Jonathan Takiff: Are buy-back programs really the Best Buy?

Ozzy Osbourne and Justin Bieber have been pitching the Buy Back Program in commercials aired during the Super Bowl and Oscars.
Ozzy Osbourne and Justin Bieber have been pitching the Buy Back Program in commercials aired during the Super Bowl and Oscars.
Posted: March 01, 2011

BEST BUY is hitting a hot button with those amusing TV commercials for its new Buy Back Program. The spots underscore how fast technology changes and how people often feel taken by what they perceive as planned obsolescence.

You saw them during the Super Bowl and Sunday night's Oscars - a befuddled Ozzy and Sharon Osbourne scratching their heads over the latest "5G phones." Then up pops teen star Justin Bieber, waving an even hotter off-the-assembly-line "6G phone." Ugh.

Still, the cure Best Buy's pitching seems like another kind of squeeze play to grab your hard-earned bucks. The Buy Back Program charges you for the privilege of selling back your goods at a ridiculously low price.

Truth is, consumer tech does evolve quickly. New mobile-phone models emerge every month; computer lines are refreshed every eight months, and TV models are revamped every year with new features.

Recent cases in point: LG has just previewed mobile phones and tablet computers that take 3-D pictures. Apple is unveiling its iPad 2 tomorrow. And both Panasonic and Samsung are about to introduce sleek TVs with thinner screen frames that effectively increase the viewable picture by an inch without increasing prices.

So what's a big-box store to do to keep customers satisfied - and buying? Best Buy CEO Brian Dunn describes the Buy Back plan as "future-proofing" and suggests "our customers can now have more confidence that they're protecting the value of the products they're purchasing today."

But is that really the case?

Let's take a look at the fine print.

WHAT PRICE PROTECTION? It doesn't take an insurance actuarial to see that the Best Buy protection, as underwritten by Chartis' U.S. Warranty (formerly AIG), has its downsides.

For starters, the plan is fairly costly. Coverage for a laptop, netbook or tablet computer is $70. Protection for a big-screen TV selling at $500 to $1,200 is $100. For a $1,200-to-$2,500 telly, the price rises to $180, and the tab is $350 for a $2,500-to-$5,000 set. Prices were quoted from a Best Buy store last night, but you may find plans cheaper online.

To jump-start the program, Best Buy briefly offered a free buy-back policy with mobile-phone purchases. But this week the price went to $40 for a "postpaid" mobile phone selling under $350 and $60 for wireless phones priced $350 and higher.

And what do you get back?

That's determined on a sliding scale and distributed as a Best Buy Gift Card that has to be used in the store or on the company's website. The most you'll get is 50 percent of your purchase price - if you return the item within the first six months "in good working condition" and with all original parts.

By the time your computer, phone or TV is a crusty 12- to 18-months-old, the most you can get back is 30 percent of the purchase price. That drops to 20 percent in the 18- to 24-month age span before the policy expires.

TVs come with a 48-month plan, but payback in the two- to four-year time frame is a mere 10 percent of the original price tag.

A BETTER MOVE: Truth is, you'd be better off just relocating that "ancient" 2-year-old TV to a guest room. Or donate it to charity and take a tax deduction. Given how long most electronics last, that set probably has 12 more years of good life left.

As for the subsidized smart phone you bought with a two-year service contract, be forewarned: You'll be socked HEAVY penalties for returning it early.

The better idea here is to take good care of the mobile from the get-go (wrap it in a rubbery Griffin case or "invisible shield" like BodyGuardz) and then sell it directly in a classified ad or on eBay, Gazelle or Craigslist, where Androids and Apple iPhones can fetch big sums.

Youth-oriented products like MP3 players, digital cameras and gaming hardware - things users might feel peer pressure to replace fast - are not included in the Best Buy program. However, you will find such goods supported by competing buy-back plans being launched elsewhere from the extended-warranty companies SquareTrade, New Customer Service Cos. and TechForward.

CAN YOU BLAME THEM? Clearly, times are tough for high-overhead operations like Best Buy, which reported a 10.6 percent drop in consumer-electronics sales in the final quarter of 2010, versus the same period a year before, when consumers were really sitting on their wallets.

To compete with online sellers' razor-thin margins, brick-and-mortar stores have been forced to almost give away the hardware in hopes that they'll make their profits with the add-ons - such as premium-priced cables and protection plans - that the sales staff sweet-talks customers into on their way to the checkout line.

"The odds of a product breaking down during a typical extended-warranty period are low," according to Mark Kotkin, who tracks such things as director of survey research at Consumer Reports.

I recommend passing on warranties (unless you're really hard on your laptop) and observing a common-sense practice.

When you do bring home a new TV or computer, turn it on and leave it on for a day or two. If the unit has faulty components, the operational heat often brings the problem out quickly. If that happens, take the item back for a full refund or replacement with no questions asked.

WHAT ABOUT TRADE-INS? Have some unloved electronics getting dusty in the basement? There's little or no downside to the trade-in programs offered by some manufacturers.

HP, for one, often has a deal going at office stores like Staples. Trade in an old printer (working or not, from any brand) and get $50 knocked off the price of a new HP laser or ink-jet printer. Just pay attention to the cost-per-page of the ink cartridges that fit those models.

Logitech has a new trade-in program offering "up to 20 percent off" a new item when swapping an old Logitech mouse, Internet camera, keyboard, audio component or gaming device. They'll even send you a free shipping label to send the item back.

Even Best Buy offers trade-ins on select used goods - and that's without the need to buy "protection."

E-mail Jonathan Takiff at

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