What is an extended warranty?
Protection plans, service plans, extended warranties... the extra coverage that you pay for at a retail store when you buy a computer might go by a number of different names, but essentially these extended warranties are all the same, and you might end up paying a lot for extra coverage that you might not even get!
A good example
You're already aware that all computer retailers offer some forms of extended warranties, but let's research Staples Protection Plans. Overall, Staples claims that “Protecting against the unexpected has never been easier” and they tell you to “Make sure you get coverage you can count on with Staples Protection Plans”, and they offer plans with and without “accidental damage” coverage. But can you honestly rely on Staples so-called protection plans?
Staples' Terms And Conditions, the highlights...
At first glance, Staples' Terms And Conditions document is 38 printed pages in length! You can review the link for yourself because I do not wish to post the entire 38 pages in this article, but I would like to point out the highlights....
- The Plan is not an “insurance contract”, and is legally interpreted and understood as a “service contract”!
- The “Plan Provider” is not Staples... it may be one of three providers depending on your location: Federal Warranty Service Corporation, United Service Protection, Inc., or Assurant Service Protection, Inc., and you must call a toll-free number for service because Staples won't handle it for you!
- The Plan starts on the date of purchase, NOT after the manufacturer's warranty! Their coverage wastefully overlaps the manufacturer's warranty, and losses covered by the manufacturer are NOT covered by their Plan! This means that (a) if the manufacturer's warranty is one year and (b) you purchase Staple's two-year plan, you are actually getting only one year of extended coverage
- The Plan provides coverage for product failures due to “normal wear and tear”, and added “accidental damage coverage” only covers damage as a result of handling, cracks and spilled liquid. Surge damage is covered up to $1,000.00, but ONLY if your homeowner’s/renter’s insurance does NOT cover surge damage, and most homeowner's policies do!
- If Staples can't repair your computer (or if they feel the repair cost isn't worth it), they might replace it with a new, rebuilt or refurbished one of “equal value”, or they might issue a Staples Cash Card settlement for an amount up to the “current retail cost”, and not what you paid for it! And if you accept either option, you discharge Staples from ALL legal obligations!
- A deductible may apply to your Plan, and you'll be responsible for paying this deductible for each service event! And if your computer needs to be shipped, you may even have to pay for shipping charges under some circumstances!
- The Plan doesn't cover any loss, repair or replacement necessitated by acts of God, intentional damage, insect infestation, or any defect that is subject to neglect, abuse or damage prior to the issuance of the Plan, which could include any “factory lemon” parts!
- The Plan does not cover loss or damage to stored data, repairs related to installed software, computer viruses, or restoration of software, nor does it cover a “no problem found” diagnosis or any defects that are subject to a manufacturer’s program of reimbursement!
- The Plan's “Arbitration Provision” limits your rights, including your right to obtain relief or damages through court action, and Staples may cancel the Plan at any time for any contractual reason, however it also says that the Plan is not intended to create or limit any implied warranties!
Why the hard sell?
Have you noticed that every time you go into Staples or any other computer store and you select a certain computer that the next thing the salesperson mentions is buying an extended service plan? Why do they push these plans on consumers so intently? It's simple. Staples knows that most of its customers will never actually cash in on the plans they are pushing, and for every plan that isn't used, that's more free cash in their wallet.
Computers have a short lifespan
Staples and other retailers know that on average most computers last a maximum of 5 to 7 years, and that's at best when considering average daily use... and it's less for people who travel around with their laptops, etc. In fact, laptops are a bit more fragile than desktops despite their portability, so most people get a maximum of 5 usable years on a laptop... their batteries often die after 5 years as well. Retailers know you're going to have to buy a new computer after 5 years, and they are simply soaking you for a few more bucks on an ever-expiring item along the way.
You still pay for maintenance
Despite what plans are offered, you still have to pay for routine maintenance. Staples will not cover routine check-ups, security scans, virus and spyware removals, nor most of the other services. For example: Staples' two-year “Complete Care Plan” starts at $150 without Accidental Damage, which is technically only one year of coverage after a manufacturer's one-year warranty! You may also be charged $149.99 per-instance for every in-store virus scan and removal, etc!
This proves my point!
Update: On 1/19/2012 I received an anonymous reply on this very article, which I decided to add because it's an honest and truthful response...
"I just found your article on Google regarding the Insurance Plans at Staples. I am currently a Staples Easy Tech and I cannot agree with you more regarding what you wrote. I am on my way out of Staples at the moment because I don't want to sell Insurance plans that I know my customer does not need. My hours at work have been cut down to only 10 hrs a week because my store manager says I do not sell enough ESP's (Insurance Plans). I thought I was hired 3 months ago to do work on computers, but apparently not, all they wanted was a drone to sell rip-off, over-priced insurance plans."
This response speaks for itself! It proves that insurance plans and extended warranties offered in retail stores are intended solely for the financial benefits of the franchise, and they offer no real benefits to you whatsoever!
"I just found your article on Google regarding the Insurance Plans at Staples. I am currently a Staples Easy Tech and I cannot agree with you more regarding what you wrote. I am on my way out of Staples at the moment because I don't want to sell Insurance plans that I know my customer does not need. My hours at work have been cut down to only 10 hrs a week because my store manager says I do not sell enough ESP's (Insurance Plans). I thought I was hired 3 months ago to do work on computers, but apparently not, all they wanted was a drone to sell rip-off, over-priced insurance plans."
This response speaks for itself! It proves that insurance plans and extended warranties offered in retail stores are intended solely for the financial benefits of the franchise, and they offer no real benefits to you whatsoever!
What is your impression now?
Reading through Staple's legalese, you can plainly see that despite what “protection plan” you buy, Staples can legally wiggle out of any amount of coverage that they promise you after you buy one of their plans... they can even cancel your protection entirely for any reason they see fit! You even forsake your legal rights against Staples upon purchasing their plans! And, it's apparent that the store's employees are forced to sell as many of these plans as possible, or they could even lose their jobs!
As noted, Staples is not the only culprit of misrepresentation, all retailers have similar legalese in their extended warranties, you can read about the struggles that other consumers have had with these kinds of warranties from Staples, Best Buy, and others online. This is why I never purchase extended warranties... it's silly to pay for coverage that doesn't provide you with any real coverage at all.
As noted, Staples is not the only culprit of misrepresentation, all retailers have similar legalese in their extended warranties, you can read about the struggles that other consumers have had with these kinds of warranties from Staples, Best Buy, and others online. This is why I never purchase extended warranties... it's silly to pay for coverage that doesn't provide you with any real coverage at all.
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