several scammers offering similar prices for fast moving items. Who would check further?

The other scam involves putting small items on at a crazy price, often a hundred times their real value. It’s quite conceivable that someone in a hurry wouldn’t notice they’d bought a small item at completely the wrong price. I’ve been noticing these sellers for several years, and out of public spirit, I’ve reported them to Amazon staff and they’ve disappeared shortly afterwards, with a note thanking me for bringing them to their attention.

Having never fallen foul of a crazy-price scammer, I don’t actually know how the problem gets resolved if you do buy something. Under contract law, if you’ve agreed a price and they’ve delivered your picture hook for £120+£50 delivery, you don’t have a claim. I see nothing Amazon can actually do about this, other than refund the buyer out of its own pocket and strike the seller off. Amazon’s lawyers may have something more creative.

However, even if the scammer only has one sale before being shut down, if that nets them £200 it’s going to be worth it.

As for the non-delivery scam, I don’t know how possible it is for the criminals to get away with the money. Amazon can’t hold on to it indefinitely, and will have to hand it to the seller at some point. Even if Amazon holds it until the latest delivery date, people aren’t going to flag it as fraudulent immediately – especially as the latest delivery date could be months later.

It ought to be fairly easy to spot these bogus sellers automatically by heuristics, and it’s high time Amazon put some effort in it. Perhaps they’re making so much money they’d rather write it all off.

Scammers ask for money for Ukrainian Government

We have intercepted a large number of spam e-mails sent from various compromised systems, pretending to be from the Ukrainian government and asking for donations to fight off those nasty Russian backed separatists. Having checked, there is a pretty good chance that the scammers are actually based in Russia. It’s unclear whether this is in fact the work of president Putin, but perhaps he is trying to collect extra cash before the sanctions come into effect.

We have yet to see any serious attempt at exploiting the situation in Gaza, which is something of a surprise. Most likely they’re not making it through the basic spam filters.

Panicky public gets scammer’s charter for cookie law

Are you worried about websites you visit using cookies? If so, you’re completely wrong; probably swept up in a tide of hysteria whipped up by concerned but technically ignorant campaigners. The Internet is full of such people, and the EU politicians have been pandering to them because politicians are a technically illiterate bunch too.

A cookie is a note that is stored by your web browser to recall some information you’ve entered in to a web site. For example, it might contain (effectively) a list of things you’ve added to your shopping cart while browsing, or the login name you entered. Web sites need them to interact, otherwise they can’t track who you are from one page to another. (Well there are alternatives, but they’re cumbersome).

So what’s the big deal? Why is there a law coming in to force requiring you to give informed consent before using a web site that needs cookies? Complete pig-ignorance and hysteria from the politicians, that’s why.

There is actually a privacy issue with cookies – some advertisers that embed parts of their website in another can update their cookies on your machine to follow you from one web site to another. This is a bit sneaky, but the practice doesn’t require cookies specifically, although they do make it a lot easier. These are known as tracking cookies. However, this practice is not what the new law is about.

So, pretty much every small business with a web site created more than 12 months ago (when this was announced) or written by a “web developer” that probably didn’t even realise how their CMS used cookies, is illegal as from today. Probably including this one (which uses WordPress). Nonetheless, head of the ICO’s project on cookies, Dave Evans, is still “planning to use formal undertakings or enforcement notices to make sites take action”.

What’s actually going to happen is that scamming “web developers” will be contacting everyone  offering to fix their illegal web sites for an exorbitant fee.

The ICO has realised the stupidity of its initial position and now allows “implied consent” – in other words if you continue to use a web site that uses cookies you will be considered to have consented to it. Again, this is a nonsense as the only possible problem cookies are tracking cookies, and these come from sources other than the web site you’re apparently looking at – e.g. from embedded adverts.

So – if you want to continue reading articles on this blog you must be educated enough to know what a cookie is and not mind about them. As an extra level of informed concent you must presumably agree that Dave Evans of the ICO and his whole department is an outrageous waste of tax-payers money. (In fareness to Dave Evans, he’s defending a daft EU law because that’s his job – its the system and not him, but he’s also paid to take the flack).