‘Tis the season for consumer
media reporters to question whether
extended warranties and service
contracts are good or bad for consumers.
This is also the time of the year
when the Bureau of Electronic and
Appliance Repair (BEAR) gets calls
from consumers, and reporters, questioning
the legitimacy of service contracts.
The upshot of most of the complaints
we get is that businesses are doing
this for a fast buck with no real
intent to help the consumer protect
their product.
The service contracts industry
has grown tremendously over the
last five years. In fact, registrations
of new service contract sellers
have increased 25 percent from 2005
to 2006. But the industry will continue
to be successful if it stays legitimate.
Sadly, there are some contracts
hat barely meet the standard of
providing a service, which unfortunately
taints the entire service contract
industry.
“In order to keep consumer confidence
in service contracts from eroding,
we will have to work together,”
said BEAR Chief Brian Stiger. “BEAR
can provide regulation and ensure
compliance, while the industry maintains
and improves a good, consistent
service reputation with consumers.
Neither of us can do it alone.”
We all know that consumer and
tech reporters in the past have
written more negative than positive
stories about service contracts,
but can good practices turn that
around? The San Francisco
Chronicle recently included a piece
describing how big ticket items
with extended service agreements
might be a smart decision.
However, the article also mentioned
Consumer Reports as saying they
are not worth the money and usually
don’t cover much.
PC World wrote a very nice piece
explaining that more than 70 percent
of the 2,031 people surveyed reported
being pleased with the service contract
they purchased. The article
further explained that 90
percent of those who used the warranty
said they either got the service
they needed or a replacement product.
Still, there needs to be more
success stories printed on the extended
warranty service industry, and providing
good service is the best way to
make that happen.
Here are some quick tips on how
the industry can provide consumer-friendly
service contracts:
• Present a well-written, easily
understood contract that has been
reviewed and approved by BEAR.
No service contract can be sold
unless it has prior approval from
the BEAR. It’s the law!
• Consider having your service contract
reviewed by legal counsel to assure
the rights of both the consumer
and your business are not being
overlooked.
• Be honest with your customers.
Explain the contract to the consumer
before he or she purchases it, and
do not over sell or exaggerate.
A common misleading phrase is “everything
is covered, you don’t have to worry
about a thing.”
• Let the consumers read the contract
thoroughly before buying and explain
that they are entitled to a 30-day
cancel with a full refund.
• Call BEAR when you see someone
who is unlicensed or using questionable
contracts or practices. These practices
hurt the entire industry’s reputation.
• Visit the BEAR’s informative Web
site at
http://www.bear.ca.gov/, then
share valuable information with
fellow staff members so everyone
is informed.
• Keep connected with the issues
and regulations by visiting Service
Contract Industry Council’s Website
(http://www.go-scic.com/),
Professional Servicers Organization
Council (http://www.psoca.org/),
http://www.warrantyweek.com/
and many other great organization
and industry supporters.
Bottom line, the service contract
industry needs to be aware of the
bad marketers and report questionable
practices to the BEAR so that a
few bad players don’t taint the
rest of the industry. We all need
to work together to keep this developing
industry a value to consumers.
Article comments and suggestions
can be sent to
Dale Chessey, emails at
dale_chessey@dca.ca.gov
