Wampum

Kos writes that extended warranties on many items are a rip off and should not be purchased. He notes that the big box stores have very high profit margins on the warranties, have almost no cost in the marketing of them (although they are marketed very aggressively at the check out counter) and it is difficult to get the stores to honor the warranties.

Atlanta consumer guru Clark Howard agrees:

Did you know that 100 percent of Circuit City's annual profits come from the sale of extended warranties? How about Best Buy? Forty percent comes from extended warranties. That's why salespeople are all over you like a cheap suit when you go to Circuit City or Best Buy. Clark just read a Consumer Reports article on extended warranties that confirmed how useless they are. The only product CR says is worth it is a high end treadmill. The smartest thing you can do is to buy an item on a credit card because some of them automatically double a manufacturer’s warranty. That's like getting a free warranty. Business Week got more in detail with extended warranties. The magazine found that if you were to buy a $1,000 RCA digital TV, Circuit City charges $100 for the warranty. Best Buy charges $62. But WalMart charges just $29 for the same warranty. So, it's a huge mark-up. Salespeople receive a huge amount of pressure to sell these things, and you pretty much never should buy one. Appliances, electronics and computers rapidly decrease in value as soon as you take them out of the box. Why would you want to insure that? Plus, the average cost of a warranty is as much as a repair. So stay away from extended warranties at all costs.

I have an eleven year-old autistic son, Bobby. One of Bobby's great joys in life is to play videotapes. He loves music, loves to sing, and will play his favorite videos thousands of times. All told, he has memorized 100 or more full length video tapes. Although he can not yet talk, he reproduces the sounds of the tapes (in his own way. It is not actually speech, the experts call it echoalia).

Bobby does not play his tapes all the way through. He fast forwards to the exact scene that he desires, plays it, then rewinds to the beginning of the scene and plays it again. And again. And again. If we do not intervene, he will play the same scene over hundreds of times in one sitting. When he reproduces the sound of the scene and gets to the end of it, he makes a noise I can only describe as "ruh-ruh-ruh." We wondered for a long time what that sound meant until my wife put it all together. The ruh-ruh-ruh was the sound of the VCR rewinding. He ruh-ruh-ruhs for precisely the time it takes for the scene to rewind.

Bobby also has the timing of a rock star returning to the microphone from off stage just in time to continue the song. He will put on a scene, run from room to room, dance down the hall, get a drink or something to eat, check on his brother etc but he always arrives back at the VCR at the precise moment the scene ends so that he can rewind it to the beginning and play it again. It is an impressive skill.

All of that fast forwarding and rewinding is tough on VCRs. The buttons tend to wear out. In addition, all the back and forth is hard on the mechanism that holds the tape and moves the tape into position on the heads.

When the machine fails to perform as intended, Bobby becomes very frustrated (things are supposed to work right!). He tends to try to make it work by throwing it against the wall. That rarely repairs it.

Finally, Bobby simply mistreats the machines. He sits on them. He fills them with orange juice, crackers, checkers, pages ripped from books, toys, and worse. In the interest of good taste, I will spare you the complete list.

As a result of all of that, Bobby's VCRs do not last long. I have become proficient at repairing them. I have a garage full of spare parts in the form of no longer operational VCRs waiting to be cannibalized.

Because videotape players (we do not need the record function) are cheap and because they provide Bobby with so much joy, we usually keep a working one in Bobby's room.

A new one usually lasts a month or so and I can extend the life to two or three months by repair. I watch the ads of the big box stores and when video player goes on sale (usually at about $30) I go and buy three or four. That is a six to nine month supply for about a $100. It is worth it to us and to Bobby.

One day I was at the check out counter of one of the big box stores with three tape players when the cashier asked me if I wanted the extended warranty. I just said that I didn't think it would cover what would go wrong. Tthe cashier was quite aggressive in trying to sell it to me. Finally, I asked about the terms and cost of the extended warranty. There were offering a one year replacement warranty if the machine stopped working for any reason other than intentional damage. I don't remember the exact price but it was around $11.

Despite being a lawyer, I really do not like to take advantage of people so I asked to see a manager. I explained to the manager that the tape player was for an autistic child who was very rough on the machines. I told him that the machine might be thrown to the ground or against the wall but that Bobby would not be intending to harm it. He would just be acting out of autistic frustration at the failure of the machine to function properly.

The manager assured me that the store would provide a new player if the one I bought failed to work at anytime within a year of purchase as long as I paid the $11.

They had sold an extended warranty. I returned 2 players to the shelf and walked out with one plus a printed receipt with the warranty on it. Over the next year, they gave me seven new machines. They didn't like it and I had to be fairly insistent, but they honored the warranty they had sold. Being a lawyer probably did not hurt.

Shortly after the one year warranty period ended, I was back buying another tape player. The cashier again asked me if I wanted the extended warranty. I did. When she entered my phone number into the computer, she looked at it quizzically and informed me that, for some reason she did not understand, I was not eligible for an extended warranty. I said I understood, asked her to hold the VCR for me and said that I would be right back. I returned to the shelves for two more machines, went home and looked for where I had put the VCR repair tools.

Extended warranties are generally not a good idea, at least not for one side of the transaction.