I purchased a cell phone at Future Shop in 2010. This was already an expensive purchase because the previous cell phone wasn’t working and the repair option was more expensive than the purchase option. Due to this, I was talked into buying what the guy referred to as ‘insurance’ for my phone, Future Shop calls it a PEP (product exchange plan) Warranty. Now, a year down the road I feel a bit misrepresented because I was under the understanding it could be cancelled (I just didn’t realize it had to be done within 14 days of purchase).
I’ve never needed the warranty; the phone never broke nor was it lost, nothing. I did, however dislike that phone model immeasurably and finally contacted my service provider (different company) for an upgrade to a better phone at my own expense – not through Future Shop. Thus, I am no longer using the phone for which the insurance policy was purchased and the phone is not being used by anyone. I made the assumption that by no longer having that phone in service, the warranty could be cancelled. Let’s take a look at that warranty cost:
Cost of warranty to date: approx 125.88
Owing until warranty ends: approx 251.76
Total cost of warranty: 377.53
This is what I discovered today
- I can transfer the warranty to another phone, oh but wait, it must be one purchased from Future Shop.
- Warranties at Future Shop can NEVER be cancelled.
So, I get to receive a charge on my credit card every month for nothing, zippo. I am receiving no service from it, there is no customer satisfaction because of it, and it feels rather slimy to realize that when a warranty is no longer needed or worth the money spent on it that there is no option but to pay it. Apparently, it is a company policy to NEVER allow customers to cancel their warranties. I asked @FS_Connect on Twitter to better explain it by saying,
@FS_Connect – what wise words can you use to explain no cancellations on warranties for cell phones no longer used? would luv to understand”
But so far they have chosen not to answer….perhaps they are looking into it???
I can cancel my life insurance policy, my home insurance policy, my car insurance policy. I can stop paying for a lot of things when I no longer need them, but not this phone warranty.
A question comes to mind, is there a commission on these at the store level? Is this why they are pushed so hard? From the report in the next paragraph stores can gain as much as 50% the cost of the warranty by selling it to you.
Reading this post at the Financial Edge piqued my interest on warranties in general and I wish to add this; by the time a 3 year warranty is completed, pricing for many electronic items generally comes down and your total cost of a new one often equals or is less than that of the warranty costs already spent on the old one.
I understand why cell phone service carriers require a locked in term for a new phone, it is because they are trading the price of a new phone at a discount and can afford to do that so long as you are tied into the plan they devise. There is a give and take here, it costs them to offer free phones for a 3 year plan – they are giving you something in agreement for the deal and it makes sense. When it comes to electronics in general, it is this author’s belief that a warranty is not worth the paper it is written on. Technology is travelling at a rate where expecting 3 years for a cell phone is equivalent to expecting 25 years from a computer, so I have learned my lesson.
So, what exactly did I get for this warranty? $377.53 of ‘peace of mind’, oh but this comfort only covers a year, of course that was the year that the Manufacturer’s warranty covered so what did I really get? A monthly visa charge. The next two years I will see a credit card charge on my Visa for 10.49 a month and it will be a fantastic reminder of how unfortunate it is that Future shop has lost my business, (not to mention all other companies any possible warranty purchases). You see, for the 251.76 out of that 377.53 I have no product or service coming my way, nothing will be exchanged, the insurance is moot. In fact, I now carry a loss for which I cannot recoup, and unlike service provider terms, I can’t even buy myself out of this one. I can only remind myself – buyer beware of all things warranty.
We are living in a new age, Future Shop – an age of customer experience and customer satisfaction. I am on to the electronics warranties deal and now know this is where your electronic profits come from, and am happy to share the story with anyone and everyone who will listen. Why? Because I feel having purchased a warranty is like having been talked into buying thin air.
Patti Blackstaffe works with people and organizations to develop
Happy Workplaces world-wide guiding them toward mastery and leadership
through advising, coaching, speaking, and delivering training.