The extended warranty racket

March 20 2010 by Ellen Roseman

I hate it when stores push extended warranties on everything they sell. Appliances and electronics should last longer than the basic one-warranty that manufacturers provide. And if they fall apart after the purchase, consumers shouldn’t have to pay to replace them.

The Ontario sale of goods act says consumers have a right to expect reasonable quality in the merchandise they buy. This implied warranty can’t be nullified in a contract. So, how can companies argue there’s no coverage of defects after a limited time period?

Check out Bill’s story below. His HP laptop computer stopped working 22 months after purchase, but he had no extended warranty. The manufacturer finally agreed to replace it, but only when I asked the retailer for help.

18 comments

  1. Bill

    Mar 20 2010

    I was wondering if you can help me with a problem I have with HP computers.

    I own an HP Pavilion laptop, purchased on March 26, 2008, for over $1,100.

    I have not used it for more than 100 hours for the last 22 months. (This is the second computer in the house and was used for 4-5 hrs monthly.)

    Suddenly on Jan. 21, 2010, while I was reading the news, the computer lost all power, all lights were out and it was not responding to the start button.

    I took the laptop over to a repair shop where they tested the power cord and the AC connection. They concluded that the “system board” is not functioning.

    I contacted HP consumer support on Jan. 24. I was told that since my 1 year warranty had expired, there was nothing they could do to help me.

    I tried to explain that many other similar HP laptops had their warranty extended to two years due to “system board” failures. The decent thing for HP to do was to repair my computer’s “system board” free of charge.

    Since I was not able to resolve the issue through HP consumer support, I have emailed to HP twice. The first went to compliance@hp.com, who responded with the following.

    “Hello and thank you for your message. I am the intake manager for the Corporate Compliance mailbox in the Ethics and Compliance Office. I am forwarding your e-mail to the Executive Customer Relations team (ECR), copied on this message, for their response and action.”

    ECR has never got in touch with me.

    On Feb. 4, I sent an email directly to ECR (ecr@hp.com), explaining my problem and they ignored me once again.

    Today, I thought you might be the only person that can help me with my problem. I read your column every Saturday in the TORONTO STAR and I know that you can persuade HP to listen and respond to my consumer complaint.

    Thank very much for your help.

  2. Bill again

    Mar 20 2010

    I bought the computer at Staples in Pembroke, Ontario.

    For your information, after HP read my email to you, someone called to offer me a repair to my computer by HP for $299 (I assume taxes shipping/delivery are extra).

    I did not accept his offer. I do believe that HP should repair or replace the computer free of charge to me.

    I do hope that you will be able to persuade HP to accept their responsibility.

  3. Pete Gibel, Staples spokesman

    Mar 20 2010

    Hi Bill. My name is Pete Gibel and I am VP of Merchandising with Staples Canada.

    Ellen passed on your message to me. I was wondering if you had any of our technicians in our Pembroke store look at the computer. We have a really good team there. Let me know.

    If not, we can arrange for them to look at it and see what they think.

    ————————————————————

    Hi Bill. As promised, we have completed the diagnostics. It looks like the computer indeed needs a new motherboard and a new power cord.

    Cost of this, including installation, is $455, so the offer from HP at $299 is cheaper than what we could do it for.

    My fear is that if we fix the computer, there is no guarantee that something else will happen in the next couple of years and that would cause unhappiness again.

    I am happy to speak with the VP of Sales at HP and see if they’ll help. but I think the odds are still 50/50.

    I’d recommend a different approach. We have a new HP computer that has similar specs to your old one. Our price for that is $647 (it always amazes me how fast technology changes).

    I’m proposing we split the cost. Staples could reduce the price by $200, I’m pretty sure I could get HP to put in $200 and you would have a new computer for $247. Our store can show you the computer if you want to explore that option.

  4. Bill’s response

    Mar 20 2010

    Good morning Ellen. I have proposed to Pete to use his proposed $400 discount to purchase an HP desktop computer (as you can understand, I do not trust HP laptops) and Pete has accepted my proposal.

    This afternoon, my wife and I will go over to Staples to look for a desk top.

    Unfortunately, the poorly designed laptop produced by HP will cost me more money ($250 or more, depending on what we will find at the Staples store). Or I could have refused Staples’ offer and lost 100% of my money.

    There is no logical explanation why a 22 month old computer used for not more than 100 hours fails.

    Obviously, the suppliers of the motherboard and the power supply, in order to offer an attractive price to HP, have reduced quality to the absolute minimum.

    In my computer’s case, HP has charged me a high price for an inferior product.

    The other problem with HP is that they have ignored my emails. To me, that indicates HP does not care about their customers at all.

    On the other hand Staples (after you got involved) has tried to satisfy a customer, despite the fact that Staples only sells HP products.

    The bottom line is that unless companies’ names are exposed to the public (by good reporters like you), customers are going to be taken advantage of.

  5. HP’s response

    Mar 20 2010

    Dear Bill,

    Thank you for taking the time to contact HP regarding your HP Pavilion dv9730ca Entertainment Notebook.

    As a company that greatly values customer service and satisfaction, please be assured that we take the steps necessary to understand the root cause of situations such as the one you have experienced, and work to ensure they are not repeated.

    Please accept our sincere apologies on behalf of HP for the inconvenience you have encountered regarding your notebook motherboard issue.

    I understand that your notebook is out of warranty and this does require you to pay an out of warranty fee for repair unless you have purchased an extended warranty.

    As a customer satisfaction gesture, we will make in your case a one-time exception and replace your notebook for a comparable desktop computer.

    At HP, we continually strive to provide the best Products, Service and Support for our customers and are always looking for ways to help improve the quality of your overall experience.

    Our Technical Support staff is available 24/7 by contacting us at 1 800 HP INVENT or by visiting on the web at http://www.hp.ca.

    We have provided the shipping instructions below on where to ship your current malfunctioning notebook.

    Once we have received the unit, we will process and release the replacement desktop computer.

    We appreciate your business and look forward to your continued patronage.

    Sincerely,

    Executive Customer Relations Team
    Hewlett-Packard Canada

  6. Ralph

    Mar 20 2010

    We all know Hewlett Packard as a major technology corporation with a long standing reputation.

    It seems that recently they value their reputation much less than we’d expect.

    For the past couple of years, HP has been marketing a tablet style notebook in an attractive size and configuration to personal users. It’s quite popular among college and University students. Unfortunately, most of them can little afford to throw out $1,000.

    There’s overwhelming indication on the internet, and on HP’s own user forums they host online, that thousands of consumers are experiencing similar heat-related failures on these TX1000 and TX2000 series.

    The difficulty is that so many of these are failing shortly after the 12 month warranty. The pattern of initial failure seems to be ranging from about 14 months to 18 months.

    HP finds themselves in a seemingly legal position to do nothing special about these after-warranty failures, for which their repair quote is $400 plus taxes.

    I have heard that even after having used that service, owners continue to have a PC prone to failure.

    HP acknowledges no manufacturing defect – and therefore there’s no indication that a repaired product will be any more reliable than the original. They warranty their repair for 90 days.

    While legally they are not breaching their contract to support new products for a 12 month warranty, what should be their ethical obligation?

    People don’t expect to pay $1,000 for a major brand PC and get something that’s not sustainable beyond 18 months.

    That seems to be the problem, even if the consumer is willing to pay their exorbitant repair rate.

    My daughter bought a TX2508CA for college at Best Buy. Because I am a technician, I made the many contacts with HP on her behalf.

    I have it all well documented, but nothing came of it, even after I sent an e-mail to their public relations address. The TX has failed now 4 times after simple repairs.

    HP may replace the motherboard for $400, but I do not believe it’s worth that cost, as the design remains unreliable without a recall and root cause fix.

    To get a sense of the scope of this:

    — Read a few of the comments among the 2,400 signatures on this petition: http://www.petitiononline.com/deadhptx/

    — Simply Google the keywords: Dead HP TX

    — Read any of hundreds of entries on HP’s forums related to TX notebooks

  7. Caroline Hester, HP Canada

    Mar 20 2010

    We’ve spoken to Ralph and found the repairs to his unit were made by a non-HP authorized 3rd party repair centre.

    HP has a warranty policy in place that’s in line with industry standards to protect customers. Under this policy, any repairs or replacements need to be made at an HP service-authorized facility.

    Because of this situation, HP does not have any record or assessment of his previous repair history.

    To repair his unit at the current time, which is outside of the warranty period, will cost $299.

    We’ve explained to Ralph how the process would work if he wants to repair the unit through HP Service and he said he would think about it and get back to us if he would like to go ahead.

    There have been no identified product quality issues with the TX series he owns.

  8. Al

    Mar 21 2010

    I bought an extended warranty through Staples for my daughter’s Sony laptop. It failed twice in the first year.

    The first was a faulty hard drive, which was replaced. The second was a faulty wireless device, which Staples claimed was a software issue. It tried to charge me $90 for the repair after I came to pick it up. No mention of the $90 before then.

    When turned on at the store, the computer was still not working and the problem was deemed to be a hardware issue (I’ve worked with hardware for 20 years!). They (Sony, I guess, since still under their warranty) replaced the faulty device.

    Now in the second year, the computer will be going into Staples once again. The issues now are a battery that holds at most a 10 minute charge (I was told this would be replaced when I was “sold” on the extended warranty) and a non-functioning left mouse button (the one in the laptop).

    I’m really hoping I can report a pleasant experience from Staples when it happens. Each time you bring in the computer, you have to back up all of its contents since it gets reformatted. That takes time and is a major pain — and this for someone (me, not my daughter) who is a techy to some degree. I’ll report back in a month or so.

  9. Lior

    Mar 21 2010

    HP laptops going bad in less than 2 years? The hell you say?!

    Truth is if people are looking to buy another brand, consider purchasing the extended warranty. All the big computer technology corporations – Dell, Acer, HP, Lenovo, Toshiba, Asus, Sony, and yes even Apple (to all you kids who think your Macbooks are special, they’re simply re-badged Asus notebooks with a little bit of Apple “flair”) outsource the manufacturing of their products to Taiwanese companies who in turn have manufacturing facilities in countries like China, the Philippines, Indonesia, and Malaysia.

    So when you ask what differentiates a Dell from an HP or a Sony from an Asus, it simply means it was likely designed by the same company and shares identical components. The only thing that’s different is the brand name attached to the product.

    As someone who started on laptops in the mid-1990s, I can attest that the quality of notebooks in recent years has actually improved. This is a big change from the beginning of the decade and even the last 5 years when the quality was highly dubious.

    Sometimes, the extended warranty from the manufacturer is quite useful. For example, I have a 4 year old Dell desktop that needed on-site service and Dell always dispatched someone without giving me issues. In fact, when the warranty on my laptop runs out this coming summer, I’m strongly leaning towards purchasing the extended warranty from Dell. The new systems are so cheap these days that it really doesn’t make sense fixing them if anything major goes bad.

  10. Lior

    Mar 24 2010

    The stupidity of some Rogers employees never ceases to amaze me. In this particular circumstance, the company’s policies are clear – why not learn them? Why yoyo the customer back and forth? If they’re that incompetent they shouldn’t be working there.

    $1.99 a month to cover all the receivers in the house is a definitely on the low side. One receiver is reasonable but not 6 of them. It’s just not financially feasible for Rogers if even one of them goes bad, especially the HD boxes which are more costly to replace.

  11. Wendy R

    Apr 2 2010

    FROM THE MOM of A FORMER EMPLOYEE AND BEST BUY FAN:

    I agree with many of the comments here, but found the HP one particularly interesting. A family member worked at the Call Centre Tech Support for 2 years. He finally had to leave, as he became aware the the party line he was being given was to no avail.

    It occurred to him that if he remained with them, in good conscience he would be GIVING away more merchandise than the complaints. (When he felt it was needed, he did; and expressed this to a Company Vice President on Christmas Eve 2005, shortly before leaving the Centre.)

    About the HP computers: Last year, we purchased 2 computers at Best Buy; one of them an HP, the other an Acer Netbook. We have NOTHING but good to say about the service; a family death interrupted decisions about an extended warranty. However, our local Best Buy has gone out of their way concerning our HP Laptop (even though the tech brother had had doubts about its purchase, but he is a MAC person).

    All in all, of the 3, I would heartily say that Best Buy is the one working hardest on service at the local level. Two weeks ago, I was told mine would have to be sent away; our local department manager saved the day (and Acer reputation) in about 40 minutes; is presently doing the same with HP.

    I doubt we will be buying another HP, but WOULD buy at Best Buy.

    And as to Dell extended warranty, we are now deciding whether to reassemble the 2000 Dell desktop (been around the country) sitting in my rec room. Been to the grandfather and two universities, three sets of report cards and is STILL creaking along.

    Bell has a hard time believing the Internet works with it. Sorry, it does; and with a 2005 one with extended warranty, owned by their recently deceased pioneering grandfather. He had NO hesitation (age 93) about phoning Dell about honouring their warranty. It was only when Future Shop in 2008, when he was suffering another series of heart problems, sent out a Geek Squad rep that we found an issue. They replaced the hard drive without even giving him External hard drive, and to our dismay, charged him $500 to do so. (However, it still works too).

    My father went for 5 months without the valuable Family History research that he could not access on the hard drive. We had questioned why Dell would charge him $500 for replacing a hard drive. Last time my son saw his grandfather in March 2009, he ran out and got an external hard drive for $50; and never DID complain to Dell and Future Shop although he meant to. My dad was thrilled that he had access to his research. And Future Shop lost a generation of customers (the third). Not Dell, but Future Shop.

    As this generation gets older, some of them are beginning to understand and respect values of predecessors. Watch out, Future Shop.

  12. Rob

    Jun 4 2010

    I used to work in the electronics manufacturing industry for the company that makes most of the brands listed above (it’s not a Taiwan based company by the way — the Taiwan company is HonHai/Foxconn and HP doesn’t use them).

    People have some unreasonable expectations. HP computers use the same technology on their motherboards as other brands and are made in the same factory.

    Switching brands to Dell or Apple does not guarentee better design life. Design life is not a matter of cost so much as a matter of heat and lifetime of the chips.

    Many of the new chips used in designs such as computers and set top boxes (like the PVRs) run hot and if you do a MTBF calculation to estimate how long before the chips will fail you get an average number of ~5 years. Some units will last much longer and some much shorter.

    This is just the reality of any high tech device that uses a high power processor. Brand and manufacturing company make no difference to this type of failure.

    The introduction of a law called RoHS that required the boards to be built without lead solder has also reduced reliability of consumer electronics in the last few years.

    If you want your electronics to last longer, keep them cool — not in a cabinet with the door closed on top of other hot electronics.

    Also consider buying devices with less processing power, as they tend to run cooler and the reliability calculations usually suggest a longer design life.

  13. Durk

    Aug 5 2010

    I am having a hard time with the Staples store in Woodstock. Every time I buy something, they ask me if i want an extended warranty.

    When I say no, they try to persuade me to get one anyway. I had one salesperson get very rude and angry at me because I refused.

    I complained by e-mail to the head office of Staples Canada, but never received a reply. Even cheap little things like a cordless mouse supposedly require an extended warranty.

    Why does a customer have to be subjected to verbal abuse when he or she refuses the warranty?

  14. Simon

    Mar 14 2013

    SO i find this attitude regarding warranties interesting. You said at the beginning of the article (applying to Ontario) that clients can expect reasonable quality in their purchases.

    This is true and that is why it is mandatory that manufacturers offer a 12-month warranty on all new purchases. This is to protect the customer, the retailer and the company itself.

    So what is a reasonable time period? Bill’s computer dying after 22 months is beyond a reasonable time period and as a retailer, I wouldn’t cover this product.

    This attitude holds the store or manufacturer responsible for a undetermined amount of time. Does this mean that if your TV dies after 5 years, the retailer has to replace it?

    Years ago, the average TV came with a 3-5 year warranty standard from the manufacturer. However, a 27″ TV would cost more than a 60″ today — and one of the reasons for that was to cover the cost of the warranty.

    I have talked to numerous suppliers over the past 10 years about their products and the same thing is true for all manufacturers. It is cheaper for everyone to offer a base 12 month warranty and allow outside companies to sell extended warranties.

    These outside companies do it better, cheaper and more efficiently, allowing the manufacturer to sell a TV for less. We could go back to offering 60″ HD TV’s for $5,000 and throw in the cost of a long term warranty, or we can sell that same TV for $1.000 and a extended warranty for around $200 that still offers the same degree of protection.

    This is why extended warranties are made available and yes, stores do make money on them. Otherwise, what would the point be?

    I think the retail industry in Canada has taken some very unfair hits in the last few years. The end result is that the public doesn’t go looking for great deals, but just expects them.

  15. Shawn

    Oct 16 2015

    ^^ Hit the nail on the head.

    Some people are completely unreasonable and their expectations are too high.

    When you boil it right down, the only one who is responsible for the product is the person who owns it.

    And if you’re too lazy or ignorant to look after your own stuff, then you shouldn’t own it.