Purchase Protection Plans: Scam or Savior?

Scam, although the one time I did buy one it did turn out to be worth it. (mini-stereo system whose CD player went crazy two and a half years down the line, after it was out of warranty)

It’s probably pure profit cause the retailer turns around and ship the bad product back to the manufacturer as defective so they have to eat the loss.

Good point, Brad! Yeah, I was told my AIW was going back as defective. I would think with the major chains, anyway, that they’d usually do that. And another thing that would sway people towards buying protection plans is a bad past experience with a mfr. (which I had concerning the dreaded Kenwood CD ROM drives) versus great experiences with the plans (which I had when my 6-month-old, 19" Sony Trinitron G400 got hit by a surge and fried and I was able to swap it out in ten minutes).

Jeez you guys, I am suddenly realizing that I’m the Calamity Jane of computer hardware. Thanks a lot for inadvertantly pointing that out to me!

In general I think the “extended warranties” are pure profit and something of a scam. There are times they come in handy, though.

I recently bought a display unit MP3 player (for my car) from Best Buy. The unit turned out to be defective. Because I had the extended warranty, Best Buy was obligated to replace the unit. They don’t carry it any longer, so now they’re going to let me buy one from somewhere else (at about 2x what I paid for the display model) and Best Buy will reimburse me for the cost and warranty it over the period covered by my extended warranty.

A friend of mine recently had his Geforce 256 die on him. He’d purchased it 2.5 years ago at a Best Buy and had purchased the extended warranty protection. Best Buy just gave him an in-store credit for the $290 he’d paid for the Geforce 256 – which he used to buy a Radeon 9700 (it cost him an additional $20 or so). I can’t imagine a better policy than that!

When I worked at Computer City (a now-defunct competitor to CompUSA that was owned by Tandy), we only earned commission on the extended warranties we sold. However, the commission was (if I remember correctly) 10%, which means that you could easily double your income if you sold 3 or 4 warranties on computers in a given day. So I’m inclined to agree with Jason – the damn things have to be pure profit for the retailers.



(just to keep all the polls together, you see)


My mother-in-law used to work as very senior person for a certain electrical goods retail outlet. She told me in no uncertain terms that the extended warranties are a tax on the gullible and that we should NEVER buy them. On the other hand, she had made enough money in bonuses from having sold these to suckers that she was able to pay off about half of her mortgage.

Don’t do it kids.

Industry Dwarf

I bought it for a laptop. But I’m a klutz. And they knocked $100 off the laptop.