Arlington, VA- November 28, 2007 - Stop before you throw away those contracts or receipts this holiday season and take the time to read the fine print on extended warranties, service contracts and return/exchange policies. It may end up saving you money.
A new Better Business Bureau (BBB) national survey conducted by national market research firm Kelton Research finds that nearly half (46 percent) of Americans admit they do not read service contracts and more than four in ten (42 percent) do not look at the extended warranty policies that come with their purchase.
Extended warranties and service contracts are popular with the American public. According to Warranty Week, an online industry newsletter, consumers are expected to purchase approximately $1.6 billion of extended warranties and service contracts on PCs, consumer electronics and major appliances this holiday season.
“There’s an on-going debate about whether extended warranties and service contracts are worth the up-front cost,” said Steve Cole, president and CEO, Council of Better Business Bureaus. “The bottom line is that consumers need to make sure they completely understand the terms and weigh the value of purchasing one versus the potential need for repair or replacement over time.”
In addition to extended warranties and service contracts, surprisingly, nearly three in ten (29 percent) adult consumers don’t carefully read return and exchange policies when making a purchase in a store or retail outlet.
“The number of people who don’t read return and exchange policies carefully is concerning,” said Cole. “Though they are commonplace, not every retailer has the same policy and some establishments even implement separate policies around special sales and holidays.”
Prior to the 2006 holiday season, the National Retail Federation (NRF) released a survey indicating that more than one in three consumers (37.6 percent) were expected to return at least some portion of their holiday gifts. And, in a more recent survey released earlier this month, the NRF found that consumers will not see a drastic shift in holiday return policies this year, with four in five retailers (81.4 percent) implementing the same holiday return policy as last year – while 15.3 percent will tighten their policies (vs. 25.0 percent in 2006) and 3.4 percent will loosen policies (vs. 4.8 percent last year).
Added Cole, “We encourage consumers to carefully read and make sure they understand any and all policies that come with their purchase. In the long run it can save them a lot of time and money.”
BBB commissioned the survey just prior to the holiday shopping season and is advising consumers to take the following steps to help them shop wisely:
For extended warranties & service contracts:
· First, read the terms of the warranty or contract carefully before purchasing.
· Take your time before buying one. Many extended warranties and service contracts don’t have to be purchased at the point of sale and can be purchased at a later date up to a specified period of time.
· Make sure you understand what the policy covers (parts, service, shipping, etc.) and be clear about what is covered under accidental damage versus product failure.
· Anticipate and calculate what it would cost for average repairs over the specified time period of the contract and compare it to the total cost of the service contract. If the product has a track record of not breaking down or needing average repairs over that specified time period, then the service contract could end up costing more money.
· Make sure you don’t duplicate coverage. Some protection may already be covered for a specified period of time under what is known as “implied warranty” depending on state laws. And, sometimes you may even be covered for a certain period of time through your credit card if you use it to purchase the product or service.
· Be sure to understand the cancellation terms. Some state laws require a "Free Look" period, which allows you to get a full refund if you change your mind within a specified period of time. Some contracts can be transferred to a new owner.
· If you choose to purchase a service contract, make sure to keep the service contract paperwork, receipts, and all maintenance records together.
For returns and exchanges:
· Make sure to keep receipts. If giving a gift, ask for a gift receipt and enclose it with the present.
· Read the retailer’s policy before you purchase products. Make sure you understand whether you or the recipient of your gift can get a refund, exchange or store credit for unwanted merchandise. Also, if returns are permitted, ask what procedures and timeframe need to be followed.
· Understand what the return policies are for on-sale and clearance items, which may be different than merchandise sold at full price.
· Don’t remove electronics or similar products from their boxes before wrapping because the original packaging may be required for a return.
· Some merchants charge a restocking or "open box" fee for returns of electronics products or large-ticket items. Ask if that is their policy.
· Be sure to look for return policies when buying online or from catalogs. Sometimes merchandise can be returned to a store; otherwise, you may be charged a shipping fee to return or exchange an item.
About Survey Methodology
The Better Business Bureau Survey was conducted by Kelton Research between November 5th and November 8th using Random Digit Dialing of both listed and unlisted numbers. Quotas are set to ensure reliable and accurate representation of the total U.S. population 18 years of age and older.
Results of any sample are subject to sampling variation. The magnitude of the variation is measurable and is affected by the number of interviews and the level of the percentages expressing the results.
In this particular study, the chances are 95 in 100 that a survey result does not vary, plus or minus, by more than 3.1 percentage points from the result that would be obtained if interviews had been conducted with all persons in the universe represented by the sample.
BBB is an unbiased non-profit organization that sets and upholds high standards for fair and honest business behavior. Businesses that earn BBB accreditation contractually agree and adhere to the organization’s high standards of ethical business behavior. BBB provides objective advice, free business BBB Reliability ReportsTM and charity BBB Wise Giving ReportsTM, and educational information on topics affecting marketplace trust. To further promote trust, BBB also offers complaint and dispute resolution support for consumers and businesses when there is difference in viewpoints. The first BBB was founded in 1912. Today, 128 BBBs serve communities across the U.S. and Canada, evaluating and monitoring more than 3 million local and national businesses and charities. Please visit www.bbb.org/us for more information about BBB.
Reporters and journalists may contact Alison Preszler, CBBB Media Relations Specialist CBBB’s Media Relations Specialist or call 703-247-9376 to request an interview or additional information.