Extended warranties - Good value for the consumer?

(NC)—Holiday season is prime time for big-ticket purchases: big-screen televisions, computers and other electronic goods. You’ve done your homework, compared features and prices and chosen the model you want. You’re ready to buy when the salesperson asks whether you’d like to extend the warranty on the product. What does a smart consumer do?

“Many consumers don’t realize there is a difference between the manufacturer’s warranty and an extended warranty,” says Chris Ferguson, director of Ontario’s Consumer Protection Branch. “A manufacturer’s warranty comes with the product; it’s a promise manufacturers make to stand behind their products. An extended warranty is actually a service contract that is a separate purchase from the good to which it applies. An extended warranty may be offered by the manufacturer, the retailer or even a third-party supplier.”

“Smart consumers ask questions,” says Ferguson. Does the manufacturer’s warranty already cover the repairs and the time period of coverage that you would get under a separate service contract? How likely is it that the product would need repairs and what would the potential cost of the repairs be? What parts and repair problems does the extended warranty cover?

Who do you contact to get warranty service – the manufacturer, the retailer or the warranty company? What will the company offering the extended warranty do if the product fails? How long can you expect to wait for a repair to be done? What other conditions or limitations are there on the warranty? For example, you may have to provide a copy of your receipt in order to prove that you’re the original owner in case the extended warranty is non-transferable.

“It’s up to the consumer to decide if the extended warranty is worth the additional cost,” Ferguson advises. “However, you should realize that buying one can add as much as 30 per cent to the cost of what you buy.”

For more information about extended warranties and your rights under the Consumer Protection Act go to www.mgs.gov.on.ca or call 1-866-351-5655.

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