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December 11, 2013

LITTLE ROCK – Holiday shoppers buying the latest smartphones, tablets, big-screen televisions or other electronic devices or appliances most likely will all be asked at the checkout counter if they want to purchase extended warranties or service contracts for the products.

Retailers advertise extended warranties as added protection in the event something goes wrong with an item, but Attorney General Dustin McDaniel issued this consumer alert today to encourage consumers to think carefully about such service plans before they buy.

McDaniel said consumers should weigh the cost of the extended warranty against the potential need for the warranty in the future. Some repairs may already be covered by a manufacturer’s warranty, which is included in the product purchase price. The manufacturer’s warranty may require the purchaser to return the item to the manufacturer for repairs, but it generally covers all defects for a specific amount of time from the date of purchase.

“Consumers may want to consider extended warranties for expensive electronics or appliances, but I would urge them first to read the terms of the coverage and take time to consider whether it’s a good investment before paying for the added coverage,” McDaniel said. “Sometimes, extended warranties may not be necessary.”

Extended warranties may not be the best investment because, on average, repairs to items cost only a little more than extended warranty coverage itself. According to Consumer Reports, studies show that items seldom break or need repair within the extended-warranty window, which is typically two to three years after purchase. With most electronics, most repairs are made when the manufacturer's warranty is still in effect. Thus, extended warranties are a costly way to protect against something that is not likely to happen. And, when items do break, it may be just as easy or cost-effective to buy a new version of the item that needs to be repaired.

But extended warranties are also big profit makers for many businesses. Consumer Reports also states that stores keep 50 percent or more of what they charge for extended warranties, and that is more than what they can make for actual product sales.

McDaniel again encouraged consumers to consider the terms and conditions of all extended warranties and consider the costs as they finish up their gift-buying this holiday season.

For more information about extended warranties or other consumer-related issues, visit the Attorney General’s Consumer Protection website,, or call the Consumer Protection Hotline, (800) 482-8982.