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Think Twice Before Buying an Extended Warranty

Service contracts depend on the retailer's whims

By Mark Huffman
ConsumerAffairs.com

November 12, 2007 

Complex terms can make the contracts difficult to enforce. And it also seems that many retailers who sell these contracts can just refuse to pay off. After all, they wrote the contract and know its loopholes intimately.

Case in point -- Ahron, of Lexington, Kentucky, tells ConsumerAffairs.com that he recently took his laptop computer to Best Buy for a repair under his three-year in-store warranty.

Cracked case

The computer casing had started to crack in three areas – a manufacturing defect that Ahron says was clearly covered under the warranty. The casing on his computer had never been opened and no liquid had ever been spilled on the keyboard, he says, conditions that would have voided any warranty.

“When I arrived at Best Buy I presented my problem to the technician. He told me this should definitely be covered but it would have to be shipped off for a couple of weeks for the casing to be repaired,” Ahron said.

In less than a week Ahron says he received a call from Best Buy, informing him that parts had previously been removed from his computer, meaning the casing had been opened and the warranty, therefore, was void. Ahron said he asked to speak to a supervisor.

“About an hour or more later I received a call back from the same technician, who told me he had spoken with a manager and that nothing could be done to help me because the liquid spilled on the keyboard had voided my in-store warranty,” Ahron recalled. “When I told the technician that nothing was mentioned about liquid before he denied ever telling me parts had been removed.”

Ahron said he believes the company simply didn’t want to pay for the repair to his computer and fabricated a reason not too. And he’s not alone.

A matter of time

Mark, of San Diego, said he opted for a four-year extended warranty when he purchased a plasma TV in April 2003. Because he was traveling extensively in his job with the Department of Defense, Mark arranged to have the TV delivered in September, five months later.

“The TV was delivered September 13, 2003 and the Best Buy installers attached it to my wall, hiding all the wires on Sept 17,” Mark told ConsumerAffairs.com. “The TV operated fine until Sept 4, 2007, when it suddenly went out. Although I thought I still had a few more days left on the extended warranty Best Buy informed me that the warranty had started 5 months before I received the TV.”

Mark took Best Buy to Small Claims Court and won. In the process, he made some interesting discoveries.

“I found out from Samsung that the TV was manufactured in Korea 17 days after Best Buy said the warranty started,” he said.

Interestingly, Samsung showed the date of purchase as September 13, 2003, the date Mark received the set. Samsung’s 24-month manufacturer's warranty began on that date.

“The judge ruled that I am entitled to costs of Best Buy’s repair service visit on Sept 12, 2007 for $100 and to have the TV fixed or replaced,” Mark said. “Best Buy personnel are the only people that I speak to that cannot understand why. Even the judge spent most of the time explaining it to them.”

Yet despite experiences like Ahron’s and Mark’s, a recent J.D. Power and Associates survey shows consumers continue to buy service contracts when they purchase major appliances.

Among owners of refrigerators, stoves, dishwashers and laundry appliances, approximately 25 percent report purchasing an extended warranty, while approximately 15 percent of microwave oven owners do so.

Think twice

“Extended warranties certainly provide a degree of peace of mind,” said Dale Haines, senior director of the real estate and construction industries practice at J.D. Power and Associates. “With some appliances -- particularly those with complex electronics and potentially high repair costs -- purchasing an extended warranty may make sense.

"However, major appliances tend to be very reliable, and consumers should consider very carefully -- depending upon their circumstances -- whether an extended warranty is worth the additional cost,” Haines said.

Perhaps one other factor should be considered as well.

Will the retailer selling the “extended warranty” actually honor it, or will it try to weasel out of its obligations, requiring the consumer to drag them into a courtroom to gain satisfaction?

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