What Consumers Should Know About Extended Warranties and Performance Service Plans for Electronics

The Cons Far Outweigh the Pros - a Former Employee Speaks Out

If you've bought anything substantial from a major electronics chain like Best Buy, Circuit City, or Frys Electronics, you've probably been asked repeatedly to purchase an extended service plan or an extended warranty. Hopefully you've always said no, but if you've purchased one before or are considering doing so in the future, there are some disturbing facts that every knowledgeable consumer should know. 

Electronic stores make more money off the extended service plans than any other product. The plans themselves don't cover any accidental damage. That includes anything they determine could have be caused by accidental use, even if it wasn't.  Although the sales counselor will tell you they are very reasonable, that's not necessarily true. If they can justify not paying for the repair, they will. If your laptop screen cracks, don't expect them to fix it.

Most of the repairs actually needed do occur within the manufacturer's warranty period and thus are covered. So even if you buy the service plan and your product breaks you may still have to deal with the manufacturer directly. This is especially true on the smaller replacement protection plans and on some computer service plans. Production maintenance fees are not covered either. For example, they won't fix your TV if it becomes discolored from magnets being too close.

In the average computer service plan, the first year is covered only by the manufacturer's warranty and it isn't until after that year is up that the store's plan even goes into effect. If you have any problems in the first year, you may not be able to deal with the store you bought it from, but you will still have to call the manufacturer.

Even if your item breaks outside of the manufacturer's warranty and you have the service plan, you will have to wait for it to be fixed. This could be weeks while the slow service center fixes it. In many cases, this wait is much longer and of lower quality then a retail repair shop, because they've already made their profit on you. I personally remember customers having to come back 2 to 3 times before their products were adequately repaired.