Consumer Reports: Extended Warranties Are Evil

Mon Feb 4, 2008 1:47PM EST

See Comments (39)

I've railed against extended warranties for years now, but my data has always been empirical: I've bought them in the past, but I can recall no cases where I actually used the warranty. I stopped buying them years ago for just that reason and have never regretted it. I just pay for repairs as I need them.

But leave it to Consumer Reports to inject some science into the matter. In a November story that I only just now discovered, the magazine reports that extended warranties will almost all be "money down the drain." Here's why:

  • Many repairs will be covered by the standard warranty. (In my experience, the most common problems occur before ever unboxing the product; they don't suddenly materialize years later.)
  • When products do break down, it's typically after your extended warranty has expired.
  • Want to get something repaired? It will cost about the same as buying an extended warranty in the first place.

And new data shows that extended warranties are becoming an even worse investment.

On even trouble-prone rear-projection TVs, the odds that you'll need to repair one in its first few years of use are only 1 in 10. And newer, flat-panel TVs show a repair rate of only 3 percent.

What about laptops? With a 43 percent repair rate within four years, they're the most trouble-prone of all consumer products that Consumer Reports tracks.

The reasons are obvious, considering the physical beating that most laptops take. But extended warranties don't cover accidental damage; you'll have to buy an accidental damage protection plan and an extended warranty to cover drops, to the tune of up to $400 up front.

That's nice if you're a butterfingers, but few people with a four-year-old laptop will want to bother repairing it, as new technology will be much more enticing at that point.

Extended warranties have saved a very few people a whole lot of money from time to time... and everyone has at least one failed device horror story to tell. That's why these warranties are so popular.

But most people will never use them at all. If you're not convinced, ask yourself why the profit margin on extended warranties is a full 50 percent, vs. less than 10 percent for the actual products. Sounds like a scam to me.

LINK: Why you don't need an extended warranty 

Comments on Consumer Reports: Extended Warranties Are Evil

Post a Comment

Join in the discussion. Here you'll see the comments in the order they were posted.

  • 26 Posted by nwkurzrep on Thu Sep 3, 2009 7:42PM EDT Report Abuse

    Not all extended warranties are equal. There are more expensive "no fault" warranties that do cover accidental damage and can be very useful if its a product that gets high usage and handling. Just a thought...although, in my "normal" extended warranties I've purchased...never used either one.

  • 27 Posted by az6024283313 on Thu Sep 3, 2009 3:00PM EDT Report Abuse

    Um you forgot that HP DOES offer accidental damage protection. You are right about the cost but when a screen is as much as the entire unit in the first place... you may as well get the ADP. Imagine the new touch screen notebooks... easily 2G's for purchase and the ADP is just a couple of hundred... scam or not? the screen could be 1G but with ADP it is covered.....

  • 28 Posted by alexisarouge on Thu Sep 3, 2009 2:50PM EDT Report Abuse

    Im torn.i had an extended warranty on my laptop. used it twice. the last time was the one that was worth it. two days before it expired, my screen on my viao turned too dark to see, almost black. turns out i needed entirely new screen (top half of laptop) which would have cost 800 bucks. lucky me. still i have 4 other warranties ive never used. Hmmmmm............just dont know

  • 29 Posted by dan_z_2000 on Thu Sep 3, 2009 3:36PM EDT Report Abuse

    Re: BEST BUY SELLS USED AND DAMAGED PS2 IN A NEW PACKAGE WHEN YOU BUY ELECTRONIC PRODUT, OPEN THE BOX BEFORE YOU LEAVE THE STORE! Dear Sir or Madam: The reason I write to you today is I want you to help me get the story to the public, to everyone, to let them know: WHEN YOU BUY ELECTRONIC PRODUT, OPEN THE BOX BEFORE YOU LEAVE THE STORE! I bought a “new Play Station 2” game system from “Best Buy” on Feb 8, 2008 at 4PM, which located at: 8801 Queens blvd, Elmhurst”. But when I went back to home and open the package box, I found the system is not working at all, even the power could not be turned on, and also I found there is lots of dirt outside the PS2 and inside the CD tray, and lots scratches outside. I realize that the product I just bought and get out from that sealed box is a used, damaged item and switched. Then I want back to the store as soon as I can, want to get my money back. At almost 5PM on the same day, I get back to the store, and I showed them the box and the “PS2”, they told me that they can not take the product back, and they are not going to give me return or exchange, the reason is the label on the back of the “PS2” is been replaced, and the product is damaged. (I bought like that! Oh my god!). I just got that idea at that moment. I am in trouble! Then I looked on that label, it was scanned and printed by some printer. Oh my god! Who did it? … I made lots of phone call to the Best Buy customer service and to SONY Corp. they all told me the same thing, that they can not do anything, I have to keep that PS2. Now I am get stock in there… I really do not know what to do to get my justice! I need help! Even that I cannot get my money back and nothing, I really do not want to see a same thing happen again to any other person. Sincerely yours,

  • 30 Posted by dan_z_2000 on Thu Sep 3, 2009 3:36PM EDT Report Abuse

    Re: BEST BUY SELLS USED AND DAMAGED PS2 IN A NEW PACKAGE WHEN YOU BUY ELECTRONIC PRODUT, OPEN THE BOX BEFORE YOU LEAVE THE STORE! Dear Sir or Madam: The reason I write to you today is I want you to help me get the story to the public, to everyone, to let them know: WHEN YOU BUY ELECTRONIC PRODUT, OPEN THE BOX BEFORE YOU LEAVE THE STORE! I bought a “new Play Station 2” game system from “Best Buy” on Feb 8, 2008 at 4PM, which located at: 8801 Queens blvd, Elmhurst”. But when I went back to home and open the package box, I found the system is not working at all, even the power could not be turned on, and also I found there is lots of dirt outside the PS2 and inside the CD tray, and lots scratches outside. I realize that the product I just bought and get out from that sealed box is a used, damaged item and switched. Then I want back to the store as soon as I can, want to get my money back. At almost 5PM on the same day, I get back to the store, and I showed them the box and the “PS2”, they told me that they can not take the product back, and they are not going to give me return or exchange, the reason is the label on the back of the “PS2” is been replaced, and the product is damaged. (I bought like that! Oh my god!). I just got that idea at that moment. I am in trouble! Then I looked on that label, it was scanned and printed by some printer. Oh my god! Who did it? … I made lots of phone call to the Best Buy customer service and to SONY Corp. they all told me the same thing, that they can not do anything, I have to keep that PS2. Now I am get stock in there… I really do not know what to do to get my justice! I need help! Even that I cannot get my money back and nothing, I really do not want to see a same thing happen again to any other person. Sincerely yours,

  • 31 Posted by socdom@sbcglobal.net on Thu Sep 3, 2009 9:31PM EDT Report Abuse

    Based on personal experience, extended warranties have been all nightmares. Fact is, extended warranties are only as good as the company that is behind the warranty. My worst experience is with home warranties (where major appliances and electrical systems in the house you purchased are insured for future failure.) MNot only once, but 5 times, I felt defrauded and abused. I reported my refrigerator twice and my cooking range thrice for needed repairs. For each visit from the warranty company's contracted serviceman, I had to pay $50 up front before they would start. Then, each time, they would just say, that the trouble was outside the warranty and that they will not proceed with repair. While I am certain that they are wrong, I did not pursue legal action because the time and effort and aggravation It would entail is not worth the potential compensation I can get. Therefore, they win, and I lose.

  • 32 Posted by xx_new_and_improved_just_4u_xx on Thu Sep 3, 2009 10:54PM EDT Report Abuse

    I purchased an extended warranty from Best Buy. My laptop screen is on its way out. They told me that I would have to ship it out and that there would be a three to four week turn around time. I explained to them that I need my computer to keep my doors open...they told me they understood how I felt, but that was basically my problem. I will never purchase anything from Best Buy again. They do not stand behind their products

  • 33 Posted by luistsr on Thu Sep 3, 2009 7:00PM EDT Report Abuse

    It is amazing that a company of this size and one I have spent thousands of dollars in, can get away with such tactics! I purchased a portable DVD for my mother and purchased the warranty just in case she had a problem and they assured me when I got it that if anything went wrong with the DVD player, through the warranty, she would just get a new one. NOT! When she took it in for a simple connector problem, she was told it would take two to three weeks for repair. I know to them, it just a simple portable DVD player but to me and specially to my mother it is much more. She takes care of her ailing mother in a nursing home and this is her only form of entertainment. The reason I bought it at Best Buy was because I purchased a portable DVD player with the warranty a few years back and when I had a problem, they gave me a new one on the spot. Apparently, this is no longer the case yet they still advertise it as such! When I complained about the fact that their service was unacceptable, I was insulted with the offer of a $10 gift card. What can anybody buy at Best Buy with $10? I strongly expressed my displeasure and their answer was "We're Sorry" but there is nothing we can do! Needless to say, not only will I never buy another warranty at Best Buy but I doubt I will ever buy typing paper which is probably the cheapest item they have! Whomever is in charge of this company is probably getting big bonuses for saving Best Buy so much money but wait until the new numbers come in, they will realize, specially in the time like the ones we are in, how valuable a customer is! Hello Circuit City! Best Buy is finished in my book and I won't buy a soda in the place or even drive by it!

  • 34 Posted by t1967c on Thu Sep 3, 2009 9:53PM EDT Report Abuse

    Extended warrenties are only as good as the company that service and sell it. I have had NIGHTMARES with an extended warrenty for my washing machine. Our 20 year machine finally gave up the ghost and we went out to Lowe's and bought a new one. Within a 1 1/2 years, the new one starts acting up. We called the extended warrenty center to get an appointment and 3 weeks later they show up...They can not fix it then, must ship a part to our house. We wait another 3 weeks. To make a long story short, after approx. $ 400 at the laundrymat, they finally said they could not fix it and only offer us 3/4 of what we paid to get a new SAME BRAND NAME washer. For the $ 1000.00 I spent on the mess, unless it is a computer, I am not going to waste the money.

  • 35 Posted by noblenysom on Thu Sep 3, 2009 7:40PM EDT Report Abuse

    Some extended warranties replace the item for a new one if it gets to old to fix. Like at Best Buy, my computer was messing up and instead of fixing it they gave me a completely new computer that would have cost me $1000, I paid 250 for the service plan and I got a free battery during the time that I had the old computer. That $250 that I paid got me a $1000 computer. That seems worth it to me.

  • 36 Posted by bjgallion on Thu Sep 3, 2009 3:08PM EDT Report Abuse

    I usually avoid extended warranties, except for high-ticket electronics using new technologies and fitness machines. I paid $400 for a 3yr warranty for my plasma and so glad I did because the main power board and z board got fried after owning the tv for a year and a half. Had I not gotten the warranty, it would have cost me about $1500 to get it repaired. I didn't get one for my elliptical and that was the worst mistake I've made. I could have spent $75 for the warranty but I didn't and have made over $300 worth of repairs on it and it just broke again (Proform is crap but that's a different story). Thankfully, I got it for the treadmill which broke a couple of months ago and now the motor sounds like it's about to go.

  • 38 Posted by hjeng on Thu Sep 3, 2009 4:19PM EDT Report Abuse

    In this case, then why buy car insurance, and why buy health insurance?

  • 39 Posted by deelightcookie on Thu Sep 3, 2009 3:40PM EDT Report Abuse

    I work with the extended warranties all day, I know more about them than the avarage person. There is so many things that you use everyday that you can get the warrantie on, like coffie pots, printer ink cartrages etc and they are transforable in most caces to the same item. With everything being made in China you might want to think twice about not getting the extended warranties.

More Posts: First Prev 1 2 3 Next Last

Post a Comment

Sign In to Post a Comment

My Tech

Please enable your browser's cookies to activate the My Tech column.

Also on Yahoo! Tech

Computers Home Office Wi-Fi & Networking Phones & PDAs Cameras & Camcorders TV & Home Theater Portable Audio
 

Site Map | Tour | Subscribe to Yahoo! Tech

Question and Answer content at Yahoo! Tech is written by Yahoo! users at Yahoo! Answers. Yahoo! does not evaluate or guarantee the accuracy of any Yahoo! Answers content. For more information, read the Full Disclaimer.

Opinions expressed by the Advisors are their own and do not necessarily reflect the views of Yahoo! Inc. Yahoo! receives no compensation from any manufacturer or distributor nor does it compensate any Advisor for the coverage of any product or service in any Advisor's content.