Consumer Protections Cover More Product Service Contracts

Service contracts can be an expensive proposition for California consumers. Starting in 2004, more home products and their accompanying service contracts are covered by state consumer protection laws.

A service contract pays to repair or replace a product if it breaks down after warranties have expired.

The law requires service contract sellers and administrators to be registered with the Bureau of Electronic and Appliance Repair (BEAR). Service contract sellers must demonstrate financial responsibility and meet other requirements.

Service contracts are an extra-cost option for many consumer items. Consumers should read the fine print and evaluate the contract carefully. Compare its benefits to the product warranty, and check that the seller of the contract is properly registered.

BEAR registers contract sellers and administrators and assists consumers who may have questions, concerns or complaints.

In the past, consumer protection laws covered service contracts for appliances like refrigerators and ranges, and for electronic equipment like personal computers, video equipment, televisions and car stereos. The Bureau regulates repair dealers for these products.

Now covered are the following types of popular consumer products: furniture; jewelry; phone equipment; power tools; lawn and garden equipment; small kitchen appliances and tools; fitness equipment; and home health care products.

As a result of these changes in the law, more service contract sellers and administrators will now be required to register with the state and follow consumer protection standards.

The law also provides some new options for the industry, regarding how contract sellers can demonstrate financial responsibility, and how contracts can cover payments for incidental costs resulting from a product breakdown.