~ SquareTrade survey reveals that 2/3 of consumers don't trust warranty companies to pay out and consumer confidence is at all-time low ~
9 November 2011 - The largest independent warranty provider in the US, SquareTrade, launches in the UK today, promising better value, customer service and more consumer choice as a survey[i] reveals UK consumers have lost faith in the warranty industry. Two-thirds of UK consumers surveyed claimed they currently don't trust warranty companies to pay out and a further 61% feel that warranties are a waste of money and poor value.
As the Office of Fair Trading (OFT) prepares to announce its findings on expanding consumer choice in the warranty industry[ii], SquareTrade's survey suggests that in order to restore consumer confidence, the OFT will need to look beyond its competition remit to ensure consumers get value for money in a market worth well over £750 million[iii].
Consumer technology expert David McClelland said: "Only 19% of respondents believe warranties offer value for money and that's a very worrying figure for warranty providers. It should be a clear signal that their business needs to change. In truth the issue is far wider than the points being investigated by the OFT report. Consumers have completely lost trust in warranty companies and the sooner the industry wakes up to that, the better."
"Anyone who uses consumer electronics knows that sometimes things break and like any insurance, consumers should feel confident that a warranty will protect them," explained SquareTrade MD Vince Tseng. "We're not remotely surprised by the survey results but it's exactly why we're launching SquareTrade here. In virtually any other financially regulated product, you'd expect more choice, value and good customer service so why should you expect less when buying a warranty? Our aim is to shake up the industry and restore a little bit of faith with consumers again."
Some of other statistics revealed in the survey include:
62% felt that extended warranties protect the warranty provider more than the customer
31% said their provider failed to pay out after making a claim
70% of respondents seemed frustrated by the process of making a claim, feeling that the terms and conditions were either too complicated or that they couldn't see what was included
Only 17% of consumers felt that warranty companies offered good customer service
A further 85% revealed they wanted more choice to buy extended warranties outside of retailers. Consumers such as London-based solicitor Stephanie Gray feel that warranties are often poor value for money and fail to meet customers' needs. "In the past I have been subjected to huge pressure from salespeople trying to sell me a three year warranty that equated to the cost of the item itself. In my view, most warranties provide poor value for money and in some instances it is actually cheaper to buy a brand new replacement instead rather than take out an extended warranty! I appreciate that some consumers like the comfort of having an extended warranty and for those people I would argue that there should be much better value options available than those which are currently offered".
SquareTrade will offer customers:
Prices on average 40% less expensive than other warranties
A 5-day service guarantee - if an item isn't fixed within 5 days of receipt at their depot, the warranty is free
Easy claim filing with online receipt storage, so there's no fear of claim denial from lost warranty paperwork
Online management - cancel, transfer and view contracts with a click of a button
Founded in 1999, SquareTrade offers warranties that make sense, with fair prices, no-pressure sales, and no-hassle service. The company boasts millions of customers who have consistently rated the warranty service 5-star reviews. SquareTrade was named one of PC Magazine's Top 100 Websites of 2010, awarded BizRate's 2010 Circle of Excellence, and is the winner of the 2011 Stevie Award for Sales & Customer Service, and the 3rd Annual 2011 Golden Bridge Awards for Best Customer Service. SquareTrade is privately held and headquartered in San Francisco and London. SquareTrade will be launching in the UK with iPad and iPhone warranties only but cover for other consumer electronics will soon be available. For more information, go to www.SquareTrade.co.uk
[i] Survey carried out by independent research company RedShift Research of 1000 consumers in September 2011
[ii] On 14 April 2011 the OFT launched a new short market study into extended warranties for domestic electrical goods. The study, due out in late autumn, will focus on whether competition for warranties is sufficiently effective to ensure consumers get value for money
[iii] Figure supplied by Office of Fair Trading press release: http://www.oft.gov.uk/news-and-updates/press/2011/55-11