Sears Liquidation Have You Worried About Warranties? BBB Offers Advice on Purchasing Extended Warranties

When a retailer closes their doors, consumers are often left with more questions than answers. What about products or services you’ve paid for but haven’t received? What about your unused gift cards or reward points? What about your guarantees and warranties?
October 31, 2017

Kitchener/Toronto – Sears Canada recently announced they would be closing 74 stores across the country. While we are left to mourn the loss of a cultural icon – and roughly 12, 000 jobs that go along with it – many consumers are wondering what will happen to the extended warranties they’ve purchased.

In a press release, Sears has stated they are no longer, “…in a position to honour Sears Protection Agreements to customers." Consumers who purchased an extended warranty between September 18, 2017 and October 18, 2017 will be given a full refund; however, all other extended warranties are officially null and void. Gift cards will remain valid through the liquidation sales.

BBB recommends consumers with extended warranties contact manufacturers directly about their options, as most new products do carry a manufacturer’s warranty. Manufacturers may also be able to offer extended solutions for your items. If you are looking to receive a refund on warranties you have already purchased, contact the trustee involved in the liquidation. This can take a long time, but it remains the best option to recover your money.

Warranties are generally only valid as long as a company is operating, but are they worth it? With the holiday season fact approaching, extended warranty sales pitches will not be far behind. BBB offers the following tips for deciding whether to purchase an extended warranty:

1.)   Find out if there’s a manufacturer’s warranty. Electronic equipment and appliances usually come with a free manufacturer’s warranty, often for one year, that generally covers normal wear and tear. Buying with a credit card can sometimes extend the manufacturer’s warranty as well. Check with your credit card company to see if they offer a warranty protection plan.

2.)  Ask when the extended warranty coverage starts and ends. Some extended warranties take effect the day of purchase, while others are effective only after the manufacturer’s warranty has expired. Consider extended warranties that start after the manufacturer’s warranty ends. It will help you avoid paying for double coverage.

3.)  Pay attention to what is covered. Ask for a copy of the extended warranty policy and take time to review it thoroughly before making a decision. For example: a good warranty on an electronic device should cover drops and spills – two of the most common causes of damage. If you are unclear about the terms of the warranty, ask the retailer or manufacturer for clarification.

4.) Inquire about what is not covered. Your warranty coverage should not have a large number of exclusions. If you have to pay out-of-pocket for certain repairs, or if only specific types of damage are covered, the warranty may not be worth purchasing.

5.)  Understand your product’s lifespan. It might not make sense to purchase 10-year coverage for an item that typically lasts five years. Consider the cost versus the reliability of the product. Most extended warranties are 10% to 20% of the sales price. Anything above 20% might be too much.

6.)  Research the company’s background. Review the company’s Business Profile on What do their Customer Reviews and complaints indicate about their business? Are there any indications that they might not honour your warranty? Does the company seem like they could go out of business? Find out everything you can about the business and their practices, prior to making a commitment.

7.)  Keep your receipts. Retain all receipts, product information, documents relating to product issues or claims, your manufacturer’s warranty, your extended warranty, and the company’s contact information. This is paperwork you want to have easily accessible in the event of unforeseen circumstances.

The validity of any outstanding warranties depends on a number of factors. If a retailer goes out of business, consumers may be able to rely manufacturers or third parties to manage their warranties. If a manufacturer goes out of business, consumers may be able to rely on a warranty from the initial retailer. In other cases, extended warranties and service plans may be provided and administered by third parties and will remain unaffected by a retailer or manufacturer closing its doors.

For more information on shopping Sears Canada liquidation, click here. For more information on what to do if a company is closing, click here. For additional consumer education resources, visit