Consumer electronics and appliance retailers make a lot of money selling extended warranty such as Apple Care now the Australian Competition and Consumer Commission (ACCC) is demanding better transparency after one insurance Company Lumley agreed to change their brochures relating to extended warranty which some observers claim is a “worthless” expense.
ACCC deputy chair, Delia Rickard, said “The ACCC believes that many consumers purchase extended warranties because they do not realise the extent of the protections provided by the Consumer Law,” Rickard said.
“It is very important that extended warranty products being sold to consumers should clearly identify the benefits they are providing that go beyond those rights and remedies already available to consumers and that representations made at point of sale do not mislead consumers about the extent of the benefits being acquired.”
Recently the influential News Corporation owned Wall Street Journal came out and said that extended warranty packages similar to AppleCare, for broken, lost or stolen Apple products are a bad deal. And in some cases, they’re a downright rip-off.
They claimed that extended gadget warranties are only worth it for niche cases, and that Apple’s “free” service is a good deal
Richard Thaler, a renowned economist at the University of Chicago Booth School of Business: “Every time someone offers to sell you insurance on a non-large purchase say no, and take that money and put it into a rainy-day account. With any luck, there will be plenty of money in that account the next time you drop your iPhone.”
Or, take the money and buy yourself a nice protective case.
An Apple spokesman says AppleCare programs deliver “exceptional value by giving our customers access to unmatched tech support wherever they need it, extending coverage for hardware repairs and protecting against the most common types of accidental damage.”
Apple says AppleCare not only extends customer warranties, it also provides more comprehensive service and support.
US publication Consumer Reports, recommends avoiding extended warranties, says only 15% of buyers got a new phone because the old one broke, and only 2% because it was lost or stolen, based on a reader survey.
If you do crack your phone, many warranties don’t look like a great deal when you tally the cost of a fix. Any iPhone owner can walk into an Apple store or authorized repair centre and have an iPhone 6 screen fixed for $109. You might have to wait, but there’s no extended warranty required.
With AppleCare+, even after you shell out $129 up front, Apple asks for additional money to fix broken screens. Your total out-of-pocket for a broken screen expense will exceed $200 and you’re only allowed two accidents in the life of your phone. (AppleCare also covers a battery replacement without the deductible.)
