Most consumer advocates will tell you that extended warranties are, to borrow the words of John Nance Gardner, FDR's first vice president, "not worth a bucket of warm spit."

Many consumers would say that even this is a generous description of the Toys R Us Buyer Protection Plan.

With Christmas around the corner and with a steady stream of complaints from angry consumers who feel they were ripped off after purchasing the Toys R Us Buyer Protection Plan (BPP), decided to examine the terms and conditions to see what exactly it is that so irks these consumers.

First, we learned that Toys R Us is not the actual "obligor," or company that provides the service. In all states except for Florida, the obligor is the National Product Care Company (NPCC), based in Glenview, Ill., a company that has generated its own pile of complaints in the database. If the toy is purchased in Florida, the obligor is the National Electronics Warranty Corporation of Florida, a Virginia-based obligor that so far has not generated any complaints under that name.

We visited a local Toys R Us and helped ourselves to some literature. The first problem we noticed with this warranty was the layout of this brochure-style contract. It's no less than 12 pages, five of them consisting of some of the finest fine print we've ever squinted to decipher.

The Good News

The front of the brochure seems simple enough: Repair or replace said toy for normal wear and tear once the manufacturer's warranty expires. However, the five pages of fine print tell another story, one that doesn't always have a happy ending.

The Bad News

"I purchased a Nintendo game unit for $149.99," wrote Lori of Youngstown, Ohio. "I also purchased the buyer protection plan. I called in May of 2005 to file a claim for a broken product. I was told they would send me a prepaid label to send the item back. I waited a month for this. Never got it. Called them again. They were resending it.

"Never got it," Lori continued. "About July I was told they would send me a refund for $149. They offered this to me on their own after I was very nice and told them that I have yet to receive the label to send the item back. I later got a call and was told they would send me a refund for $149 and I would receive it in 10 days. The 10 days went by and no refund or label to send the item back.

"I called them in August because the plan was ready to expire," Lori continued. "I was then told it had expired and that I was misinformed about the refund and how sorry they were about this."

Carl of Clinton, Mich. didn't read the line of fine print that said he needed to keep his receipt in order to repair two toys he bought for his sons.

"I purchased 2 Honda Mini Moto little cycles for my sons for Christmas," Carl wrote. "I purchased the Toys R Us Buyer Protection Plan. Well now I have a problem. I brought the mini to the store and they stated that they can't honor anything without the receipt. I asked, 'well don't you have me in the system?' -- because they asked for my information upon purchasing the warranty.

"I can't find the receipt," Carl wrote. "In the meantime I have this $200 toy that can't be used because of a manufacturer defect."

Fine Points

Here are some more BPP fine-print excerpts of interest:

• "We will repair or replace the Product, or reimburse You for authorized repairs to or replacement of the Product, at Our discretion."

• "You will be responsible for delivery or the cost of delivery of the Product to the service center for repair or replacement."

• "Non-original manufacturer's parts may be used for repair of the Product if the manufacturer's parts are unavailable or more costly."

• "The Service Plan Contract is renewable at Our discretion."

• The obligor has 60 days to provide repairs, replacement or reimbursement after the claim has been filed.

The "What is not covered" section of the contract takes up a substantial portion of the fine print and is in bold and all caps. Although this would seem to make it stand out, instead what it does is make it extremely difficult to read. Here are some of the 33 noteworthy clauses from that chunk of fine print:


• Any and all pre-existing conditions that occur prior to the effective date of this contract.
• Damage from accident, misuse, abuse.
• Damage caused by the elements or acts of God.
• Damage caused by defective batteries or replacement of defective batteries.
• Products not originally covered by a manufacturer's warranty.
• Non-functional or aesthetic parts.
• Damage, warping or rusting of any kind to the housing, case or frame of the product or any non-operating part.
• Damage as a result of civil war.
• Any type of display.
• All computer software.
• Demonstration models.

For many states there are specific changes to the contract that could even further affect the ability for consumers to get their toy fixed.

In Utah, the obligor can cancel the contract if there is a "substantial change in the risk assumed" (whatever that might mean).

In Florida and Georgia consumers don't have the right to arbitrate if they have any issues with the contract. In other states, they're forced to arbitrate under terms set by the company. No lawsuits allowed in most cases.

There is also a contradiction between the wording that saddles photos of happy kids on the front of the brochure, and the fine print located in the back. Four times it states that video games and software are covered. But in the fine print it states that, "all computer software" is not covered.

Also, although most of the service plans are $20 or more, going up to $70, there are cheaper service contracts ($3-$9) for toys that cost less than $100.

Unfortunately, many cheaper toys do not come with a manufacturer warranty and according to the fine print, "Products not originally covered by a manufacturer's warranty" are not covered. In a toy store, that would eliminate a large percentage of the products sold and according to Lorianne of Toledo, Ohio, that does not stop Toys R Us salespeople from pushing the warranty.

"I purchased a Schwinn StingRay bike on 7/15/05, with the Toys R Us Buyer Protection Plan," Lorianne wrote. "In the summer of 2006 the bike's brakes went out and the handlebars stripped. I called the Toys R Us Buyer Protection Plan and was told that they do not cover Schwinn bikes because Schwinn has no (manufacturer) warranty."

The Toys R Us Buyer Protection Plan confirms what ConsmerAffairs.Com has maintained for years -- namely, that extended warranties for almost all products, are not worth the extra money.

The Toys R Us obligor, NPCC, offers the same contract for many stores including, Circuit City, Ritz Cameras and and it's not unlike many similar companies' contracts.

According to the Federal Trade Commission, 'extended warranty' is not the correct term, but rather 'service contract,' and these contracts are, to put it generously, not written in favor of the consumer. The stores that sell the contract and the obligor make lots of money off the supposed peace of mind consumers are buying.

But chances are, the consumer's peace of mind will be rudely shattered just as soon as the supposedly-protected product breaks.