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Read fine print of rival chain offers on Sears warranties, expert warns

DirectBuy has promised Sears Canada warranty-holders a $400 discount and vowed to waive fees for those with “financial difficulties.” Experts suggest reading the fine print on these kinds of offers.

Nathan Denette/THE CANADIAN PRESS

Sears Canada customers left without a warranty for appliances purchased from the defunct chain might have felt reassured by radio and TV ads from competitors promising to honour their warranties, but experts say consumers should look at the details before signing up.

"Companies are not doing it just to be nice," says Joanne McNeish, an associate professor at Ryerson University specializing in consumer trust. "They're doing it to also build sales at their own companies."

To avoid pitfalls and get the most out of offers from competitors such as The Brick and DirectBuy, she first recommends a look at the fine print.

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DirectBuy purchased Sears Canada's warranty customer lists and millions of dollars of parts to repair their products, but will only cover repairs if consumers buy a DirectBuy membership, the savings club's chief operating officer Dylan Astle said. Customers need to provide proof of purchase if their name doesn't appear on that list.

Memberships, which offer savings on furnishings and appliances, can cost anywhere from $99 to $1,000, depending on promotions and the tier of membership you choose, he said. DirectBuy has promised Sears Canada warranty-holders a $400 discount and vowed to waive fees for those with "financial difficulties."

DirectBuy's offer covers the remaining period of Sears customers' extended warranties and adds a year's extension for recently expired ones.

The company also links customers up with vendors who are offering $100 "merchandise credits" to Sears Canada customers.

If you don't buy a membership, DirectBuy will still put you in touch with service technicians, but you'll have to cover the cost and arrange the service.

Prof. McNeish advises consumers to skip the deal if they discover it is more expensive to buy a membership than pay for a product to be fixed or replaced. "I am puzzled why someone would sign up for the membership just to get the extended warranty."

Products priced under $300 aren't usually worth the cost of repair, she said, because consumers can buy a new one for less than it takes to fix their old one.

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More expensive items that consumers often have to save up for and don't want to replace frequently make it tougher to calculate whether the DirectBuy deal is worth it. Prof. McNeish said to start with the average cost of getting a service technician to visit your home. She estimated that's about $150, but said consumers should account for extra fees for parts, time and more complicated issues.

Stephen Weyman, the finance blogger behind HowToSaveMoney.ca, said the offer appears to only be compelling "if you have thousands of dollars worth of long-term extended warranties on products purchased from Sears already and you are planning to buy a lot more brand new big-ticket items for your home."

Prof. McNeish and Mr. Weyman think The Brick's offer is slightly more attractive.

For Sears Canada customers with a one-year manufacturing warranty on a product, The Brick offers expedited servicing at no cost.

But those with an extended warranty have to pay to get their item serviced through a Brick partnership and the company will send them a $100 Brick credit to be used on a future purchase.

The Brick will not offer replacements, but its president Dave Freeman said in an e-mail that customers could be covered by purchasing a Brick warranty that could include a prorated replacement.

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The Brick's offers are contingent on customers still having the bill from Sears Canada.

Prof. McNeish said the Brick's offer "may be okay if the repair is small." If it's a bigger repair, "$100 may not save that much money," she said.

Mr. Weyman recommended getting a repair quote from The Brick and comparing it with at least one other from a local appliance store.

Ultimately, the experts say the situation Sears Canada customers find themselves in is a reminder that warranties are rarely worth the money.

"Buying a warranty is like a lottery ticket because you have to weigh what the likelihood is that your item will break in the warranty period," Prof. McNeish said.

Instead, she and Mr. Weyman recommend setting up a bank account to put aside what you would have spent on a warranty.

"If you do that, by the time your appliance breaks, you'll likely have enough saved to fix it or buy a new one," Prof. McNeish said. "And if it doesn't break, you'll have money saved."

Sears Canada’s former executive chairman says his plan to buy the struggling retailer was stymied by a process biased towards liquidation. Brandon Stranzl says he feels “deeply” for those losing jobs as the company moves towards closure. The Canadian Press
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