Extended warranties are a cash cow

Posted on January 22, 2013 by Support Spy

Electronics & appliances sales people, I’m looking at you!  You have to love the effort.  There are many fantastic, advertised deals on electronics, home theatre products, appliances, and other related items, and you don’t have to wait for the Christmas season to get them.  But have you ever wandered in to a store to pick up a “deal of the century” only to be pressured into an extended warranty?

Many of the larger chains use this tactic.  They lure you in with door crashers and great sales, only to hit you up at the end for an expensive insurance that you don’t need.

Future Shop (among others) has been in the business of selling extended warranties for years, and they don’t take “no” for an answer.  At least, not a first.  It usually takes 3 refusals from the client before the sales person will let you off the hook (not sure why our world revolves around 3 tries – not everything should be like baseball, but I digress).

Extended warranties carry high margins (around 50% profit) and as a consequence high commissions.  This is where companies and sales people make the most money.

So you walk in to a store to buy a TV.  Once you have settled on your choice and the sales is virtually complete, the sales person begins the pitch (perhaps that’s why it’s a baseball metaphor).  The pitch usually involves a statement  (not so much a question) about the extended warranty and a hard sell about how electronics are unpredictable and you can have peace of mind in case your product doesn’t perform as well as you think it should.

In reality, some may be better than others, but I believe extended warranties are for suckers. They run in parallel with a manufacturer’s warranty.  So for example, if you buy an LG Television and it has a one year warranty, a three year extended warranty only protects you for the second and third years.  Be sure you understand what exactly the extended warranty covers (they do vary).

If you want to talk probabilities, any issues with electronics or appliances usually manifest themselves in the first year.   The second, third and fourth years are least likely to produce failures.

If you do have an issue, think about the customer service that the company issuing the extended warranty provides.  What experience have you had, or have the people you know had when it comes to getting repairs done easily under an extended warranty?  I can tell you my friends, family and colleagues have not as easy time as it is made out to be.

If you use a credit card to make that purchase, be sure to see if it has any special features.  Many cards carry a clause that doubles the warranty on purchased items.  So at this point, you are paying somewhere around 10-15% of the product purchase in order to extend your warranty by a year.

Do me a favour, and put that money aside.  If you need a repair in year three, you are likely going to be able to cover it with the money you saved.  If no repair is necessary, pay off your debts or do something nice with the money!

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NHL 2012/2013 Lockout Rant

Posted on September 12, 2012 by Support Spy

This is one hockey fan’s fantastic rant that captures the anger, frustration, and helplessness of NHL fans everywhere who are about to experience a fourth work stoppage.  It appears the customers have been forgotten about in this exercise of muscle flexing and greed.

 

UPDATE: Now that the NHL lockout is over, so is mine.

 

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Stella & Dot – new hidden costs

Posted on September 11, 2012 by Support Spy

Stella & Dot is a multi-level marketing based line of boutique-style jewellery.   By using a trunk show (tupperware-style party) selling strategy, their ‘stylists’ (independent sales partners) showcase the product directly to customers.

Anne, a stylists who I have spoken with in the past, reached out to me again.  Stella & Dot has decided to change the way it pays its stylists.  The company has unilaterally decided to stop paying by cheque/direct deposit and instead use pre-paid VISA cards.

When she received a pre-paid credit card in the mail and read the terms & conditions, Anne discovered the change.  Stella & Dot positions this with this quote from their FAQs “You’ll get instant gratification with weekly pay on your own Stella & Dot debit card.”

However, there is no mention of the hefty fees that are associated with pre-paid credit/debit cards.  Customer Support at Stella & Dot did not even try to understand her issue. Instead the support representative quoted the company’s policy that they can change the terms any time they want.

I suppose they could start paying their stylists in fruit or t-shirts or copper, but that doesn’t make it any more reasonable or fair.  At least the value of copper has a chance to increase.

Escalating to a supervisor, and waiting on several promises to look in to this, proved useless.

I connected with their Social Media team who immediately called Anne back and took the time to understand her issue.  Ultimately, there was no resolution.  This was their new way of paying their stylists.

ADP is a payroll company used by Stella & Dot and many other businesses.  I reached out to some insiders about general cases (not Stella & Dot specifically).  The reason for a change of this nature seems to be to offload payroll costs from a company and on to its contractors/stylists.

The prepaid credit cards have fees to activate, transfer, simply use the card, and there is even a maintenance fee to keep a balance month to month.  You can read about them at Million Dollar Journey and from Ellen Roseman at Moneyville.

Anne decided these extra costs were more than she could take, and ultimately she has decided not to renew her contract with Stella & Dot.

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Hotel Safes Are Not Very Safe

Posted on June 15, 2012 by Support Spy

Have you taken a trip recently?  Did you stay in a hotel?  Did you trust that your money, valuables and important documents would be safe?  This is not a doomsday issue, but you should take extra care when using a hotel safe.  It is important to understand the security limitations of a safe owned by someone else.

You enter your new hotel room (well, new to you – germophobia is for another post), and get settled.  At some point you realize that you don’t want to wear all your jewellery at once, or carry all your cash, or lug around your bulky passport.   The hotel safe becomes your best friend.

When you approach the safe, there are usually very basic instructions in an obvious location, on how to program it.  Have you stopped to wonder how they get the safe open/reset after the last super spy came through, and programmed a highly secure pin code?

All hotel safes (and I suppose safes in general) can be opened by at least one of the following methods:

  1. A master code
    Many safes use a master pin that is coded at the manufacturer.  In some cases this is hard-coded, meaning it can’t be changed.  Whether the pin is hard-coded or the hotel staff just never changed it, you would be surprised at how easy these are to break.  Before programming that hotel safe, be sure to try ’000000′, ’999999′, ’123456′  and any other obvious options.
  2. A programmable card
    Take a look at the outside of the safe.  If it has a magnetic card strip/reader where, for example, you could slide your room key or credit card, then it can be unlocked by a card held by the hotel staff.
  3. A master key
    If there is a keyhole, this safe can be opened by a master key, also held by the hotel staff.
  4. A third party plug-in unit
    Again, take a look at the outside of the safe.  If there is a ‘port’ or plug somewhere, then it can be opened with a ‘safe cracker’ or plug-in unit.  Occasionally hotels will have one of these in house.
  5. A drill
    Where there’s a will, there’s a way.  All safes can be opened with a drill given time and the right drill bit.  If you ever watch any auction-themed TV shows, they often find safes and with the 4 options above unavailable, they can be seen drilling for gold.

While there is no way to prevent the hotel staff from entering your safe, there are things you can do to minimize the chances of being ripped off.

  1. Ensure that there is no obvious master code.
  2. Ask the hotel how they reset the safes and who has access.  You can decide on your level of comfort based on this.
  3. Take a picture of the open safe, with your valuables in view. Then take a picture of the safe closed/secure.
  4. Ensure your hotel room door is closed on your way out.  Many times you will be ripped off because of opportunity.
  5. Do not leave any greatly expensive item (diamond ring) or sentimental item.

There are third party locks that you can buy to further secure your hotel safe but these are unproven and expensive.

I do tend to leave cash and passports in the hotel safe assuming it’s passed step 1.  It’s probably not the best move, and passports may be a pain to replace.  However, it’s nothing I can’t live without.

Take a look at this demonstration.

Readers:  Have you ever had items disappear from a hotel safe?

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Unidentified phone numbers

Posted on June 11, 2012 by Support Spy

I started to get calls from telephone numbers that I did not recognize on my mobile phone. Not being one who just has to pick up the call, I tend to ignore numbers of unknown origin and let my voicemail work for me.  If it’s important they will leave a message or find me in any of the other hundred ways I can be reached.

Recently someone (or something) called from the numbers 210-301-0307 and 210-249-0540. I can be curious sometimes and decided to look up the number on the internet, simply by entering the phone number in Google. The web is full of great information.

After only about 30 seconds of review I was able to determine that these numbers are spoofed. They don’t exist. They are being faked by the caller. In some cases the caller asks for personal information and in other cases they hang up.

It’s a good idea look up a number you don’t recognize before answering.

Then one day 705-719-6444 popped up on my call display.
Who calls me from 705-719-6444?

Well the answer may not surprise you. Read about the scam caller here. While I was looking up this phone number, the caller left me a message.

The caller identifies himself by saying his name and muttering the name of the company (which after listening a few times, I came up with Mark Smith from KMG).

Mr. Smith addresses me by my first name only and tries to sound very familiar (as if we have known each other for awhile). He doesn’t explain why he’s calling. He is eating while he’s leaving the message possibly to make it sound more casual.

Be careful of this type of contact, because a person like Mr. Smith can lull you into a false sense of security. If you do end up on the wrong end of a call like this, I would not engage the person.

It’s not advisable to ask questions as you may be giving up more information than you realize (see: Black Widow from the Avengers). I don’t know if it’s a scam or not, but I don’t intend to find out the hard way.

Readers: Have you been the victim of a telephone scam?

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