Avoid Extended Warranties

Posted By Debbie on May 17, 2011

Categories: Business

Tags: warranties

The dirty little secret of most retail businesses is that a huge amount of money is made in extended warranties. I used to never get them… until I bought a Palm Pre phone from Sprint in 2009. The thing could barely stay alive. Sprint made it clear to me, at the time, that if I didn’t have insurance on the phone, I could get stuck with a dodgy phone. So I started paying for insurance, and only stopped this week.

In 2010, I dumped my HTC Touch Pro 2 (Windows Mobile!), and went for my pre-ordered HTC Evo 4G. Best phone ever. Best Buy sold me on their extended warranty. They showed me how much better it was than Sprint’s. It would be better, faster, it would allow for damage I clearly caused, etc… Sold. I started paying $9.99 per month to Best Buy, and cancelled Sprint’s insurance.

12 month later, this week, my Evo finally had a little problem. The port where you plug in the charging cable has a short. I can only charge the phone if I balance the cable at bizarre angles, and then weigh it down. Remembering Best Buy’s insurance, into which I’ve now paid $120 (for a $199 phone), I went in, assuming they’d just swap out my phone. Nope. Evidently, their phone insurance policies changed last month. What could Best Buy do for me?

Geek Squad will take my phone, and send it away. I’ll get a refurb back, but nobody knew when. The Geek Squad customer service phone rep I spoke to later in this story even acknowledged the time is unknown, but could easily be a week or two. During this time, I would have no phone. For a $150 deposit, Best Buy will give me a loaner phone, which is any used phone they might have laying around… like a Motorola Razr, or “some sort of flip phone,” as it was described to me. So I don’t get an Android phone while I wait for my Android phone to be fixed or replaced. And Best Buy gets to hold onto $150 for an unknown amount of time.

This didn’t work for me, and I didn’t like how the policy changed without me knowing. I called up a local Sprint repair store, explained the issue, and explained that I had no insurance with them. They said to bring the phone in. If they can verify it’s not damage caused by me, for $35, they will replace it with a refurb that is working perfectly AND has had its housing replaced… so it won’t be dented or anything. It should look and work as new. Well, that $35 is way better than the $120 Best Buy had from me. I’m taking that route.

I called up Geek Squad to cancel my insurance, and complain about the entire situation. The woman is sending me a $40 gift card to apologise, and cover my repair with Sprint. But lesson learned. Extended warranties are just BS. Huge profit centres for these companies. Without my complaint, Best Buy made another $120 on a $199 purchase, and for what? I got nothing from it. Maybe if you have a spare phone, and you can be without your regular phone for weeks, maybe this is a good plan. Otherwise, I could have BOUGHT myself a brand new phone considering the Evo is now $149.