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Computer Vendors Charge More For Less Service

By Martin H. Bosworth
ConsumerAffairs.com

September 13, 2005

• Home Warranties Not Always What They Seem • Survey Finds Extended Car Warranties Often a Bad Deal • Car Warranty Scams Target Seniors • Think Twice Before Buying an Extended Warranty • Toys R Us Warranty Guaranteed to Disappoint • Extended Warranties a Waste of Money • Five Reasons to Just Say No • Wal-Mart Pushing Extended Warranties on Electronics • Computer Vendors Charge More For Less Service --- • More about Automotive Extended Warranties

The next time you buy a personal computer, read the fine print very carefully. The warranty may not be as long as you think, and you may have to pay for coverage that used to be free.

Major computer vendors such as Gateway and Dell have been reducing standard warranty coverage to as little as 90 days, and exhorting consumers to purchase pricey extended warranty programs.

This might lead to savings in the long-term, as replacement parts can often cost far more than the money you'll spend on an extended warranty. But it could also mean you're spending money for protection you may not need after the first three to six months of owning your PC.

A Dell Dimension 5100 desktop, for example, can cost you as little as $799 with special online offers and discounts applied. But purchasing any coverage beyond the standard 1-year warranty can tack on an extra $80 to $330, not counting any additional peripherals or accessories you might buy.

The Gateway NX250X laptop's online price is $949 after the $50 rebate, with a "Notebook Value Service Plan" of 90 days. However, the purchase comes with the "Value Plus" 2-year extended warranty protection already selected, which adds an extra $109 to the purchase price.

This is becoming standard operating procedure for many Gateway products purchased online -- the default package includes an extra-cost extended warranty plan.

Extended warranty sales are big business for Dell and Gateway these days. The November 2004 issue of Warranty Week reported that Dell's revenue from extended warranty sales was actually overtaking its spending on warranty claims, and Gateway increased its warranty revenue to $33 million while decreasing its warranty costs to $15 million.

Not every major PC manufacturer is cutting corners on its warranty protection. Hewlett-Packard continues to offer the standard one-year warranty for all its products, and MPC (formerly MicronPC) offers a three-year-warranty as well as dedicated in-house technical support.

Of course, purchasing that extended warranty is no guarantee you'll actually receive decent replacement parts for your defective machine, or reliable tech support to help you fix your problem.

ConsumerAffairs.com regularly receives hundreds of complaints from users who are frustrated with rebates they didn't get, tech support that doesn't help, and extended warranties that don't cover their computer malfunctions.

Take the case of Miriam from Alameda, Clifornia, who purchased a new Dell in January 2005, and has been wrestling with constant glitches and unreliable assistance ever since:

"I've been on the telephone for inordinate amounts of time, sent and received over 32 emails, had new memory, a new fan, new hard drive, new power supply and new memory installed by [a Dell contractor]," she said.

"I paid for an extended warranty and I am getting nothing in return."

Becky from Martinsburg, WV purchased a Dell Inspiron laptop for her son at $677, including a rebate of $150 and a three-year-extended warranty of $50 per year.

Once her son received the laptop, she didn't get the rebate claim form or any documentation for a warranty beyond the standard 90-day limited version.

"I have spent hours on the phone today trying to reach some sort of satisfaction on this and have been told that I can not get the rebate," she says. "I can add the warranty for the cost of $150. Obviously the sales rep misled me or had the info wrong himself, but the sales manager basically told me there was nothing they could do. I am out $150 due to this deception."

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