I purchased a product warranty from Squaretrade last year for a toy electric scooter. The purchase price of the scooter was around $420 and I paid around $72 for the warranty.
Yesterday, when I tried to use the warranty because I have a problem with the product, they claim that it was only sold by mistake, and all they are willing to do is refund the purchase price of the warranty. Of course, this will not make me whole because the warranty was supposed to cover the full purchase price of the product, and if they had not sold me their warranty, I could have bought a different warranty from some other provider that would honor it.
So now, if the product isn't repairable, I will have to replace it at a cost of $420, with only $72 back from Squaretrade to help, leaving me out around $350.
And of course, if I hadn't made a claim, Squaretrade would have been happy to keep my money for the warranty they sold by "mistake".
I believe it's entirely possible that they do this on purpose, selling warranties on products they have no intention of honoring later, and just keeping the money if no claim ever comes in on that product, and only returning the warranty purchase cost if they are called on it. This is a can't lose proposition for them, they are either ahead or at worst even on each sale, but it's a guaranteed lose for the consumer and should be stopped.
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