LEAKS: Best Buy Internal Doc Says Their "Extended Warranties" Are A "Myth"

An internal Best Buy training document sent to The Consumerist reveals Best Buy’s position on the “Extended Warranty” debate. Best Buy says they don’t sell those pesky “extended warranties” that get so much bad press— instead they sell “performance service plans.” The document also instructs Best Buy employees on how to sell these warranties to Upscale Suburban “Barry” and “Jill.” It’s important for consumers to be familiar with these tactics so they are able to recognize them while shopping in a high pressure sales environment such as Best Buy. Understanding the sales pitch puts you on equal ground with the salesperson.

From the document:

Myth Of Extended Warranty

Best Buy’s PSP/PRPs are not extended warranties. Some customers don’t purchase extended warranties because of the bad press that they sometimes receive. Extended warranties extend the limited manufacturer’s warranty and do not cover things like normal wear and tear, no lemon based on different repairs, or power surges. Our PSP/PRP’s offer benefits above and beyond the manufacturer’s warranty. It’s very important that you never disparage the manufacturer’s warranty in any way.

While it is true that Best Buy’s plans do offer services beyond what the manufacturer’s warranty offers, Consumer Reports (the source of the bad press the document refers to) makes it very clear that they are talking about “performance service plans” or “extended service plans” when they tell people to skip the “extended warranty.”

From Consumer Reports (emphasis ours):

Retailers are pushing hard to get you to buy extended warranties, or service plans, because they’re cash cows. Stores keep 50 percent or more of what they charge for warranties. That’s much more than they can make selling actual products.

For the consumer, extended warranties are notoriously bad deals because:

* Some repairs are covered by the standard manufacturer warranty that comes with the product.

* Products seldom break within the extended-warranty window–after the standard warranty has expired but within the typical two to three years of purchase–our data show.

* When electronics and appliances do break, the repairs, on average, cost about the same as an extended warranty.

We have long advised against extended warranties. In fact, we feel so strongly that consumers are being misled about them that last year we took out a full-page ad in USA Today (see below) to warn shoppers.

Consumer Reports suggests that, rather than paying extra for a “extended warranty” or “service plan” you take the money you would have spent and place it in a small emergency repair fund. This way you can use the money to repair whatever breaks. This money will never “expire.” It’s also important to remember that your credit card probably has extended warranty protection that doubles the manufacturer’s warranty–just for using your card to purchase the item.

Here’s a chart that shows the average failure rate of 3-4 year old electronic items. You can use this chart to judge for yourself what level of risk you’re comfortable with when it comes to extended warranties.
consumerreportsfailurerate.jpg
Why you don’t need an extended warranty
[Consumer Reports]

Click the pages below to see the document in full.

Comments

Edit Your Comment

  1. *Waits for the ballsuckers of best buy to say it’s fake*

  2. milty45654 says:

    “Waits for the ballsuckers lawyers to demand Consumerist remove the documents immediately”

  3. Rupan says:

    It’s just another example of corporate newspeak. Extended warranties have a bad rep so it is a performance service plan.

    Its just like calling the guy fixing your copier a “field engineer” (yes that was me at one point long ago) or caling a salesperson a “customer relationship manager” (have not been one of those).

    Anything they can do to make it sound prettier and not as bad.

  4. Noiddog says:

    *waits for the chasm of hell to open up, spew fire, and reclaim all its employees and stores to its hellish bosom*

  5. Unit01 says:

    Alright, Consumerist. If you’re going to hate on Best Buy, hate on Best Buy, but at least pony up to the courage to use the quote in the correct context. They go on to explain what’s going on the 4 page of their report, as they see it. Whether you agree or not… whatever. But don’t take something out of context in such an inflammatory way. That’s shoddy journalism, and you owe the consumers better to make up their own minds. More people read your headline than will actually read that report. Do the right thing. Here is the exact quote they’re using, in its entirety.

    “Myth of extended Warranty
    Best Buy’s PSP/PRPs are not extended warranties. Some customers don’t purchase extended warranties because of the bad press the sometimes receive. Extended warranties extend the limited manufacturer’s warranty and do not cover things like normal wear and tear, no lemon based on different repairs, or power surges. Our PSP/PRPs offer benefits above and beyond the manufacturer’s warranty. It’s very important that you never disparage the manufacturer’s warranty in any way. “

  6. mac-phisto says:

    as a person who used to pitch extended warranties for a bb competitor, i have to admit that sometimes they do make sense. it depends on the plan & the product.

    allow me to explain. we used to sell these cheapass $20 headphones which were popular b/c of their price – esp. w/ parents of small children. at the time, you could add a service plan to them for $3 which allowed you to replace them (up to 12 times) in any of our stores for any reason for a year. in a case like that, you will definitely save money in the long run.

    of course, they changed the way the plan works – now it’s 1 replacement/plan & they’re method for cashing in would make sisyphus cringe.

  7. Scuba Steve says:

    I’d buy an extended warranty if it didn’t cost more than a single replacement (because I don’t want to keep the same POS item if its going to break constantly), if it’d cover accidental damage of any kind, as well as theft (with a police report, of course), and it would actually extend the time past the manufacturers warranty.

    And I would care about having to replace the item (headphones wouldn’t count, maybe a TV or major/appliance/game system.)

  8. Unit01 says:

    alright, I see the quote there. My anger was a bit white-hot over that title tho. I eat man sausage, forever and ever. You have a bias, but my accusation was inaccurate.

  9. SpenceMan01 says:

    I worked as a cashier/CS rep at Best Buy for about two years. As a cashier, you’re the main seller of the Product Replacement Plans (PRPs). My best sell was a $5 , 2-year replacement plan on a $5 mouse.

  10. Part-Time-Viking says:

    It’s very true, the PSP’s and PRP’s are different than the warranty offered by the MFG. “Extended Warranty” suggests that Best Buy is just extending what the MFG offers while the PSP/PRP offer more. In almost every situation, it covers more than the MFG.

    Now the readers of this site have made it clear to me that things like this won’t matter to you all, however, I have many customers who love the companies PSP/PRP and are more than happy to buy them. Yes it helps our numbers, but despite what you folk want to believe, helps the company keep the customers happy. Issues involving the PSP/PRP are seldom.

  11. kenblakely says:

    @Unit01: I totally, 100% agree. I’ll never be a BestBuy fanboy, but this story is nothing but muckraking cr@p.

    “LEAKS: Best Buy Internal Doc Says Their “Extended Warranties” Are A “Myth”?

    C’mon Consumerist – that’s not true, you KNOW it’s not true, and your own story indicates that it’s not true.

    “Consumer Reports (the source of the bad press the document refers to) makes it very clear that they are talking about “performance service plans””
    Really? How come the Consumer reports blurb never refers to ‘performance service plans’? You quoted the term like you lifted it straight outta the report, but it’s not there. Another lie.

    You’ve got a good niche to fill Consumerist. There’s plenty of REAL stories of corporate malfeasance out there – you don’t need to make stuff up. If I were BestBuy, I’d be ginning up a lawsuit about now…..

  12. This won’t post.

  13. The Count of Monte Fisto says:

    This could be a fluke, but I bought the plan for my $1,500 laptop three years ago. I had to get it fixed twice, and they did it no problem. Then the third time it broke they gave me a brand-new, better one, and a $400 gift card to make up the difference in price between the old and the new (which I think was a mistake, but hey, PS3 for me!). It seems like a decent parachute for a big-ticket item, but not for your everyday stuff.

  14. @BayStateDarren: OK, I guess it’s working for me again after ~16 hrs. Disregard.

  15. SafetyHelmet says:

    This article is garbage. I hate being pitched service plans as much as the next guy, but saying this is a big newsworthy leak and using a small fragment of the entire documentation so out of context really reflects poorly on the Consumerist as a source of quality, non-sensationalist information. They’re clearing saying there’s a misunderstanding between what their plans cover, and what people think of as “extended warranty”.

  16. skittlbrau says:

    can’t post?

  17. skittlbrau says:

    @skittlbrau = baa: wait – I can now.

  18. wellfleet says:

    if you take the time and read through the failure rates of some of the most commonly purchased items at BB, you can easily see why any service agreement is a good idea on some items. Laptops = 43% failure. Almost a 1 in 2 chance that something will go wrong on the laptop. A hard drive failure can be as simple as buying a new HD, $80, prolly cheaper on newegg. That said, many of our customers wouldn’t know the first thing about how to replace a HD and restore the system. If the screen cracks, the mother board fries, the AC adapter jack breaks off the motherboard, the optical drive goes bad… all this starts to get very expensive.
    I don’t know how the content of this article jives with the inflammatory headline. We don’t extend the MFG’s warranty. BB covers power surges and in some cases, accidents. It’s also why nobody buys used cars anymore, they buy a “certified pre-owned”. This story is blah. If you’re going to keep bashing the company, come up with something that isn’t standard issue in the industry.

  19. castlecraver says:

    Understanding the sales pitch puts you on equal ground with the salesperson.

    So does graduating from 8th grade.

  20. bonzombiekitty says:

    I can haz comments?

  21. bonzombiekitty says:

    yay, I can comment again.

    Yeah, the title of this thread clearly delivers a different impression than what the leaked document actual says.

    What leaked document says:

    Extended warranties are not the same thing as a the other two plans we offer. The other plans we offer give more coverage than an extended warranty. A lot of people think they’re the same thing, but they’re not. But don’t use this as a reason to disparage extended warranties.

    What the title and tone of this article implies the document said:

    Extended warranties don’t do anything/don’t exist and we know it.

  22. Part-Time-Viking says:

    @SafetyHelmet: Exactly, now if this was a story of the percentage of Best Buy employees who incorrectly refer to the PSP’s/PRP’s as extended warranties, than it’d be a different situation. However, most customers will refer to it as an “extended warranty” regardless so in the end, this story is just The Consumerist trying to catch up with their “Screw Best Buy” quota for the month.

  23. Grandjester says:

    If the plan covers expendables, like lamps for LCD/DLP units or the flouresents in your plasma, a single service call and parts can cost 2 or 3 times as much as the “plan”, likewise, some major appliances can benifit from one as well.

    Like the laptop example above, it all depends on the item in question.

    I bought service plans for my LCD and all my appliances when I bought them at RC Willey, the TV and fridge have already have paid for themselves (single lamp replacement on LCD, two visits for a balky ice maker on the fridge), the washer/dryer have not, BUT after the 5 years, you get store credit back for the full price of the warranty if you don’t use it, so a pretty safe bet all around.

  24. Moosehawk says:

    @wellfleet: The table says it’s a 43% chance the laptop will need repair, it doesn’t say what it will specifically need to be repaired for.

    On the other side, there’s a 57% chance it WON’T break. Even a lower chance something majorly expensive will break. I’m not sure how much a “service plan” on a laptop costs because I will never buy one, but I bet the most expensive replaceable part in that laptop doesn’t cost much more than the service plan itself.

  25. Moosehawk says:

    @Grandjester: I can understand buying extended warranties on projectors and LCD/DLP TVs though like you say.

    Some of those lamps go for around $500! And the manufacturer only covers them for up to 90 days.

  26. srhbks says:

    The Best Buy PRP worked great for me- I bought a first generation 2g iPod nano in 4/06. By 12/07 it wouldn’t hold a charge properly. Brought my PRP documentation and the iPod into Best Buy and walked out 10 minutes later with a brand new third generation 8g video enable iPod nano. No fuss, no argument, no grief. Best $30 I ever spent.

  27. tom2133 says:

    I’m not to crazy about how Consumer Reports is always saying “Don’t buy an extended warranty! Don’t buy an extended warranty!”

    Is Consumer Reports going to fix my fridge when it breaks? Replace my food that spoiled? Are they going to buy the parts for me?

    I bought an extended warranty on my laptop because of my rotten luck with laptops. (5 laptops in the past 8 years). I bought one on my vaccuum because I know for 4 years, no matter what happens to my cheap Dirt Devil, it’s taken care of, and I don’t have to use my cash reserves to pay for repair later. My camera – accidental drop coverage, because I know it will get dropped. But I know what my warranties cover, how they work and know what it takes to get a product fixed before I buy the piece of paper.

    Now there is stupid shit to get a warranty on that I used to have to sell them on when I worked for Sports Authority. A trampoline? A pocketknife with a lifetime guarantee? Seriously? And there are certain brands I know are tried and true excellent brands and I don’t need a warranty for it.

  28. AustinTXProgrammer says:

    I skip on the extended warranty unless it is a portable device and the warranty covers accidental damage.

    A friend bought a new DSLR camera from bestbuy a few months ago. He bought the performance plan that covered accidental damage. The funny thing is that is was something like $150 for the regular performance plan, and $180 for the plan that covered accidents. There is no way you can tell me that the camera is 5 times more likely to suffer a defect than an accident. To me that is proof the standard plan is a complete ripoff.

    The accidental damage protection would be something I would go for.

  29. Eric says:

    @wellfleet: I was a supervisor for Geek Squad while I was in school a couple of years ago and I can say that the standard PSP doesn’t cover most of the things that you mentioned. Screens cracking and DC power jacks were never covered, both were considered physical abuse. The accidental damage coverage covered both of those things.

    Interestingly, the accidental damage warranty covers liquid spilled on a unit but not immersion in water. I always thought that was stupid.

    I agree about the hard drives, etc… some people don’t want to spend the time learning how to do those very simple repairs. Those people may benefit from a warranty.

  30. Jeepman says:

    I agree with those who think your article and title are pretty misleading – let’s not get carried away with this “Best Buy is Satan” thing. However, IMHO Best Buy is Satan. I don’t care what you call it – PSP, extended warranty, or piece of crap, if they don’t honor the deal (as they adamantly refused to for me until they got a letter from a lawyer) then it doesn’t matter what you pay for it – it’s still a bad deal.

  31. mazement says:

    tom2133, the point is that buying insurance is a form of gambling. You’re betting $X that you’ll have a covered problem in the warranty period. If you have a problem and it would cost more than $X to fix it, then you win. If you don’t have an expensive problem, then you lose.

    The first rule of gambling is, “the house always wins”. I don’t know what the house edge is on warranties but I’d guess that you’re better off going to the casino or even buying lottery tickets.

    That said, there are situations where it makes sense to buy insurance…if the item is so expensive that it would be a real financial hardship to replace it, then getting insurance is a good idea (especially if it’s unlikely to fail and the cost of insurance is low). But it seems silly to insure a cheap dirt devil

  32. tvmitch says:

    Whether or not the Best Buy plans are garbage, a far better alternative to get your consumer electronics/computer stuff insured is through SquareTrade. Fast, reliable, far cheaper than store warranties…overall, a fantastic company.

    Plus they offer an “accidental damage” plan as an add-on, which is great if you drop your cell phone/iPod in the washer, or something.

  33. gte879p says:

    I worked as a rep for Compusa (hey, i needed money to put myself through college working part time!).

    They would push the “Technology Assurance Program” TAP, which was a similar type thing. It was a complete replacement plan, not just an extension to the manufacturer’s warranty.

    I 100% agree that these are aimed to be very profitable by the company (as are most corporate products/services are). And I 100% agree that these warranties are NOT necessary for many products, especially lower cost ones. And I agree that the company plans to keep them profitble by hoping that people won’t utilize the policies.

    -BUT-

    A warranty that says “this product will be repaired/replaced for all damages, including accidental dropping” is pretty sweet. And might be a good idea for items that are expensive and likely to be damaged. I replaced my digital camera from compusa after a year because one of the buttons was sticking. Naturally, after a year they didn’t have the model camera I originally bought, so i got store credit for the amount I originally paid. It was a pretty good deal.

    That being said, YMMV for different warranties and different products. As always, Caveat Emptor (buyer beware).

    Rarely in this world are “Always” and “Never” used correctly, usually the answer falls somewhere in the middle. You probably shouldn’t ALWAYS buy an extended warranty, and you probably shouldn’t NEVER buy one either.

    A good rule of thumb is to insure items that you can’t afford to replace.

  34. backbroken says:

    Can I buy a warranty for my Best Buy protection plan? You know, to protect me in the inevitable event that they don’t honor the protection plan?

    In the year 2025, the US economy will be based on call girls, internet poker, and extended warranties. Cue the Zager and Evans.

  35. GodzillaDad says:

    A lot of people have commented so this may be adding or not, but it’s been a long day at work already so I just skimmed – anyways;

    As far as PSP’s with BB go. I know BB gets a lot of bad press here but they have been simply the best deal ever for my wife. I am surprisingly brutal on my laptops, but my wife puts me to shame. She has had her’s replaced through the PSP program 2 times over the years. Thanks to the original PSP she purchased she has yet to pay another cent for any of the new laptops, and at the rate she is going she may be looking at getting a third soon.

    Every time we have needed to take her laptop in BB has been quick, efficient and follow up with us in a friendly and helpful manner. Of the one singular time we had a bad experience (Geek Squad cashier was rude and nasty to us while we were in the store picking up her laptop), the manager went out of his way to make up for the experience.

    I know everyone at Consumerist loves to rag on in general – some like to hate the victim, others the corporate evil bad guys. Sometimes I agree with each side, it just depends on the situation. What I wanted to get across is this – I know BB get’s a lot of flack but you have to remember those who are happy with their products usually don’t take the time to make a big noise about it (because they are busy enjoying them!), but those who arent have all the time in the world to complain.

  36. snoop-blog says:

    why does best buy try to operate like some sort of secret spy company? it’s frikin retail! how do you dick that up?

  37. cyberquog says:

    The extended service plan has saved my laptop (X1000) a few times. In the most recent case I had a 3 year service plan and the video card in my laptop fried 1 month before the service plan expired. Take it to BB, fill out a form, they take my laptop, a month later I get it back working. Saved me from buying a new laptop.

  38. tevetorbes says:

    For all you Best Buy dimwits who are continuing to extol the virtues of extended warranties, re-read what Consumer Reports said:

    Consumer Reports suggests that, rather than paying extra for a “extended warranty” or “service plan” you take the money you would have spent and place it in a small emergency repair fund. This way you can use the money to repair whatever breaks. This money will never “expire.”

    Hello? Nobody said you had to repair your own laptop. Put $150 in a savings account (that garners interest- what a crazy idea!) and when your power cord breaks or your trackpad stops working, take it to a qualified technician (understand: the twenty-something dipshit Geek Squad guy is not qualified to do anything other than steal your porn).

    Odds are your electronics will NEVER break- and I know many of you are spewing forth with your “bad luck with laptops” stories, but its just not the case for the vast majority of people. If you think that Best Buy is somehow DOING YOU A FAVOR by selling you a PSP or a PRP or an extended warranty, then you are misinformed.

    By the way, it doesn’t matter what you call it. After all, a terd by any other name still smells of shit.

  39. lemur says:

    @tevetorbes: “If you think that Best Buy is somehow DOING YOU A FAVOR by selling you a PSP or a PRP or an extended warranty, then you are misinformed.”

    Ah well, a good deal of people seem to think that Best Buy is in the charity business.

  40. sp00nix says:

    Well i know that XBOX owners are thankful for the PRPs. I see XBOXs come in on an hourly basis

  41. sp00nix says:

    Any way its like having home owners insurance, doesnt mean you expect a fire or flood to come destroy everything, but if it does you know your covered.

  42. tevetorbes says:

    I would assume that sp00nix is one of the Brainwashed Best Buy Masses (aka “employee”) who epitomizes what is wrong with PRPs.

    I bet that sp00nix couldn’t tell us RIGHT NOW what is covered and what isn’t covered for, say, a laptop computer (this might not be fair as this might not be his department.)

    Fact is, many BB (and Circuit City- don’t think they’re off the hook) employees will “decorate the truth” when it comes to upselling how great a PRP is. Sometimes they claim things are covered that aren’t, or discuss how great a feature of the PRP is when in fact the manufacturer’s warranty already covers the problem (the XBOX is a pretty good example of this).

    Again, sp00nix and his ilk think that they are doing customers some great service by adding on a PRP, and as lemur eludes to, Best Buy is not in the charity game. Companies do not do things that are not good for the bottom line (which, incidentally, is why if people stopped shopping there, Best Buy wouldn’t be able to pull all the bullshit that it does).

  43. bonzombiekitty says:

    @tevetorbes: But that’s a silly tactic in the event that the cost of the repairs exceeds the cost of the extended plan, which is exactly why people may choose to buy them – they want to be covered in the off chance (no matter how remote it may be) that their purchase is damaged and would cost a large sum to fix. The cost of the service plan is worth the peace of mind to some people.

    As others have said, it’s simply insurance. I don’t pay $X/month to Progressive because I expect to be in a car accident. I pay it because I don’t want to be screwed over in the event that I am covered.

  44. bonzombiekitty says:

    @bonzombiekitty: oops that last sentence should read “I pay it because I don’t want to be screwed over in the event that I am.”

    we need an edit button

  45. tevetorbes says:

    No, you pay $X/month to Progressive because its the law. You buy the extra insurance in case you run into a boob who drives around without insurance, which is a different rant altogether.

    Look, if you want to buy a PRP/PSP/extended warranty with the money that you have earned, stolen, or otherwise happened upon, who am I (or anybody else in this thread or elsewhere) to tell you that you’re wrong?

    HOWEVER, do NOT try to convince me that they are somehow necessary or relevant or that Best Buy, who I can assure you is aware of all sorts of numbers, formulae, and dollar signs, is doing us all a favor by offering them.

  46. Craig says:

    Add me to the list of people who are ticked off at the title of this story. It’s misleading, untrue, and goes completely against what Consumerist is supposed to be about.

  47. Craig says:

    I should add that I’m not a fan of Best Buy in any way, shape, or form.

  48. bonzombiekitty says:

    @tevetorbes: I’d be paying $X to progessive if it was the law or not. I don’t want to shell out another $X thousand dollars if I crash the car and its my fault.

  49. bonzombiekitty says:

    @tevetorbes: to add to my last comment:

    Of course they’re aware that you are unlikely to benefit from the service plan, and anyone who stops for a second to think about it would know that too. If you’re likely to benefit from it, then it would be a money loser for BB and they wouldn’t offer it. Duh.

    However, it’s not simply “I’m unlikely to benefit from this plan so I won’t get it” it’s a cost vs risk ratio. Is the cost of the plan worth the risk of having some sort of damage to the item that will cost me a more money than the plan cost to fix/replace? The answer to that differs for every person and depends on the particular situation.

  50. rjhiggins says:

    Meg, this is another example of your sloppy work. The headline in no way reflects the contents of the memo.

    You lose credibility every time you pull something like this. There’s enough stuff going on out there without inventing controversy with inaccurate headlines.

  51. Rectilinear Propagation says:

    Is Best Buy saying that they don’t offer Extended Warranties at all or that they offer both those and performance service plans? Because if they are in fact saying they don’t offer extended warranties at all then how is the headline inaccurate?

    *cops to being too lazy to read through the internal documents

  52. Raziel66 says:

    I buy Best Buy psp’s because they HAVE helped me in the past. I had a 42” Westinghouse HDTV that had a bad board in it which resulted in blue and white dots all over the screen in 1080p mode. These dots only got worse the warmer the tv got. Westinghouse was going to charge for a tech to come out and fix it. Best Buy on the other hand sent a tech out for free and then let me exchange the tv. I ended up with a 47” Philips with Ambilight.

  53. mac-phisto says:

    @Rectilinear Propagation: the anger with the headline is that it doesn’t relate to the story at all. best buy is NOT saying their extended warranties are a myth. they are saying that it is a myth that their PSPs are extended warranties.

  54. ellastar says:

    The memo clearly does not state that “their ‘extended warranties’ are a ‘myth’.” It says that the myth is that their service plans are “extended warranties”. Then they go on to explain how the plans differ, with all the corporate jumbo on how to sell it (retail tactics don’t seem to change much across different stores).

    Best Buy does get a lot of bad press (and for good reason most of the time), but this is just deliberately misleading on Consumerist’s end.

  55. Starbright says:

    I like Consumer Report’s suggestion of putting the money that you would have spent on the PSP/PRP aside in a savings account because it will never expire. I can understand the concern that the money in the savings account might not be enought to cover the repairs if something went wrong with an expensive product. However, consider this: if you buy the PSP/PRP to go with every expensive item you purchase, that money spent would add up and chances are not every product that you buy will require repairs or replacement. If you put that same money aside in a savings account, it would keep adding up and you likely would have enough money to repair/replace the item that does end up breaking and you would probably have money left over. With the plan, it might not cover the repair or replacement depending on what is broken or how it was broken. However, with money in the savings account, you aren’t limited to what Best Buy feels like covering. Also, you are only paying for what actually ends up breaking instead of what might break.

  56. avconsumer says:

    High pressure sales environment – ha! As an ex-audio visual professional, I trap those kids in technical babble-speak lies every single time I’m in there (and engage sales reps). The complete fabrication of hogwash that come out of those mouths that they talk to their mothers with is simply astonishing.

  57. ogremustcrush says:

    It’s almost worth getting an extended warranty on a laptop, because if there’s a problem with the motherboard, which happens a lot, it can easily cost twice what the warranty cost. Of course, if its a laptop that costs less than $700 or so, it’s probably never worth it, because you could just buy an new upgraded laptop if your mobo fails . All the other parts are cheap and easy to replace though, even the screen.

  58. MrEvil says:

    @SomewhereOutThere: Some very good words of Wisdom there. When you get offered an extended warranty, rather than buying it. Put the cost of that warranty in a savings account.

    @ogremustcrush:

    I would agree with that. On a high dollar laptop with a 17″ LCD especially. The price of most parts direct from the manufacturer is very prohibitive. Sure there are cheaper alternatives on eBay, but 90% of them are working pulls and may not work by the time you get the part, I’ll buy them for my customers, but only if they acknolwedge that they are used parts and I can’t guarantee them. Also, not all shops charge $80 flat rate for repairwork like I do on Laptops. Most of them charge insane /hr charges and then say there’s an X hour minimum and run the clock up.

  59. TechnoDestructo says:

    @milty45654: Make sure to save all the items in this post. The more people do that, the more likely they’ll be playing whack-a-mole until the end of time on this one.

  60. Blinkman says:

    @sp00nix: You’re retarded. The 360 has a 3 year manufacturer warranty. Best Buy pretends they’re doing you a favor, but they’re shipping the 360 to MS to fix it. 5 minutes of handling for $50? I want to get in on that business.

  61. Blinkman says:

    Oh, and this article is completely dishonest as far as content that should be on the Consumerist. The title is misleading and the abstract of the article is not accurate. Shame on the blog.

  62. m4nea says:

    @Moosehawk: lcd screen on a laptop: $1200. Mine’s gone out twice.
    Do the math.
    Of course, I work at best buy, so my PSP was half price ;)

  63. wellfleet says:

    @Moosehawk: motherboard = several hundred dollars, if you’re putting it in yourself, screen = ditto,laptop battery = $80, power cord = $80… Not to mention that in many cases, the cost of repair is higher than the unit’s value and you walk out with a brand new, way better computer. @Eric: DC power jack failure can be normal wear and tear, which is 100% covered, I’ve gotten 3 units back from service this week for this exact issue and they are fixed and covered by PSP. Cracked screen is covered with ADH, not under regular PSP, that’s true, unless it’s due to being left out in the heat “heat, dust, humidity, power surge, and normal wear & tear” remember? I’m a PSP goddess…@Blinkman: umm, WRONG! we don’t fix 360s, we give the customer a new unit and junk out the defective ones. When I worked as a CSR, I would exchange about a handful every day under PRP. I’m certain Microsoft’s warranty is great, but you have to be without your unit, deal with shipping it off, etc. Please be *informed* before you bash.

    Also… before you purchase a PSP, why not read over the ENTIRE brochure when you get home, all the terms and conditions and benefits that you paid a lot of money for. If you don’t like the fine print, return the service plan, it has the same return period as the item purchased and is returned in full. If you wait longer than the 30 or 14 days, it will be prorated. It never ceases to amaze me how many people spend hundreds of dollars on services and products without asking any questions. If I had a dime for every person who says to me “I just signed, I never read contracts”…

  64. bigmil87 says:

    @Blinkman: Ah yes the 3 year warranty. The warranty actually only covers RRoD. Anything else and you would be left paying out of your pocket for the repairs.

  65. FLConsumer says:

    Where the hell is Consumer Reports getting their reliability data from? If anything it seems inversely correct. Between myself and my friends, we’ve pitched far more TVs in the past few years than anything else on that list. In the meantime, my 10 year old IBM Thinkpad and 6 year old Dell Latitude are chugging along.

  66. Ghede says:

    @FLConsumer: Because laptops are notoriously fragile. While TV’s tend to just sit there, laptops are meant to be carried around. Now, YOU don’t drop your expensive electronics willy-nilly, but many others DO. Also, you fail to disclose what TV’s you are buying, how you treat them, and what environment they are placed. Also, Percentages aren’t absolute. Some people will never break a TV.

    Myself, I still have all three of the last three TV’s I bought, and I gave away the ones older than that. They still worked. I also still have the last three computers, my elderly laptop, and just recently replaced a refrigerator I’ve had for about ten years. Just because you don’t fall inside the percentage, doesn’t mean the percentage is wrong.

  67. wellfleet says:

    @FLConsumer: they just don’t make things like they used to… my MIL still has her Magic Chef appliances from 1970, in Harvest Gold, and other than looking like a$$, they work wonderfully.

  68. blueboxer says:

    In the car audio department, PSPs are invaluable. We get issues all the time with satellite radios and decks going bad in that 4 year time period.

  69. SAugsburger says:

    @mazement:
    “The first rule of gambling is, “the house always wins”. I don’t know what the house edge is on warranties but I’d guess that you’re better off going to the casino or even buying lottery tickets.”

    You are close, but not exactly correct. If the house *always* won, then nobody would ever play. You have to pay occasionally or people stop playing. Some forms of gambling involve some degree of skill and others like roulette are pure luck. On games with some degree of skill individual players who understand the rules well can come out ahead, but overall the statistically average player will lose money.

    In gambling as is in warranties the correct answer is that given enough players the house ultimately wins. The house with enough bets will win if the game plays long enough.

    The trick with warranties as with gambling is knowing the rules before you play. There are some items like memory or cables where lifetime warranties are common where it is fool’s bet to buy a warranty. More problem prone items like laptops may be worth buying a service plan depending upon the conditions of the plan, the cost of the plan, the length of the plan, historical reliability of said product by said brand that you are buying, how you use the product, your capabilities to do repairs, how quickly are prices dropping, and of course the length of the default warranty.

    A good example of a situation where a service plan might make sense is if you are buying a Mac and have no interest in buying a Windows machine if the mac breaks after a year. You can of course replace the HDD or RAM, but if the logic board is dead Apple will charge you an obscene cost for a replacement. Furthermore, if a logic board on a mac goes south, there wouldn’t be a cheaper mac a year from now. Apple historically doesn’t release a mac that is cheaper than last years model.

    For the guy who can easily do repairs the only cost is parts. For someone like this service plans rarely make sense, but if you aren’t so inclined the price of a repair would be the parts plus labor. For a lot of repairs the labor is equal if not a great percentage of the cost than the parts.

    On the flip side there are a lot of people especially with computers that barely use the machine, where most of the parts won’t get much wear and tear at all where the chances of anything dying prematurely are remote. The success of convincing these folks to buy warranties is why the average payout relative to the cost of plan is so low.

    There are simply too many factors to simply give a one size fits all answer, although I will admit that service plans don’t make sense for a lot of people because they never use the product enough for it to ever reasonably fail.

  70. SAugsburger says:

    @wellfleet:
    “Also… before you purchase a PSP, why not read over the ENTIRE brochure when you get home, all the terms and conditions and benefits that you paid a lot of money for. If you don’t like the fine print, return the service plan, it has the same return period as the item purchased and is returned in full. If you wait longer than the 30 or 14 days, it will be prorated. It never ceases to amaze me how many people spend hundreds of dollars on services and products without asking any questions. If I had a dime for every person who says to me “I just signed, I never read contracts”…”

    This is true of contracts in general. Some service plans depending upon the product, the conditions of the plan, how you are going to use it, etc. are worth getting, most aren’t. I can’t believe how few people spend the time to read what they are signing.

  71. tcp100 says:

    I just want to add that this has been Best Buy’s position for at least 15 years.

    I worked there when I was in high school, in the early 90s, and we all got the exact same spiel.. “They aren’t warranties, they’re service plans.”

    True, perhaps, but also a caveat in their favor – not calling it a warranty allows Best Buy not to be subject to certain states’ laws that cover extended warranties and insurance.

    One good thing to know: you can return a Best Buy PSP, for a pro-rated refund, even years later.

    The manger will hate you (it’ll bring their daily numbers down), but the text in the plan (at least the last one I had from 2005) allows it.