Recently I heard a caller on the Dave Ramsey radio show comment on her employment with Sears. She claimed her hours had been reduced by the company because she had not sold enough Sears credit cards or the MPAs (Master Protection Agreements) to customers. Now, I’ve posted about this topic before here and here but this caller officially spilled the beans. It’s pretty obvious that commissions and profits are tied to both the company and the employee for selling these MPAs which are commonly called extended warranties. The reason I believe that Sears is not looking out for you is because by the time you get to checkout to pay your bill, they stick you with more useless financial junk to buy.
In another Sears incident, one blogger details her story at length about how she had extreme difficulty getting her money back from a Master Protection Agreement that failed to provide coverage for her digital camera. The long and the short of it is that she paid for part of the MPA with a gift card and part of it in cash. When she went to get it refunded (due to Sears not even servicing digital cameras after all!) the store manager required her refund be given in the form of a store credit.
A former Sears appliance salesman basically created a Master Agreement Manifesto detailing the dubious nature of these offerings. Among the highlights I found unbelievable:
- the company holds weekly meetings to discuss MA quotas and techniques to sell them
- the salesmen are told to not give up selling the MAs until the customer says “no” at least three times
- a mathematical diagram called the bathtub curve which display high failure rates for products either in the first days of use or many years later thus making a curve the shape of a bathtub. Sears uses this curve to maximize profits on the MA by making the warranty end right when failures become more likely (in many products after three years)
- for many people the MA ends up being a waste of money because they lose it or forget to use it
As many of my posts stress, remember the following tips when buying from a major retailer. First, using their in-store credit card significantly increases the chances of you getting taken to the cleaners on interest charge if you miss a payment. Second, the extended warranties are a rip-off that transport cash from your wallet to the retailer’s pocket and end up providing you little and the merchant a lot. Third, loss leaders will often get you into the store for a free or cheap deal, but often you are enticed to buy more once in the store. Remember these tips for maximum savings for you.