Sneaker warranty: deal or scam?

Editor's note: Sports Authority has discontinued their sneaker warranty program because it wasn't turning a profit. We discuss this as well as their other warranty programs in a follow-up blog post. 

We've all been offered extended warranties on electronics products whether it be cell phones, HDTVs or digital cameras, but what about sneakers?

On a recent trip to Sports Authority, as I was trying on a pair of walking sneakers, the salesperson offered me their so-called footwear plan. He explained that for a small fee, I could purchase an extended coverage plan for my sneaks that would cover scuffs and other wear or tear for one year. Within that time frame, I could simply return my less than perfect footwear to the store and trade them in for a new pair. If the new pair is the same price, there's no additional cost; if they're more expensive, I'd have to pay the difference. I didn't end up making a purchase that day, but my interest piqued, I decided to dig deeper and see what this sneaker warranty was all about.

According to the brochure, the warranty covers "defects in materials and workmanship" including "normal wear and tear" such as "sole separation, seam rips and separation, fabric discoloration or color bleeding and broken fasteners (eyelet)." Prices range from $4.99 to $15.99, depending on the price of the sneakers, for a year of coverage, which starts at the end of Sports Authority's 30-day return policy. There are exceptions to this extended coverage plan (ECP), but they border on the ridiculous. the warranty is void if damage is incurred by any of the following:

• fire
• theft
• acts of God
• invasion or act of foreign enemy
• civil war, rebellion or civil commotion

Laces are not covered at all. (See the full list at SportsAuthority.com.) So if you scuff your shoe on the track, you're covered, but you're responsible if you break a lace or your shoes spontaneously combust while picketing during a hurricane.

What the blogosphere is saying

The question on everyone's mind, is how this could be profitable. A blog post at Consumerist says Sports Authority associates told them "most people forget they have the extended warranty," but editors there are skeptical, as are we. Consumerist also quotes from another blog, in which a Sports Authority employee reveals that sales associates get commission each time they sell plan. (That blog post has since been taken down.) I also found a forum post on LetsRun.com, (a community for runners, natch ) where an employee details what is expected of sales associates. "Sports Authority Worker" says "15% of my shoe sales need to have ECP plans." Finally, the company that carries the warranty -  oddly enough, the National Electronics Warranty Corporation - has a number of complaints logged at RipOffReport.com.

How much does the Sports Authority footwear plan really cost?

Say you buy a pair of sneakers for $49.99 and purchase the extended warranty for $4.99. Two months later you bring the sneakers back to the store and exchange them for a $59.99 pair. Keep in mind, that once you exchange your sneakers, you need to purchase a new warranty if you want to continue coverage.

In this example you end up with with a $59.99 pair of sneakers, for the total price of $74.97, assuming you re-up your warranty; $64.98 if you don't. So if the original pair of sneakers are unusable -- broken lace eyelets or ripped tongue -- then you've probably got your money's worth. But if you're just turning in a pair that's just scuffed up, probably not. In the end, I think this is an attempt on Sport's Authority's part to boost revenue and for most consumers, the footwear plan doesn't have a leg to stand on.

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