ConsumerWatch: Cellphone Protection Plan Surprises
SACRAMENTO (CBS SF) — When it comes to buying a cellphone protection plan, what the salesperson tells you may not be the whole story.
"I want them to be upfront," said Sacramento-area resident Logan Stahl, who used his high school graduation money to pay for a new phone and protection plan from Best Buy.
The Best Buy clerk sold him the company's Geek Squad protection plan for $9.99/month, Stahl said, in case something happened to his Samsung Galaxy S4.
"[They said] 'you just come in, and we'll get you a new one,'" he said. "She just made it seem like it was the best and hassle-free."
But when a friend knocked his phone from his hands several weeks later, Stahl said he didn't get a new phone — but a refurbished replacement.
And even that is only after he had to wait 10 days, he said.
So just how do companies sell their service plan? Best Buy has their Geek Squad brand protection plan.
"It's $9.99 monthly," an employee told a CBS Sacramento undercover producer. "It covers any physical damage to the phone."
He included water damage, saying Best Buy would send us a new phone within two to three days.
"They send me a brand new phone?" our producer asked.
"Yeah," he said.
But the fine print of the protection plan agreement states the company has the option of sending a Best Buy voucher or gift card for whatever amount they think your phone is worth — something "equal to the product's current market value as determined by us."
And as for water damage, the protection plan specifically excludes "products damaged by liquid immerson/submersion."
Employees are required to be up front about the terms of plans they sell, according to Ken Abbe of the Federal Trade Commission.
"It's a very big deal," he said. "We've brought cases against companies that have misrepresented the terms of their warranties."
"If someone is making a misrepresentation, is lying to a customer, the company has to own up to that lie," Abbe said.
At a Sacramento-area MetroPCS kiosk, a sales clerk makes a solid sales pitch about how much their $6/month protection plan covers.
"That covers everything?" the producer asked.
"Mm-hmm," she said. "If you crack a screen, if you get water damage to it."
But the MetroPCS plan states, "We will not repair or replace any cosmetic damage … that does not affect the manufacturer's intended use."
In other words, a crack alone isn't enough to replace a phone; it must stop working altogether.
Over at Sprint in West Sacramento, the clerk wasn't clear on the type of replacement phone would come with their $11/month program.
"They just send you the new phone," she said.
Actually, the policy allows them to send out a "refurbished" phone, or one of "like kind and quality."
Of the 12 stores tested in the Sacramento area, the majority were forthcoming about their policies.
As for the others, Sprint said it regrets "if any customers were misinformed about how the program works."
We try to be clear in our online and point of sale materials that replacement devices provided through our equipment protection programs may be refurbished and/or equivalent devices when an exact match of the customer's device is not available. We also try to ensure through our sales training process that all of our Sprint Retail employees and the employees of Sprint dealers understand the details of our programs but it's possible that mistakes sometimes happen. We regret if any customers were misinformed about how the program works.
– Sprint Spokeswoman Roni Singleton
MetroPCS said, "We apologize if this dealer's employee was not as clear as she could have been."
To clarify what you were told, a phone will be replaced under the Metro Total Protection plan if the cracked screen interferes with the phone's intended use. Strictly cosmetic cracks or scratches are not covered under the plan but phones are sometimes replaced if the damage impacts the phone's intended use.
The store that you visited is an independently owned and operated dealer location. We strive to ensure that our employees at company-owned stores, as well as independent dealers and their employees, provide consumers with clear and correct information for all of our plans and services. We apologize if this dealer's employee was not as clear as she could have been regarding this service.
Should potential or existing customers have questions, we make service and protection plan details readily available in-store and online, along with posting all terms and conditions here.
– Metro PCS Spokesman Drew Crowell
And Best Buy admitted, "Employees do not go through every aspect of the service plan," and said "we would hope that the customer is reviewing the terms of the contract that they signed."
Since the employees do not go through every aspect of the service plan, we would hope that the customer is reviewing the terms of the contract that they signed. In the event the customer does not agree, then they can return the plan for a full refund within 15 days from the date of purchase. The service plan does not include a loaner program for the product, and is offered as a courtesy which is why it is not in the terms and conditions. In the event the phone cannot be exchanged with Rapid Exchange (current service process for mobile phones) then the customer would qualify for a brand new in the box replacement after 14 days have passed.
– Excerpt from Best Buy customer resolution team via spokesman Jonathan Sandler
Our Geek Squad Protection plans provide genuine benefits to consumers. Because of these plans, millions of Best Buy customers have their products repaired or replaced at little or no extra cost each year. We know the importance people place on their personal technology and we take pride in getting our customers a working device. We have an extensive employee training program in place and make every effort to ensure the plans are represented accurately. Employees do not receive commissions for sales of Geek Squad Protection plans and have not for more than a decade.
– Company spokesman Jeffrey Shelman
Best Buy also noted terms and conditions are always available to customers in-store, and are available online as well.
Stahl said the service he experienced doesn't sit well with him.
"I like to put my faith in people," he said. "So I did."
Every store tested has a deductible ranging from $50 to $200, depending on the phone.
Best Buy has changed its Geek Squad plan since the undercover visit, and now charges a $150 deductible on its warranties like many other stores.
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