Argos will refund £500,000 to 114,000 customers after breaking extended warranty rules

Argos will share more than £500,000 of e-gift card payments with 114,000 customers after breaking extended warranty rules.

It comes after the Competition & Markets Authority (CMA) found that the firm had failed to remind people they could shop around when taking out an extended warranty.

The retailer has now agreed to fix the way it sells extended warranties to customers and provide a goodwill gesture to those who may have missed out on a better deal.

Its breach of a legally-binding commitment affected sales of more than 400,000 extended warranties and 114,000 of those customers may have found a cheaper deal by comparing prices, had they been prompted to shop around.

Some cases involved extended warranties for breakdown care for larger electrical items.

Argos will now contact all customers who may have missed out on a lower price and make them aware of the error.

Customers will have the option to cancel their Argos extended warranty and all will receive a “goodwill gesture”, amounting to £570,010 of e-gift cards in total.

Extended warranties enable people to take out increased protection when buying products, over and above any standard guarantee.

Thousands of Argos customers are to share more than £500,000 of e-gift card payments.

An Argos spokesperson said: “We’re contacting customers to apologise after an error with our website meant our link to a comparison website was not as accessible to customers as it should have been when purchasing Argos Care product insurance. We’ve put this right and customers affected can continue with their extra protection or cancel and receive a refund.”

In 2012, Argos signed an agreement which promised to provide a link to a price comparison website every time it offered an extended warranty for domestic electrical products online, so that customers could compare the price of the warranty.

As part of routine monitoring, the Competition and Markets Authority (CMA) found Argos was not displaying this link.

Argos admitted it had not been doing so for more than a year.

The CMA said Argos has reinstated the link to the website and agreed to carry out regular internal checks to avoid breaching the undertakings again.

Adam Land, CMA senior director of remedies, business and financial analysis, said: “We welcome Argos’s promise to provide a goodwill gesture of over half a million pounds to customers who may have missed out on a cheaper extended warranty deal, after it failed to remind shoppers of their options.

“It’s only right that Argos is now taking steps to fix its error and make sure that something similar doesn’t happen in the future. Any breaches of this kind must be put right immediately, or we will take action.”

The CMA has also written publicly to Argos, outlining the steps the retailer has agreed to take.

It will now monitor Argos’s compliance and consider formal enforcement action should it fail to do as agreed. The issue has been logged on the CMA’s register of breaches, which records all significant breaches of market and merger remedies and is updated quarterly.

The CMA can take companies to court if they refuse to put right any breaches. It cannot currently impose financial penalties on businesses for breaches of this kind but it wants the power to do so.

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