The Auto Warranty Industry Scam
I’m sure you’ve heard of such companies as US Fidelis, Stop Repair Bills.com, National Dealers Warranty, Or Mogi right? Well about 9 months ago i got hired on at one of these companies above, and i feel it necessary to prevent anyone that reads this from making the same mistake that many of the people I sold to did.
And for those of you that haven’t heard of any of those companies – let me give you a basic run-over of what these companies claim to provide to consumers and how the average consumer would go about getting mixed up in one of these companies. (If you have called one of these companies before, or just want an overall sum up of what these companies are doing wrong, Skip down to “The Scam” section)
And then there’s this about why people buy extended warranties:
Many people would not think of making a major purchase without doing research to find the best model and the lowest price. But at the checkout counter, all of that preparation often breaks down.
There, shoppers are asked to buy a product that few have investigated: the extended warranty. New research suggests that the appeal of such warranties depends not only the inability of most people to assess risk, but also on the emotional state of the buyer. The happier you are, it turns out, the more risk-averse you become, so the more likely you are to buy the protection.
AppleCare for Apple products is one exception. On the other hand, there’s Best Buy’s which are pretty much as worthless as the car warranties.
It’s all in the fine print.
Just in time for Black Friday.
The AppleCare story was completely anecdotal, and there are several AppleCare horror stories on the same website. Extended warranties are a rip-off. The best solution is to self-insure if you’re really worried about it. Take the money you would have spent on the warranty and put in in a savings account. You’re going to come out way ahead in the long-run. Also, save your receipts. Most decent credit cards double the standard warranty anyway.
I have purchased exactly one extended warranty in my lifetime (on my first laptop). Best Buy made me regret that purchase sorely and taught me a valuable lesson.
Since then I have purchased probably 10 cell phones, 5 laptops, 4 desktop PC’s, Several Pocket PC devices, 2 plasma and one LCD TV’s and several digital cameras including a digital SLR that cost $1500.00.
I have never once regretted passing on the warranty. I do my research and buy reliable products from brands I trust. I buy all my electronics from brick and mortar stores. It seems like electronics either die in the first week or not at all. If something I buy is DOA, I take it back to the store for a refund.
The main difference with applecare (even though its still a total scam as with all apple products) is that its provided by the manufacturer itself, not some 3rd party in who’s interest is like health insurers – to NEVER pay out unless completely unavoidable.
I will always ask about extended manufacturer’s warranties when making a big purchase, but if that extension turns out to be provided by a 3rd party I’m not interested, and have actually taken a retailed to Small Claims after finding out they lied to me about who was providing the extended warranty I purchased.
Our campus Dell supply contract comes with a four year extended service warranty, data recovery insurance for laptops and complete replacement if stolen or destroyed. And it still works out around $US50 cheaper than an Applecare.
Like ANY insurance, it is valuable if you actually get to use it, worthless if not used. Insurance is priced to the exposure plus profit. If you “self insure” you get the pro-rata share of that profit for yourself. If you take care of the equipment, usually by adding more cooling, you can maximize your lifetime failure experience by quite a bit.
Same reason I never used credit cards that offer “lost, damaged, extended” coverage. “I” would be paying for other people’s stupidity or fraud.
Insurance is like that.
Pretty much anything is cheaper than applecare though, though you’d be wise to pay for it given the reliability of many recent apple products like the TimeCapsule – http://tinyurl.com/yzwztfb
I’d have to agree. Apple Care (Especially for Laptops, iPhones,and iPods is the best deal on the planet.
All other extended warranties must be read thoroughly. I do like the Sears warranties I have on my Major Appliances… Has saved me some $$$ here and there.
Speaking of Applecare
Smoking Near Apple Computers Creates Biohazard, Voids Warranty
http://tinyurl.com/yclzcaz
The story is half right.
The insurance MUST cover what the agent told you it covers. The problem is that very few people record their phone conversations. When you come down to a “he said/she said” discussions, the consumer needs to prove that the agent said “the engine, transmission…” and not specific parts.
The quip about not advising the consumer they have 30 days to cancel the policy is irrelevant. No seller is required to advise any consumer of a cooling off clause.
Moral of the story, don’t buy from telephone salesmen or from TV ads over the phone. Always see the policy in writing first. OR, record the call and save it.
Didn’t read the article. Why do so many websites put 6 point grey type on a black background?
#11: If, like most people, you’re using Firefox, ctrl-+ will increase the size of the font.
Fix it your self.
Today if you buy a Plasma you be susprise how easy to fix them damn thing. They are build like computers inside. Mainboard, AV processor, Driver for X axis and Driver for y asis and a few other buffer board and power supply.
Ask some expert online on how to troubleshoot, all you really need is screw driver, flash light and volt meter. Boards are cheaper then extended warranty.
Some years ago, I took my elderly pop over to the local Bestbuy to get him a new Tv set. They were still selling analog CRT sets, back then. And a 27″ color set had some weight to it (still). Anyway, the salesman seemed ready to help us with the thing, until I turned down their extended warranty plan. Then he simply disappeared. And NOBODY helped me and my 75+ year old father get a cart and take the thing out to his pickup and load it. We had to do it all! Perhaps if I had been a bit more cagey and said “I’ll think about the plan”, or “Yeah, sure thing”, I would have at least gotten them to deliver it to the cashier line. But I’m betting the help would have stopped there, if I didn’t pay for the plan.
On another occasion, I bought a Sony Audio Tape Deck. And again the salesman at Bestbuy offered their extended warranty plan. I asked to see some pamphlet about it. And quickly read that it didn’t cover parts that wear out from normal use. Ya know, like pinch rollers. So I asked the guy, if the plan covered free replacement of worn out rubber rollers. And naturally he assured me it would. Which was an obvious lie. So I said I come back and get the plan sometime later. Which was my lie, to keep him from deserting me, should I need him. Apparently, that’s the way they roll at Bestbuy.
And I won’t invest in any large screen Tvs, until I can once more feel confident that I can get one delivered without it having been damaged, because I didn’t pay for the store’s extended warranty plan. Because it wouldn’t surprise me that these things happen.
Check out this pic of how my new TV arrived. Thankfully the online retailer (oo.com.au) bore the cost of return shipping and replacement, but I know many others including big box retail stores wouldn’t be so upright about it.
Well don’t go to Best Buy
While enforcing a claim by a sales agent may be impossible without good witnesses, the pamphlet probably would guarantee compliance…. A disclaimer in the fine print likely wouldn’t survive a jury trial….
That said, it’s generally a bad idea to buy the warranties.
Many years ago my dad decided to buy one for his car. Seemed like a good idea until I read it. (I’m not a lawyer, but….) Really funny things like tranny problems not covered at all after the car was 2 years old…. By the time the smoke cleared, about all they seemed to cover was some seals on the doors….
My daughter bought a notebook a while back with the warranty, and then managed to spill a glass of water into the keyboard. Trashed the machine. No repair, either. “Water damage” was excluded. (Not really a surprise.) She bought another one, with a warranty, that specifically included water damage. So far she hasn’t need it. Bet they’d tell us to drop dead, though…. (Or pro-rate the thing down to $500….)
Probably doesn’t help that I told her not to….
(I also told her to avoid that second one entirely. Sure sounds good on paper, or if you read the box, but it’s hard to believe that a top-end notebook of a couple years ago really shouldn’t run XP! Not quite enough horsepower…. She’s about to retire it – I’m going to try to get her to give it to me and put Win98SE on it.)
Regards
I had an LCD monitor die on me a few months after the manufacturer’s warranty expired, so the next time, we bought the extended warranties on two new LCD monitors, a desktop computer and a laser printer — from CompUSA…
The only extended warranty I get is the one included with my credit card. They give me an extra 1 year on top of what the manufacturer provides.
Just recently, I had a GPS die on me. It was about 3 months after the original warranty. I contacted the CC insurance department (actually an insurance company that provides the service), told them it was dead, emailed the receipt, details on what was covered from the manual and waited. About two weeks later, I hadn’t heard from them, so I was about to call, when after checking my mail, I see a cheque from them for the full amount I paid for the GPS.
Not the first that I’ve used it, and it won’t be the last.
I’m sorry that your TV arrived in bad shape and I’m glad that things got sorted to your liking, BUT don’t kid yourself or try and make yourself feel better about your purchase: All “big box” retailers would have stood by you and replaced that TV with no hassle at all. Don’t be stupid.
I think the accidental warranty’s for laptops are still worth it. I had a co-worker that had to send his in for repair a couple times with the accidental warranty.
I’m also going to send my laptop in soon, the left arrow key needs to be replaced, and I’ll also force them to replace the screen because there are some clear spots that can get annoying.
I swear by extended warranties on high ticket items, TV’s, automobiles, laptops, etc. I’ve had nothing but great results with them, and the times I never used them I was also thankful for them. Why? Instead of harping on the profits companies make from these warranties, which are a form of insurance, you need to have some common sense and realize how the insurance pool works. Just because your home, disability, work, auto, etc. insurances make a ton of money I don’t see any articles to go out and cancel those. Just because you never filed a homeowners claim or a disability claim or a life claim, does that make those insurances obsolete?
So far in my life I have had 3 laptops fail on me, Best Buy replaced them with no questions asked. I had a 61″ DLP fail in its 4th year, replaced by circuit city no questions asked. I’ve had literally thousands of dollars of extended warranty work done on vehicles which made me very happy to have purchased the extended warranties.
And yes, I have had purchases which used zero extended warranty repairs. I do not consider them a waste in the least, just another insurance I purchased which I did not need to utilize, as most of my other insurances work.
As for the empty promises the sales people make, that’s the consumers own fault. They should be asking “hey, where is that in the contract?”, and if it’s not in the contract they need to make the decision to walk away, or realize that it’s not valid. As for being in the pamphlet, I would venture to guess that would be some form of a contract, ie: offer, consideration and acceptance. The pamphlet is best buy branded, I’d take that right along with the contract into small claims court. It’s amazing what those $40 spent in small claims court can accomplish.
Even manufacturer’s warranties aren’t always reliable. Years ago I bought a Technics CD player. One of their early models. About a year after I did, it started skipping tracks. Still under warranty, I took it to the closest licensed repair shop, for that brand. I picked it up a week later, and it still skipped a lot. Took it back (which was a 20 mile drive!) and asked to see them actually work on it. All they were prepared to do was tweek the laser adjustment, and hand it back to me. No parts replacements. Later I read that these players had a problem with lasers going fuzzy. But replacing them, wasn’t part of their plan. So I had to junk a $300 player.
About a year later, at an Electronics Show, I saw a Technics booth. And I asked if they fixed the laser problems with their CD players? The reps wouldn’t talk to me. I’ve never bought another Technics optical player since. But they did make nice LP turntables.
My choice of CD players after that was a Philips CD880. Which has never giving me a problem in the two decades I’ve owned it.
Way back in the 1980s, I bought my second VCR. I remember it clearly. It was a Panasonic model. And I got an extended warranty at the store that sold it (Video Warehouse). They offered to sell it $100 cheaper, if I paid for the service coverage (which added about $200 more). About 18 months later, the thing developed a chronic tracking noise problem. So I took it back to them. And they kept it for like four months. Telling me tales like how parts were on order, and company reps were called in to look at it. I finally got it back and it reeked of cigarette smoke. And the noise problem persisted. So I opened it up and took a look at it myself. And within a half hour, I found that it was a simple limit switch problem, involving one of the moving tape guide posts. It was stopping short of its final posiition. I corrected this by bending the “switch” spring apart, just enough to extend the loading shutdown motor. Clearly, this could have been an easy repair by anyone. If they really cared to honor the warranty. But instead they blew smoke up my nose. An apparently into the player, while using it to play adult movies for four months.
After that experience, NO MORE extended service plans for me. Not even by major chain stores. Most appliances will never have a serious problem, in the time that these cover. They all know this. And paying several years’ coverage, will cost you what a replacement unit would. And you gamble that they will actually repair the old unit, satisfactorily.
Insurance, properly used, should only be for things that you can’t afford to cover yourself. Buying insurance for cell phones and TVs is simply a way to give away money. In the long run you will lose, and that is with the assumption that the company will actually pay your claim (not a valid assumption). My experience is that, *if* they are still in business, they always find a way to not pay. A policy I had for appliances refused to pay on my dishwasher because, “doors are not covered”, Nuff said.
On a related note, Apple Care is GREAT…for the people who DON’T get it. Since most people DO get Apple Care, Apple takes a different view on product reliability that other manufacturers. It might make better financial sense for them to buy a higher quality component if it will reduce the number of Apple Care claims. They already took everyone’s (Apple Care) money up front so a bean counter might determine that they MAKE money by using, say, a better hard drive or fan. This financial incentive is not there for companies with a low percentage of service contract sales. So tell everyone else to use Apple Care, but don’t buy it yourself.