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3 On Your Side: Cell Phone Protection Plans

jim-donovan-web Jim Donovan
Jim Donovan is a 13-time Emmy Award-winning consumer reporter w...
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By Jim Donovan

PHILADELPHIA (CBS) — A slip of the hands can cause a drop, a crack or a plunge that can ruin a cellphone.

Cellphone protection plans may sound hassle free, but is that really true?

Logan Stahl says a Best Buy clerk sold him on their $10 a month protection plan in case something happened to his Samsung Galaxy.

“You just come in and we’ll get you a new one,” said Stahl.

When something did happen, he didn’t get a new phone.  He says they gave him a refurbished replacement.  And he had to wait 10 days to get it.

So just how do they sell these plans?

Undercover crews went to find out, first stop – Best Buy with its Geek Squad Protection plan.

“It’s $9.99 monthly,” an employee told the undercover producer. “It covers any physical damage to the phone.”

He includes water damage, saying Best Buy would send us a new phone within two to three days.

“They send me a brand new phone?” our producer asked.

“Yeah,” he said.

But the fine print of the protection plan agreement states the company has the option of sending a Best Buy voucher or gift card for whatever amount they think your phone is worth.  As for water damage, the protection plan specifically excludes “products damaged by liquid immersion/submersion.”

“If someone is making a misrepresentation, is lying to a customer, the company has to own up to that lie,” said Ken Abbe with the Federal Trade Commission.

Abbe says employees must be up front about the terms of these plans.

“It’s a very bid deal.  We’ve brought cases against companies that misrepresented the terms of their warranties,” said Abbe.

Next up, a MetroPCS Kiosk where a clerk makes a solid sales pitch about how much their $6 a month protection plan covers.

“That covers everything?,” asked the undercover crew.  “Mhmmm. if you crack a screen, if you get water damage to it.”

But the MetroPCS policy states, “We will not repair or replace any cosmetic damage… that does not affect the manufacturer’s intended use.”

In other words, a crack alone isn’t enough to replace a phone. It must stop working altogether.

At Sprint, the clerk wasn’t clear on the type of replacement phone you get with their $11/month program.

“They just send you the new phone,” said the clerk.

Actually, the policy allows them to send out a “refurbished” phone, or one of “like kind and quality.”

Of 12 stores tested, the majority were forthcoming about their policies.

As for the others, Sprint said, “We regret if any customers were misinformed about how the program works”.

MetroPCS said, “We apologize if this dealer’s employee was not as clear as she could have been”.

And Best Buy admitted, “Employees do not go through every aspect of the service plan.”  “We would hope that the customer is reviewing the terms of the contract they signed.”

A response that doesn’t sit well with Stahl.

“I like to put my faith in people, so I did,” said Stahl.

Also, practically every plan has a deductible too, ranging from $50 to $200 dollars to get a replacement phone.  It’s something else you need to factor in when considering signing up for one of these plans.