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What's the Real Value of a Guarantee/Warranty?


Not all guarantees and warranties are worth the same. For example here at LandlordMax we guarantee that we will give you a refund within 30 days of buying LandlordMax if your not completely satisfied (remember this is after trying it for free for 30 days before purchasing it). We’ve honored this guarantee every single time!

However not all companies create guarantees with the intentions of honoring them. And even those that do might not (especially if money starts to get tight). Let me start with an example of a useless guarantee (sometimes also called a warranty – we’ll assume for this post that they are the same although there are minor differences). A year ago I bought a dehumidifier for my house, a Honeywell. With the dehumidifier came a 5 year guarantee. If anything was to go wrong, they would immediately replace the unit. All I had to do was call the 800 number listed in very large and bold letters on the box, in the manual, and so on.

As you can guess, the dehumidifier broke before the guarantee was up. It actually broke within a year, less than 20% of it’s guaranteed lifespan. So I obviously called the big bold number listed everywhere that had influenced my purchasing decision. On a side note, I ended up buying two units, one for our house and one for my mom’s house. Both units stopped working within a year, so I suspect there are some production issues.

In any case, after calling the number I discovered that Honeywell itself doesn’t actually manage the guarantees, they’ve outsourced that to another company. Not a big deal, but if you’re going to outsource it’s important to make sure the company that you use to outsource does a good job and represents you well. Turns out that the company they outsourced for was no longer around. But they gave us another number to another to call so that we could take advantage of the guarantee.

Again I took the phone and made a call so that I could exercise the guarantee. And in this second case, the company is pretty much clueless. They don’t really know what to do, so they take my name and phone number and promise to call back within a few days with some answers. Of course being busy as I am I forgot to follow-up within a few days, and I ended up calling a few weeks later. Still the same response, we’ll call you in a few days. Nothing again. It’s as if no one’s there. And this wasn’t just me, my mother, with her faulty unit, also had an identical experience.

It’s almost as though they’re trying to ignore us hoping that the problem will go away. And it did, we both eventually gave up and got ourselves other different units. But rest assured it wasn’t from Honeywell, it was from another brand. I’ll never buy another Honeywell dehumidifier again. Even though my experience with their home thermostat has been very positive this experience has really soured me on their company. I now place absolutely no value in their guaranties and warranties. They just don’t honor them. Getting rid of their obligations through attrition is very deplorable!

But who’s going to go after them to enforce the guarantee. I need a replacement now, not much later. And I’m for sure not going to spend my time chasing down a few hundred dollars that will likely never come when I could make multiples of that working on my business. So they’ve just basically got the benefits (increase in sales conversions) from their guarantee without having to enforce it. Maybe it’s different with other departments within the company, but for this dehumidifier unit they definitely own up to their claim.

The moral of this story is be careful when you make a purchasing decision, especially if you put a lot of value on the guarantee or warranty. Don’t just assume it will be honored.
Look at who you’re buying from and see if they have a history of owning up to their guarantee. Check their reputation. And only then put value into the warranty.

And one last thing, the longer the duration of the warranty, the less value you should put on it. For example, the odds of a lifetime warranty being honored after 20+ years of purchase are pretty low. They’re assuming you’ll have moved on, lost your receipts, there is no equivalent replacement unit, or maybe even that the company might not be there anymore. I personally won’t trust anything beyond a 5 year guarantee, and even than my trust is limited. For example you can be pretty confident that most car manufacturers will honor their warranties. But I wouldn’t put any weight in a $40 coffee maker 20 year guarantee. And is it even worth your time to follow through with a $40 guarantee after 15 years…

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