Sunday, January 6, 2008

Future Shop: No, we will NOT extend the warranty.

One of the lifebloods of the consumer electronics industry is the extended warranty. Having worked for almost two years at a consumer electronics retailer (which is on its way to becoming a business, I'll just say it. "A&B Sound"), one of the things that was firmly drilled into us was how at least 5% of our sales had to come from extended warranty.

In theory, this is a good thing. Considering the failure rate of most electronics these days, and the fact that the manufacturer only gives you one year (or as little as 90 days), it could be worthwhile to consider. But, when you consider what actually is covered, that's when it'll give you pause.

The policies on extended warranty are what make them a pain in the butt. For the first year, you are still covered by the manufacturer, so if something goes wrong within the first year, you are not subject to the benefits of the extended warranty. And then when it finally is, then you're subject to scrutiny. Therefore, if something goes wrong on the device and the warranty people determine that it was due to neglect or abuse (whether it was or not), then you're SOL.

I went into Future Shop to exchange a pair of Sony headphones. These failed less than 90 days after the purchase date, but being that I was unable to obtain a receipt, I had to go through this huge song and dance number (involving finding the credit card invoice), only to find out that I'd have to wait three days for them to make a decision. Eventually, they allow it, but then they decide to sell me on the warranty.

So, what are they telling me, that the unit is so crappy that I'll need it? And considering the hassle that I went through, they still think I'm going to be receptive to the idea of buying extended warranty?

Incidentally, there is 50% profit margin every time a salesperson sells extended warranty.

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