Consumer Reports makes no secret of the fact that they think extended warranties are a big old waste of money for consumers, but now they’ve actually launched an advertising campaign against the warranties, says the New York Times.
Not surprisingly, the car dealers who sell the extended warranties disagree. A spokesman for the National Automobile Dealers Association likened the warranties to insurance for which, of course, policy holders as a group pay more than they get back to protect against the rare problem that is ruinously expensive.
Kenneth Weine, a vice president of Consumers Union, said the ad campaign is a way to further the group’s mission, “to make the market a better and safer place for consumers.”
The basis for the campaign is a new survey that shows that most extended warranty purchasers lost money on the deal.
From Consumer Reports:
But extended warranties sell costly “peace of mind” for repair nightmares that probably won’t occur, according to a survey of more than 8,000 readers in December 2007 by the Consumer Reports National Research Center. We have long advised that extended warranties are a poor deal for almost every product. Now we have the first data showing that this advice applies to most new cars as well.
The survey found that warranty buyers on vehicles from the 2001 and 2002 model years paid an average of $1,000 and received $700 worth of repairs in exchange, says the NYT. A full page ad will appear in Tuesday’s USAToday, warning against extended warranties and featuring a sign that says “Pushover on board.”
Bearer of Bad News Decides To Advertise It [NYT] (Thanks, Molly!)
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