Extended Service Contracts: pro-business, anti-consumer

I can remember the old days, the simple days when buying a consumer electronics product or appliance meant that you’d get to the cash register and their big question was “how do you want to pay for that?” Not any more, though: the big question of the twenty-first century is “did you want to buy an extended service warranty with that?”
You’ve heard it too. In fact, you can even buy extended service warrantees here on line. Just Google “extended warranty” and be prepared for thousands of questionable sites pushing various bad deals. Because, don’t be confused about it, in almost every single case, extended service warranties are a very bad deal for the consumer.


But for the corporation, they’re manna from heaven, a windfall of profits that can even be woven into corporate spreadsheets to make the entire business more profitable.
Two of the biggest companies in this space are Best Buy and Circuit City.For the 2003-2004 fiscal year, Best Buy generated staggering profit margins on contracts of 60%, and Circuit City had a profit margin of over 50%.
But the numbers don’t stop there. According to an article in BusinessWeek from a few months ago, Best Buy calculated that extended-service contracts account for a whopping 45% of their operating profits (amazing, given that the contracts only represent 4% of their overall sales). That number pales beside Circuit City, where 100% of their operating profits were produced by extended-service contracts.
Without extended service warranties, Circuit City would have reported a loss, rather than a profit, for the fiscal 2003-2004 year. In that period extended-service contracts were worth $326 million in sales.
Here’s how these warranties work: Say you splurge and buy a $3000 flat-panel TV. The extended service contract would cost an additional $400, of which Best Buy pays out $160 to the third-party insurer, keeping the additional $240 as pure profit. Nice! Especially when you consider that in the highly competitive, highly commoditized consumer electronic business, their actual profit on the sale of the TV might be as low as $100.
But then again, go into Best Buy and pick up a cheapo Magnavox DVD player for $39.99 and you’ll find that the four-year extended service contract will cost you an additional $49.99, more than buying a second unit and storing it in your attic. Or go into CompUSA and buy a $59.99 Netgear router and you’ll find that the extended contract costs $17.99. Not too bad, until you read the small print and find out that Netgear’s already got you covered for the same three years of the CompUSA extended contract. CompUSA 1, you 0.
Retailers often duplicate contracts that you can buy from manufacturers too. Consider this: Toshiba sells an extended service warranty for a Satellite laptop (a $1000 computer) for $199. A similar, though less comprehensive, warranty from CompUSA costs a cool $369.99. Less coverage, more money, more profit for the retailer.
Across the entire business ecosystem, extended service contracts and warranties now account for $15 billion dollars annually. And they’re all set up so that the company selling the contract keeps over half the value of the transaction. That’s $7.5 billion in pure profit. A sweet deal for retailers, no question!
But for consumers, isn’t it a rip-off? Like all insurance, of course, you’re betting against the house, paying in to a system that you hope you’ll never have to get paid back from because of an accident, a health problem, etc. There are some products that analysts think might be worth covering, including laptops and exercise equipment, but most products either fail in their first year, victims of faulty parts (and covered under the original warranty) or work fine for years until parts wear out, at which point the extended service contract has also expired.
As I learned with the extended service contract for my Toyota Prius, if you are convinced that you want to buy the warranty, shop around and find the best price: you have an entire year after purchase to extend the warranty and certainly don’t need to be pressured into it by a salesperson at the point of purchase.
Extended-service contracts are like so much else in our world, another case of buyer beware.

29 comments on “Extended Service Contracts: pro-business, anti-consumer

  1. I love the fact that because you don’t find value in “extended warranties” that they have no value to anyone else. I would like to take your example of the 3,000 dollar plasma television that you cited. I can’t speak for the smurfs but at circuit city we don’t sell warranties on televisions (or anything in the entertainment department for that matter)we sell gurantees. For a plasma television we offer either a 3 or 5 year gurantee that is just that, a gurantee. We gurantee that the product will perform the same as it did the first day that you bought it for the term of the contract. This differs from the manufacturer’s warranty in that it covers essentially everything other than physical damage, not just defects as the manufacturer does. This includes wear and tear, power surges, and picture quality. But perhaps the largest benefit of purchasing the gurantee is the plasma television example is the fact that the service is in home. If a defect were to show up within the first year, the customer would have to uninstall their television (which generally weigh over 100 lbs and must be transported in an upright position) and take it to a service center where it would be sent back to the manufacturer for repair or replacement then returned to the service center where the customer again would have to transoprt it back home and reinstall it themselves. Circut’s gurantees on large televisions are in home service and hence provide a great benefit to many customers who don’t want to risk the hastle of dealing with that process. So please before you shit on something, take a second and talk to someone who knows a thing or 2 about the benefits. Oh..and if you don’t like them…don’t buy them..but don’t misinform other people and cause them to make poor buying decisions. Heres my AIM screen name so feel free to IM me with any questions or comments, or if you would like to purchase something at my store (Circuit City Ft. Lauderdale) I’d be glad to sell it to you.

  2. Adam, first off, you misread what I posted. It’s not about whether I find value in warranties, per se, but that I was reporting some research published in “Business Week” on this very topic. If you have a beef with the analysis, I surmise that you’d need to talk with their reporters too.
    Your further information about large TV performance guarantees, however, is very interesting and certainly not the kind of pitch I’ve heard from sales people when I am at a store like Best Buy or Circuit City. However, how does this apply to the more general “extended service contract” that is the subject of this article in the first place?

  3. Good article. Interesting points. I have to say, as a Supervisor at Best Buy I agree with Dave all the way. You know surely PSP’s, ESP’s, PPP’s, extended whatevers, whatever you want to call them at different stores, consumers have all the world of an option to decide “do I, or don’t I?”. I care about my customers who walk through that door, so if they feel they don’t need the protection, fine.. its cool. We offer a service, it’s your choice to take it or not.
    However I work in appliances. There are things surely I wouldn’t even think about offering because it just wouldn’t benefit them. However on the flip side, certain bigger items I will offer (not push), and if you feel it’s good enough for you, then get it. And for us, it’s just a plus. If you take it, we get a few extra dollars in our bottom line; if you don’t, we don’t lose money (well, at least not in Circuit City’s case..haha).
    They are great, like Adam said, however in certain instances and certain people. Everyone who walks through a Best Buy or CompUSA or Circuit City will always be offered a contract, but it’s the value, like Dave said, that the customer actually sees in it for them if they buy it.
    Just my 2 cents, and this is why Best Buy is the leader, and CC isn’t… ­čÖé

  4. I didn’t see anywhere, where there was a quote from where you were commenting on any report from “Business Week” at least in the initial article…And you do say that “don’t be confused about it, in almost every single case, extended service warranties are a very bad deal for the consumer.” Is this fact or opinion? I don’t see anything to back this if it is fact. Whether you believe in the value of the service is a personal decision, but to tell people that “in almost every single case, extended servie warranties are a very bad deal for the consumer.” just doesn’t seem like a good idea to use a blanket statement. There are always exceptions to the rule…always. Extended warranties are not for everyone, but for some people they are invalueable.

  5. I appreciate your perspective, Bob, but think of the numbers here: if they weren’t profitable for businesses, they wouldn’t be offered. Therefore it’s indeed safe to say that they’re typically more pro-business than pro-consumer. Or do you disagree?

  6. What business is in business to lose money? Isn’t that the whole ideal behind capitalism? Why would you offer something that you lose money on, you wouldn’t or at least you wouldn’t be in business long. Anti consumer leans toward a rip off, Working in a service area, I have to constantly tell people that the manufacture does not cover power surges for example, those people are out the money and time for the product purchased, w/ some service plans that is covered. This was used as an example. Now, I can’t speak for all extented warranties, but if you don’t use it, yes, it’s pretty useless, but if you do, then it is worth it. You could go round and round w/ the arguments for both sides; however, to say they are anti-consumer as apposed to pro-business, why could they not be pro-business and pro-conusmer. I don’t recall anyone forcing anyone to buy an extended service plan, I’ve never had a gun stuck to my head and told buy it or else…
    Overall, are they good for business, well yes, of course they are. Are they bad for the consumer, I would have to say no. The consumer can ultimatly say “no”, No one has ever been physically injured by declining an extended service plan. It comes down to consumer responsibility, if you don’t know ask or read the brochure. It is just that simple, people need to take responsibility for their actions and not cry foul if they did not educate themselves first.

  7. I’m not necessarily a fan of extended warranties, but with the trouble people are having with Plasma I’d sure say it is a must. However, as I’m finding out even with the extended warranty companies like Magnavox are still making it nearly impossible for customers to enjoy what they paid for. You can see the story at http://plasmabuyerbeware.blogspot.com/

  8. If you think that an extended warranty is a bad idea, honestly think again. Being a sales associate from circuit city, i offer this every day and in a way that clearly interprets the terms and conditions, as well as the inclusion. In Pennsylvania, we have Accidental damage protection on cameras, camcorders, desktops, laptops, and monitors. How is that a bad deal for the customer? If someone buys a 700.00 camcorder and gets a 125.00 service plan, if the customer drops the camcorder it is repaired to like new condition, or fixed if the damage is accident related. Also with laptops, battery replacement..a battery for an average notebook runs about 150.00. The plans start at 134.99 for 2 years, which is the battery replaced for 2 years.
    You’re probably one of these people that comes in and says “I never buy them” or “if it breaks i’ll just buy a new one”.
    I ALWAYS GET THE SERVICE, and not just because i get a discount. Because, if my 50.00 router goes, i get DIRECT REPLACMENT OR EVEN GIFT CARD REPLACMENT thru circuit city, instead of talking to a bunch of people over in india having them troubleshoot my router.
    -teh end.

  9. I didn’t think getting an extended warranty on my big screen tv last year from Circuit City was a bad idea. That is until I actually needed it repaired.
    After numerous visits and no solution, Circuit City’s *solution* is to offer me the same TV for a DISCOUNT.
    I bought an open carton so they claim they can’t just replace it. Boy, that’s not what the Advantage Protection plan I paid for says. I honestly don’t believe they have the tvs in their warehouse like they claim (it was apparently a 1999 model). I think they just want me to take my money back rather than honor their warranty, it’d be cheaper for them.

  10. I bought an open box LG 42 Plasma from Circuit City along with the Advantage Protection Plan on Dec. 22. Boy was that a mistake !
    Salesman said it was bought by employ and brought back because it was too large for his apartment.(must be a statement they’re taught in sales school)
    In a couple of weeks a vertical color bar would flash on the left side screen, salesman said “Nothing to worry about” by Jan. 20th.. it was a solid black line top to bottom.
    I filed a claim with Circuit City, never heared from them, LG said CC had to cover the repairs, several calls all the way to the top finally got the repairman out on Feb.7th. Took one look and said it can’t be repaired in home and the TV would have to be removed from home.
    Feb 10. removed, not repairable, several calls to CC all the way back to top managment at home office as the ball was passed back and forth.
    May 1st. After repeated attempts to CC, I went to local store on three occasions with each time managment said they would take care of it. On May 2nd. after they made sure the TV was at their repair agent that they sent out to pickup the tv. the delivery person showed up with the wrong tv and it had a busted screen!
    Go figure. So later that day I finally got my kids christmas present installed !!!!
    So the moral of this story:
    Don’t belive a damn thing CC tells you, don’t belive their salesmen when they push floor models off on you as slightly used, and don’t count on their protection plan just simply repairing or replacing your TV “IN HOME”as I was led to beleve when I purchased the plan..

  11. I had no idea there was so much profit in ESPs. There are so many inferior products being made that you would think someone would be LOSING money guaranteeing them. I wish I had bought the ESP offered by Conn’s when purchasing an over the counter microwave for our vacation condo. Used it maybe a dozen times in twelve months, after which it went out. Called service and paid $60 to have them tell me it wasn’t worth repairing. So, the point has been made that for some people the value is in not having to worry about repairing something that goes bad after the manufacturer’s warranty has expired. For others, they don’t mind paying good money to replace the item. Those are the gamblers! I wish I hadn’t gambled on the microwave, but Dave, you’re right, it probably would have failed in the first year under warranty if it had been in our home instead of vacation place.

  12. I don’t get why people feel that if their product doesn’t fail, they wasted money buying an extended service agreement. I have life insurance that I pay very good money for and I hope that I don’t ever use it (obviously I will day one day). Just because you purchase a plan does not mean that you want your vehicle, TV, DVD Player, or whatever to break down. It is very upsetting to break down on the side of the road in rush hour with or without an extended service contract. It is however, a heck of a lot better to know that your vehicle will be towed in, repaired, and you will receive a rental vehicle while it is being fixed and all you have to pay is a small deductible ($50-$100 usually) That is very calming in a case like that, plus you don’t have to worry if the repair shop is gouging you or selling you repairs you may not need. The more he can replace the better, cause you are paying the same! If you make it all of the way to the end of your extended service contract and you never used it, I say congratulations. To me piece of mind is worth a lot for me and my family.

  13. Your Blog has created some good dialog and has even prompted me to chime in…
    I am not one to buy extended warranties but I do sell them and back them up. As the Director of Service for my Company we try to push Service Contracts not only for the revenue but the recurring revenue as well. There is profit in contracts but just as much for service calls & repairs. I do back my service contracts up with priority over non-service contract customers, faster response times, no labor charges, over-night hardware replacement, no shipping charges, problem resolution management, manufacturer warranty enforcement, etc.
    If I were to buy a Plasma TV I would really consider buying the service contract. I have seen too many failures on Plasma TVs. On the majority of failures I encounter it is not cost effective to repair the unit (usually 50″ and above). Thankfully most of the failures of late have been under warranty but it still required a complete swap out.
    My 2 cents…

  14. IT’S CALLED ADVANTAGE PLAN BECAUSE CUSTOMER GETS TAKEN ADVANTAGE OF
    The plan for TVs makes the assumption that someone will come out to fix your TV. My Sony 60″ HDTV (KDS-R60XBR1) only shows a white vertical line about 6 inches wide on the left side. I reported it on 10/10 and the date they are supposed to fix it is 11/6. It was supposed to be repaired on the 18th, but no one showed up or called. Now I get to go 27 DAYS without a TV.
    *** ACTUALLY, SINCE THEIR RETURN POLICY IS 30 DAYS AND NO RESTOCKING FEE, I’M GOING TO BUY ANOTHER TV TO USE UNTIL THEY FIX MY CURRENT ONE. ***
    I’ve made 18 phones calls, including to #’s 804-527-4000, 888-333-2333, 800-843-2489, etc. none of which have been of any use. ‘Customer No-Service’ even had me call another ‘Customer No-Service’ department, only for the second one to tell me I needed to talk to the first one!!
    Section 4 of the Advantage Plan Service agreement states:
    The Administrator (Circuit City or Third Party) will exercise all reasonable efforts to perform service under this Contract, but will not be responsible for delays or failure in performing such services caused by acts of nature, acts of any government, failure of transportation, accidents, riots, war, labor actions or strikes or other causes beyond its control.
    I find it hard to believe all reasonable efforts have been made to address this problem. As such, this constitutes Breach of Contract. They are failing to meet the terms of the Agreement.
    And I also bought a floor model, the excuse was ‘the TV was too big for a custom cabinet the customer had built.” I suppose people were catching on to the ‘too big for the apartment’ excuse.
    I’m now contacting Philip Schoonover, the Presidient and CEO of Circuit City, to see if this problem can be amicably resolved.
    *** HOW TO REACH PRESIDENT OF CIRCIUT CITY: For others wishing to contact him, his number is (804) 527-4000 ext 8851. ***
    Philip currently owns 235,000 shares of Circuit City stock. In a recent conference with Wall Street analysts, he specifically states one of the company’s Operational Priorities is “To improve the customer experience to support near-term growth.”
    Well, if not making good on the terms of the Circuit City Advantage plan is part of the strategy, he’s in real trouble, especially with the margins on those contracts.
    By the way, with the stock trading around $30/share, his holdings are worth a cool $7,050,000. Though I haven’t met him, I am impressed with how he has turned around the company overall (new store format, etc.). I’m hoping this is an issue he just hasn’t had the opportunity to address or is unaware of (only been with the company for a couple years).
    Nonetheless, I will NEVER do business with Circuit City again.

  15. Mr. Ivins, it sounds like you and are on the same page. I recently bought a product from Circuit City on 12/3/06 from my local store, though the product had be shipped from another store in another state. This was after I spoke with the same salesman twice, who then sold the system I was interested in to a gentleman, and knocked off a hundred dollars as well. Of course, I was offended that I hadn’t been offered the same deal, even though I asked if the price was negotiable. When I confronted the sales associate about it he stated (and I quote directly) “You snooze, you lose.” After speaking with another associate, I was able to locate the system at another store, and the managers of the two stores coordinated to have the item shipped. Only after I purchased the item did they tell me the item was slightly damaged, but would not affect the performance. I was upset, but a small “ding” in the speaker is something I could handle and the other store matched the price my local store sold it to the gentlemen for. Then the problems continued.
    They told me the product would be in by the end of the week, however, when it wasn’t, they told me it would be in by the next week. It didn’t come that week either, and I made two additional calls. The shipping store assured me they sent it out on a Tuesday. When it had not arrived by Monday this week, I called yet again. Nothing. I called Tuesday, and the store manager never called me back. I called the shipping store directly, who admitted they forgot to ship it altogether, and would ship it overnight. The general manager of my local store then called me (approximately 8 hours later) to tell me the store had sent it last week and the product should be there anytime. When I told him the other manager admitted he had forgot to send the item, he stuttered on about how he didn’t want it to upset me. In other words, he lied.
    The product did indeed came yesterday. The shipping store gave me a UPS tracking number, and UPS told me the package was signed for at 9:31am. I called Circuit City and guess what? They said they didn’t have the package. After I told them I spoke with UPS who verified they signed for the package, they magically called me back in five minutes to tell me they located it. I went that afternoon to pick the package up, and again, they couldn’t find it. Why? Because the shipping store packaged a speaker system in a television box, which looked as if someone threw it off a 50 floor building. The box was torn, ripped, dented in, beaten, and taped back together. The box was also so large, it wouldn’t fit in my car (though the speakers were actually quite small). I dread the condition I might find my stereo system in when I open that box today.
    I called Circuit City customer service and told them I would like a business address of a specific person to whom I could write a letter to, concerning the customer service I received. I waited on hold one hour (and yes, I watched my digital clock every minute of it). I spoke to three people (who claimed they were supervisors, and I couldn’t understand the first one at all), and the third person actually told me his manager does not handle calls, and would not give me his name. He stated they are not allowed to release any information other than that of the general customer service information listed on the website.
    I have worked for a Fortune 500 company and I know what good customer service is. I don’t expect the person on the other end to know everything. That’s when you say, “I don’t know, but I will find out for you.” And I have certainly never heard of witholding supervisor information from a customer, and simply telling them “That’s all we can do, okay?” With the manner in which I was spoken to and the way I was treated, I am appalled that I ever gave any of my business to Circuit City. I stopped shopping Best Buy when one person was rude to me a few years back. You always have a bad associate in the bunch. But apparently my Circuit City is a bunch of bad associates. I’ll be taking my business elsewhere, and have already shared that with friends, family and coworkers.
    I’m with you, Mr. Ivins. I’ll NEVER give my business to Circuit City again!

  16. regarding circuit city protection plan .. we bought one for $549.00 along with our $3299.95
    50 in Plasma TV in February 2006. The tv worked for two months … Circuit City sent a service tech to our home who I later found out was an unauthorized tech … it took five months before Circuit City offered us an exchange …. the new model no longer will fit in our custom cabinetry that was made for our original tv …. to boot they will only give us the value of the tv at the time we we returned the original tv … five months later … $500.00 less and they refuse to refund our $549.00 protection plan … even though they agree they do not have an authorized tech to work on tv’s that they sell …. Circuit City Corp says that there is nothing they can do for me ….

  17. Comp. USA says the computer has to continue to break in the same area for replacement. Go figure… Let’s say you bought a car and the engine gave out, then the transmission went, then the rear end started shaking etc… Duh, perhaps it’s a LEMON… However, to say that the drive has to go out 6 times before the computer is a LEMON is a JOKE… Comp. USA will go broke if they continue to treat customers this way…
    Gianni

  18. Phillip J. Scoonover
    President, CEO and Chief Executive
    Circuit City Stores, Inc.
    How can you possibly accept $17.1M for fiscal 2007
    when your customers are being treated like this?
    On February 26, 2006 we purchased a 50 Inch Plasma TV, model no. (LG 50PX1D) for $3,299.99, ticket no. 316402608104, at store #3164 in Salisbury, Maryland. We also purchased a specific TV mount for $403.99 along with a five-year ´┐ŻAdvantage´┐Ż Service Protection Plan for $549.99 (on the advice of the salesmen, D. Abbott). We purchased this plan in good faith and expected ´┐Żhassle-free´┐Ż certified service.
    This purchase was made after extensive research on purchasing a quality plasma TV with the correct dimensions. Our home had been recently remodeled and the family room fireplace and custom cabinetry had been made to fit the TV dimensions. The TV was professionally installed on March 6, 2006.
    On Friday, May 12th, 2006 (two months later) the TV lost its picture quality and the screen showed large black spots. We were unable to watch the TV. We called Circuit City´┐Żs Service Department on Monday, May 15th at 1-800-787-0750 and were given a call reference no. 5925646, confirmation no. IHR605220412 and DUC no. 5927591. We were instructed to call Appliance Unlimited, (Circuit City´┐Żs Authorized Service Provider) at 1-800-448-3997 to set up a repair appointment. Jim, the technician (410-587-4945) called back a few days later to set up an appointment. We were given ID No. 6106800.
    On June 6th, two weeks later, the technician arrived and quickly stated that the he needed to order a digital board for the TV. He told us that it could take a short time for the part to come in or up to two weeks. Two weeks pass and we call the service technician. He informs us that the part is on national backorder and that it could take up to another two weeks. We wait another two weeks and call the service tech again. He does not return our calls. We call Appliance Unlimited and talk to the secretary and she acknowledges that the service technician is having a hard time finding the part.
    We decide to call LG (the TV manufacturer) and they inform us that they have plenty of digital board parts. We then call Circuit City (Jesse, tv/salesmanager at the time) with the hope of having him help resolve this matter. It´┐Żs now been over two months that TV is unviewable. After a few more days of no answers, we call LG the TV manufacturer again and they inform us that Circuit City´┐Żs service provider ´┐ŻAppliance Unlimited´┐Ż is UNAUTHORIZED to work on LG TV´┐Żs. They will not sell Circuit City´┐Żs service provider the parts. We call Jesse, the TV manager from Circuit City and explain the situation to him and he acts odd when we explain to him that LG stated the service company that was sent to our home is unauthorized to work on the TV. We ask to speak with the store manager. Lauren Palmer/CSA #1 who offers no solution. We contacted Circuit City Corp. and they put us on hold for two hours.
    We felt deceived. Is this a scam or a tactic of Circuit City? We again contacted Circuit City Corporation and spoke with Marilyn Pando, and finally were given a contact ID Number 2205897. I never heard from Circuit City again. We contacted the Better Business Bureau. They were working on getting a replacement TV for us and checking into the unauthorized service provider issue. A few weeks later we speak with the store manager again, and she states that they are working on getting authorized service.
    On July 14th, after several months of misleading information from Circuit City and their service provider, we returned the TV to the store. We were issued an exchange for our original TV on July 31, 2006 under ticket no. 14150118491 only after the Better Business intervened. However, we did not take the 50´┐Ż LG exchange TV that was offered to us because of the unresolved service protection plan issue. In addition, by this time, our original model TV was no longer available and the exchange LG model was not similar in dimensions to our original TV. . We were told by store manager, Paul Renshaw/CSA #2 that we could wait a few weeks to see if any new models arrive while the service issue is being resolved.
    February 2007, we still have no TV. I again call Circuit City and speak with new store manager, Tracy Sgon/CSA #3, and return to the store to consider a different brand TV. This brand was a Sony 46´┐Ż LCD TV (Model No. KDL46XBR2), with similar dimensions as our original TV and was priced at $3,609.99. It was not a 50 Inch Plasma TV. We were however, willing to pay the difference between our $3,299.99 original purchase and this particular exchange TV, but when we arrived, Tracy informed us that we had only been authorized an exchange value of $2,800.00. We never agreed to this amount, especially when the original TV only worked for two months. She also informed us that she still had not been authorized to refund our service agreement fee, and stated that ´┐Żthe corporate office should not be selling those service contracts when they know that we´┐Żre not certified´┐Ż. We did not take the exchange TV. I called Circuit City Corp. and spoke with Amos Forman, and waited on the phone for over two hours, and was finally told that there was nothing he could do for me.
    On February 16th, 2007 we contacted the Maryland Attorney General´┐Żs Office of Consumer Affairs to help resolve the issue. As of March 3rd, the office had not heard from Circuit City or had returned their calls.
    On April, 9th, 2007 John Rekinburg, Circuit City´┐Żs new TV Manager calls to say that he has a different ´┐Żlower-end´┐Ż 46´┐Ż Sony LCD model priced at $2,249.99 and asked if we were interested. Since Circuit City had still not addressed the service protection plan issue, and the quality and value of their TV offer was continuing to go down, we informed him that we were not interested. We also told him that we sent our complaint to the Maryland Attorney General´┐Żs Office and were taking steps to file in Small Claims Court. A week or two later, other TV salesmen from Circuit City called to say that 46´┐Ż TV we ordered was in. We informed him that we did not order a TV.
    After a year of explaining our case over and over again to different store managers, TV sales managers, customer service reps, making numerous telephone calls to the corporate office, typing emails, and sending many letters without resolve, we feel victimized. The Circuit City ´┐ŻAdvantage Protection Plan´┐Ż states that it provides you with the best product coverage and customer service available. ´┐ŻRelax with a peace of mind´┐Ż only seems like an ´┐ŻAdvantage´┐Ż to Circuit City. I have spoken with hundreds of people on the internet that seem to be going through the same problems with Circuit City. The consumer should be made aware of this.
    We would like to add that Circuit City is misleading the average consumer, with the intent to deceive. This is an unfair and deceptive business practice. They sell a service contract knowing that they can send anyone (an unauthorized service tech) to your home and say that they ´┐Żattempted to fix it´┐Ż, or actually fix it and make matters worse, and then after weeks and months of the consumer trying to get this resolved, they begrudgingly offer you an exchange that ´┐Żis similar´┐Ż ´┐Ż a new item with far less value or even worse, a TV that someone else returned, and then offer you nothing for the service contract fee.
    Circuit City sold us a fraudulent protection plan. It is unacceptable that they are now only offering ($2,659.96)? exchange value for a $3,299.95 TV that only worked two months. As a customer, we have done everything possible to resolve this issue in a patient, timely manner. Circuit City´┐Żs customer service policy prolonged this situation by not being honest and forthright from the start.
    In the interest of consumerism, we now expect Circuit City to refund the full amount of our original TV purchase, in addition to the service protection plan refund. If this cannot be resolved we will have no choice but to file in small claims court for the total amount of the TV, the protection, plan, the custom mount, installation and repairs, and possible attorney fees.

  19. this is how i get back at these stores:
    sweet talk the salesman into buying a “service-plan”
    WITH the lowered negotiated price, come back the next day and get a refund on the “service plan”. This way you save so much.

  20. I think it should be obvious by now that Circuit City is a slimy organization that no intelligent consumer should patronize. The stories posted here are but the tip of the iceberg. And, remember, this is a company that fired several thousand of its employees simply because they were paying them more than they wanted to pay them. The employees weren’t even allowed to accept lower wages in exchange for keeping their jobs.
    With fine companies such as Costco selling very good electronic products with superb warranties and excellent prices and a doubled manufacturer’s warranty, why would anyone take a chance on Circuit City?
    A final point: It seems obvious by some of the postings here that Circuit City may well be engaged in unfair and deceptive trade practices. I suggest that all victims seek the advice of a very good lawyer who knows how to file class-action suits.
    Good luck.

  21. Wow…we just left CC and I was actually contemplating purchasing two LCD/Plasma TVs from them…I should have suspected things might not be on the up & up…I bought a computer from them during my first year of law school and it failed miserably during first semester finals and I nearly had a nervous breakdown trying to get it repaired despite spending $300+ dollars on an extended service plan…some things never change I guess…

  22. Circuit City DOES NOT honor their ‘Lemon Guarantee’ in their (dis)Advantage Plan. Provision is third repair = replacement options:
    Repair 1: Complete DLP Engine replacement
    Repair 2: New Digital Boards (2) replacement
    Repair 3: Complete DLP Engine replacement needed again –
    CC says Repair One and Two are same repair because they happened within 30 days of each other – a provision that is NOT in their contract.
    DON’T BUY THESE PLANS –

  23. I can add some real insiders knowledge about Extend Service Contracts. I worked for Warranty Corp of America, and I must say. They’re offering a service, but the reality is, it’s really not a good deal for the customer in some instances. WaCA is headquarters is located in Norcross, GA about 20 mins from Atlanta, GA. The Company was brought by http://www.asurion.com/. However, the owners of the Company who sold it now owns a Health Care Company just up the road from WaCA. The Norcross, GA Warranty Corp of America location has two clients: Target and Office Depot. They have a Tech Center that has Call Agents who support Office Depot Computer Support issues and Target Agents that support General Items. They have 3 Warranty Plans they sell through Target and Office Depot. 1 is a replacement plan, 2 an Extended Service Contract, and a DOP Plan ( Date of Purchase). Now keep in mind: The plans don’t pay over the value of the purchase price of the item purchased, and the ESC does not keep in until your OEM ( Manufactures warranty ends), and if you try to call in before the OEM Warranty ends, WaCA will tell you to contact the Manufacture. So yes you have a 2 or 3 year Extend Service Contract you purchase at Target and Office Depot, but the reality is: It’s no good to you until after the OEM Warranty has expired. Now with that said, in many cases, the majority of people will lose the Warranty Contract (ESC) over time, thus you lose you money and the WaCA has just made a high profit yield. So if you do buy a ESC for Office Depot or Target, do call in and register the product with the WaCA company so in the event you lose the paper work, they will have it noted in their WISE system, therefore; you don’t lose your investment in the ESC you purchased from Office Depot and Target who are Dealers for Warranty Corp of America Headquarters in Norcross, GA. Also, if you have a problem with getting a issue resolved with the WaCA about your ESC, do demand to speak with a supervisor or manager and demand nothing less than a yes from them. They will do it, especially if you say you will write a letter to the upper level management. They have a Yes Fund set aside that is use for customers that want take no for an answer. Also, WaCA will try to avoid giving you a check if a ESC cannot be fixed. Instead they try to offer you a Gift Card from Office Depot or Target. Demand a Check or better yet, a Cash Buyout which is the wording they used. Another thing, always write a written request to WaCA when trying to get service on an item that needs attention to when your ESC is about to run out because it could mean the difference between your contract being extend another month if WaCA does not respond in a timely manner in resolving your ESC problem. The Conclusion: Don’t buy a Extend Warranty from Target or Office Depot if the OEM manufactures warranty covers the item for 2 years of more, and if the item is under a 100 dollars don’t waste your money on buying an Extend Service Contract from Office Depot or Target. Waste of money….

  24. In response for the above…. Oh Great! So my two ( Used to be favorite) vendors screw us all?
    I just started into the fight and fill out the paperwork with the St Atty Gen, Fed Trade Commission, and BBB on Amazons Protection Program. I like you,,,,,, above in blog, bought mine hoping to have a place to help me should the unit go Tits Up. Oregon Scinetific was a sweeet heart and replaced the unit 3 (yes THREE) times. They no longer make the unit and have discontinued making it because it was such a headache. So, they can no longer replace or repair it. However it’s not all the way done thru the years manufacturers wararenty.. Amazons Protection plan flat REFUSES to touch it even if it goes a year past the original date.
    Hold on here I said.. I bought the 2 year plan right.. She (CSR) replied yes mam you did but since you were so nice to tell me they replaced it 3 times and gave you those units I will comment the acct and you will most likely wont be able to use your warrenty for any replaced past the first. Now does this smell like something your dog does in the yard or what?
    I firmly canceled my new order for a replacement of another type of unit because of this treatment and am going to buy it at Target.. But read your info and it said they kick you around too. Where the hell do I buy a water proof MP3 player that will stand by their warrenty.
    Can any of you put me in the right direction?
    My behind is sore from kicking my self the first time…
    Blessings in advance!
    Donna

  25. The service contract that SONY sells is not worth the paper that it is written on. I purchased a 50 inch SONY TV two years ago along with the extended service contract and the lamp burned out last week. SONY claims that the contract does not cover lamps or bulbs, so I am stuck with paying for it. I’ll never but another SONY product.

  26. I just bought an iPod from a store and got the 2 year extended warranty for $35. When I got home, I read through the brochure and discovered a minimum of two pages of things the warranty DOESN’T cover – including if the product breaks for no apparent reason, wear and tear etc. I was left wondering what it actually COVERED! (I’m still not sure, especially since the salesman told me if it breaks for any reason, they’ll replace it – according to the fine print in the brochure, this is NOT the case!)
    Luckily there was a 14-day cooling off period so I went back and cancelled the warranty. I still have the one-year warranty with Apple and if I want more, I can shop around.

  27. I’m laughing (but it’s not actually funny) when I read the horror stories about Circuit City (no wonder they’re going out of business). The first (and last) time I went into Circuit City, to look for a big screen TV, I asked the salesperson (a young guy, no offense to youth) if he could give me some help regarding how different makes and models compared. His response was, “they’re all pretty comparable — but whatever one you choose, you NEED the extended protection plan that we offer.” It was the poorest sales approach that I had ever heard. I left and never returned.

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