Although this may not apply to most of the standard inkjet printers that people buy, there is a story in the Washington Post today about what a big scam extended warranties/service plans are.

The decision to buy an extended warranty, however, defies the recommendations of economists, consumer advocates and product quality experts, who all warn that the plans rarely benefit consumers and are nearly always a waste of money.

Stores like Best Buy and Circuit City are pretty famous for offering warranties, but other stores like Staples offer them as well. If you are buying a $40 inkjet printer and you get some lazy kid at the counter, then maybe he won’t offer you one, but if you buy an expensive photo or laser printer, you will probably have to hear about some three year service plan, that “like, totally covers everything sir.”

The basic idea is that the warranties go unused because either the item never breaks, or when it does break the warranty doesn’t cover it because it was accidental damage or maybe just because the underwriter for the warranty doesn’t want to pay. But, as consumers we have this instinct to avoid a short-term risk even if it means giving up the long-term benefits.

One time I got into an argument with a clerk at Circuit City because I didn’t want to pay $80 for a warranty. I told him before he even rang me up that I didn’t want the warranty, but he still asked me about it. Then he asked me about it two more times when I turned it down. Eventually he asked why and I told him that I don’t just assume everything I buy is going to break in one year. Then after I became frustrated with his persistence, I asked him “are you saying you are selling me something that is absolutely guaranteed to break within a year?” He had to say no to that, and then tell me that the real reason to get it was so that you could trash what you buy for a year, come back, and then get a brand new one. Pretty good official Circuit City policy.

Neither Circuit City nor Best Buy discloses how much of its bottom line comes from extended warranty sales. But analysts have estimated that at least 50 percent and in some lean years 100 percent of profits at the electronics retailers come from extended warranty sales.

Sounds about right.

Unwarranted [Washington Post]