Warranties - Consumer Fraud

OK, how many times do you hear about a company promoting their great warranty, yet, when you read the fine print, the warranty is actually void of substance, bordering on consumer fraud. Here's the latest example of what I mean. I bought an expensive (i.e., over $200) pair of Nike running shoes in 2007 Air Max 360's to be exact, the ones with the air pockets in the heels. About 6 months after I bought them, one of the air pockets leaked. Fortunately when I returned them to The Foot Locker in Sherman Oaks, CA, they exchanged them for a new pair, since they were "under warranty." I didn't think much of it until just this winter, the same thing happened again, an air pocket started to leak.

Now, I'm not a big runner and certainly didn't use the shoes as one, as a matter of fact, since I'm sort of a shoe-aholic, I only wore them occasionally. However, when I called Nike to complain about the leak, I was told that they only warrant their shoes for 2 years, which I was told was the most generous warranty among their competitors. When I posed the question as to whether they took into account the wear and tear and quality of materials into account for their warranty policy, I was told NO! And, I was told that they wouldn't even consider replacing the shoes in spite of me having explained that the tread on the shoes shows that I hadn't worn them much and had a lot more tread left.

When I think of warranties for products, I think, as most people do, that the warranty relates to the use or application of the product. If the product is one that incurs wear and tear, then the warranty should be written accordingly to reflect that the manufacturer stands behind their product's quality in use, including the materials they use to make their products. A time-limited warranty, in this case, is not really a warranty at all, unless the manufacturer assumes that their materials and workmanship follow along a timeline, rather than use.

I liken this policy by Nike to that of a tire or other product that has a life based on use. The technology is available to ensure that a tire and most other products do not deteriorate over time, rather that they need replacing based on use. When was the last time that you heard of a tire being guaranteed for a period of time, rather than manufacturer's defects (at a minimum) or tread wear (at a maximum)?!

Its obvious that Nike has determined their risk of return exposure to be 2 years, after which, they have determined that their customers will not expect their products to have any more life, and if so, its a stroke of luck. Having studied risk exposure, each company determines how much the cost of their losses and anticipates such losses as part of their business model, much as insurance companies determine risk. As the exposure rises so does the cost. This makes sense in this business, but is way out of line for a manufacturer of durable goods.

I have seen more than this one example of how companies fool consumers into believing that because they offer some sort of warranty, their product is superior to the competition. However, when the warranty has nothing to do with the application or use of the product, then the promotion of the warranty is a way to fool the consumer.

The FTC has posted on their website valuable information about warranties. I quote their opening paragraph, "When you make a major purchase, the manufacturer or seller makes an important promise to stand behind the product. It's called a warranty. Federal law requires that warranties be available for you to read before you buy even when you're shopping by catalog or on the Internet. Coverage varies, so you can compare the extent of warranty coverage just as you compare the style, price, and other characteristics of products." (see http://www.ftc.gov/bcp/edu/pubs/consumer/products/pro17.shtm).

So, as I find warranties that have no real substance, I've decided to post these for others to be aware of.