By Kelly Anne Fitzpatrick on October 5, 2011 in
In 2009, ConsumerSearch reported on the questionable sneaker warranty offered by sporting good mega-retailer, Sports Authority. The store has since discontinued the footwear warranty since it wasn't turning a profit, but it still offers its electronics and equipment warranties through the same warranty provider, National Electronic Warranty Corporation (NEW). We had to wonder, if NEW's footwear warranties were discontinued for lack of financial gain, how does the rest of their coverage stack up?
Former footwear warranty plan
With prices from $5-$15 (depending on the price of the shoes), the one-year Sports Authority footwear warranty promised a new pair of kicks if those purchased turned out to be defective. The plan even covered "normal wear and tear" such as "sole separation, seam rips and separation, fabric discoloration or color bleeding and broken fasteners (eyelet)." Laces, however, weren't covered. If the shoes wore out, Sports Authority would replace them at no cost to you, unless, of course, you purchased a more expensive pair (in which case you'd have to pay the difference) or wanted to purchase coverage for the new pair. It almost sounded too good to be true, and as usual, everyone across the web had their own opinion (see Consumerist, ChattyGal.com and Ernesto Burden).
Despite some accusations of a scam, it turns out Sports Authority (and NEW) weren't actually profiting from this program, hence its halt. "It just turned out to be a non-profitable department for both [NEW and Sports Authority]," said Doug Slatten, manager of Sports Authority's extended coverage programs. "It was very good for the consumer, but not for us."
So how is this new program from NEW?
ESPs (extended service plans) are an additional warranty beyond the manufacturer's warranty and Sports Authority's current electronics and equipment plan is not directly provided by the store, but by NEW Corporation. NEW also provides the ESPs for Sports Authority competitor Dick's Sporting Goods and Amazon, and is the largest provider in the $9 billion U.S. warranty industry.
The NEW warranty covers a product for one to two years (depending on the plan) after the product's manufacturer warranty expires and includes failure due to mechanical or electrical failure. For products under $100, a dud is replaced for free, while more expensive purchases are repaired. However, in order to offer in-home service on more expensive products, NEW relies on local contractors. It would seem that the multiple middlemen involved could easily gunk up the works. A commenter at ConsumerAffairs.com says it recently took more than two months for a local technician to come replace parts in his elliptical. More consumer complaints are logged at Ripoff Report.
Because NEW warranties are so ubiquitous, customers may not have another option for extended coverage, which raises the question, are they really worth the money and hassle?
According to Slatten, each NEW ESP offers different value. For equipment with many moving parts and electronics (think, a treadmill) there's more opportunity for things to go wrong, so an extended warranty that covers all of it may be especially worthwhile. Other plans, like those for bikes, include regular maintenance and service, and might not need the coverage. "It's completely up to the consumer," Slatten said. "It helps protect their purchase and give them piece of mind that their product is going to last."
If you decide to go with this warranty, or any for that matter, base your decision on what's covered, how much wear and tear the purchase will endure, the manufacturer warranty and replacement price. Whether you purchase extended coverage or not, focus on finding a product with a strong track record to avoid repairs or replacement whenever possible.
But at the end of the day, a smart consumer must consider the facts: as Investopedia warns, all warranty programs are designed, in the end, to be profitable for the seller. Remember, as aforementioned, that the Sports Authority actually canceled the footwear plan that benefitted the consumer because it didn't turn a profit for the company. So who really benefits from the warranty coverage: the consumer or the seller?