Extended Warranty? Retailers Bet You’ll Buy One…

When spinning the roulette wheel of gift giving and buying this year—or at any time of year, really—when you’re purchasing an electronics product, cell phone, computer, or appliance, you may get asked this question at the register: “Do you want to purchase an extended warranty?”

Oh, the pressure.

Retailers are betting that you will, because, according to CBS News, that little piece of paper and the reassurance it brings can boost the price of a product, making the retailer the overall winner and leaving you with a warranty you will probably never use.

It pays to place your bets carefully and do a little research beforehand. If you buy the item with a credit card, you may already have an extended warranty; some card issuers automatically tack on an extra year of coverage just for using their card. Researching reviews of the product online can help as well; find out what problems, if any, people have experienced; if there’s trouble, you may want to get the warranty; if not, you may want to skip it.

To Bet or Not to Bet?

There are no clear instructions or definite precautions when deciding whether to buy an extended warranty, but here are a few tips form CBS News that can help you shop smarter:

Check the coverage dates. Some retailers will sell you an extended warranty that starts the same time the manufacturer’s warranty does; for example, you buy a product with a one-year warranty, and buy a two-year extended warranty, but you end up with a total of two years, not three. Make sure you know the start and stop dates.

What does the warranty cover? What does it not cover? Are you one of those people who leave their phone on the roof of the car and drive off? If you’re hard on your devices or products, a warranty may not be a bad idea. If it doesn’t cover damages, you may be out of luck.

Is shipping involved? Does the warranty allow you to return the product to the place where you bought it, or do you have to pay to have it shipped out for service?

Know who provides the service. Who is responsible for actually performing the repair? The older an electronic product gets, for example, the harder it becomes to find replacement parts. You want an extended warranty that will offer a replacement if repair is not possible for whatever reason.

Do you have to buy the warranty now? In some cases, such as with vehicles or big-ticket appliances, you may be able to pick up an extended warranty before the manufacturer’s warranty ends.

Try to negotiate. This is another trick that works in the car industry but that you might be able to do with other types of products, especially more expensive ones. Extended warranties are high margin add-ons to a sale. See if you can get the salesperson to offer it for less to close the deal.

Know Your Rights.  The Song-Beverly Consumer Warranty Act (California Civil Code Section 1793.22) requires that all service contracts sold in California include specific information regarding your rights as a consumer. This information includes:

  • The right to request to see the terms and conditions of the contract prior to agreeing to purchase it.
  • A “free look” period of 30 days (for electronics and major appliances) or 60 days (for all other covered products). You may request to cancel the service contract and receive a full refund of the purchase price if canceled within this time period.
  • Prorated refunds of service contracts canceled after the “free look” period.
  • The name and address of the service contractor responsible for any obligations (repairs, exchanges, etc.).

The Bureau of Electronic and Appliance Repair, Home Furnishings, and Thermal Insulation, part of the Department of Consumer Affairs, regulates service contracts sold in California, as well as the shops that repair appliances large and small. For more information about service contracts and your rights, read their brochure, “What You Should Know About Service Contracts.”


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