Few products break within the period, Consumer Reports magazine says
Sun
TORONTO — The organization that publishes popular Consumer Reports magazine says buying an extended warranty on electronics and major appliances is like pouring money down the drain.
Consumers Union says few products break within the extended warranty period. When they do, the repair rarely costs more than the warranty would.
The organization, which counts 300,000 among it magazine readers, based its conclusion on decades of product testing.
American consumers are expected spend $1.6 billion US this holiday season buying extended warranties for everything from laptops to flat-screen TVs.
Consumer Reports says profit margins on some extended warranties can be as high as 50 per cent.
It says a warranty shouldn’t cost more than 20 per cent of the product.
Canadian retailers say they offer consumers extended warranties because some people want them.
“It’s a bit like buying insurance, I guess,” said Vince Power, a spokesman for Sears Canada Corp., the country’s largest appliance retailer.
“You don’t expect things to go wrong. But, if they do, you know with the protection agreement you have that peace of mind. That’s really what we’re selling.”
“The reason we offer them is because there are customers who want them,” said Lori DeCou, a spokeswoman for Best Buy Canada, the country’s largest consumer electronics retailer.
Neither retailer would comment on what percentage of customers opt for these contracts, nor how much money they make on them.
Sears’s appliance sales associates work on commission, Power said. Best Buy’s sales associates don’t, DeCou said.
And if you’re still determined to buy the extended warranty, don’t pay more than 20 per cent of the price of the product for which it was purchased, Consumers Reports said.
© The Vancouver Sun 2006
