Consumer Watch: Why We May Not Want To Buy An Extended Warranty

Friday, November 22nd 2013, 10:36 pm
By: News 9

Stores love to try to convince us that we need to buy an extended warranty. Consumer Affairs has advice on when we should not take the bait.

*Extended warranties usually cost more than they're worth. Especially with low-end consumer electronics, it's often cheaper to replace a product than try to have it repaired.

*Warranty work may be unreliable. Keep in mind, should something go wrong, the company holding the warranty, not us, will determine who does the repair.. leaving us with little control on the quality of work.

*The warranty may not cover what we think it does.  I hear about this one all the time since the contracts are usually filled with exceptions.

*Before purchasing a warranty, we need to make sure we know who's guaranteeing the product: the store or the manufacturer. If the company goes out of business, we're left with a worthless warranty. The extended warranty may also overlap the manufacturer's warranty, defeating the purpose of the extra coverage.

*The FTC says before signing any extended coverage contract, we need to fully understand its terms and coverage.

The FTC says what we're are actually buying is not an extended warranty but a "service contract."

"A service contract is a promise to perform, or pay for, certain repairs or services. Although a service contract is sometimes called an extended warranty,' under federal law, it is not a warranty," the FTC said.

"A warranty comes with the original price of the car, whereas a service contract costs extra. It is mainly this separate and additional cost that distinguishes a service contract from a warranty."