Buyback Plans For Technology Products May Not Be Good Investments, BBB Advises

If having the latest cell phone, laptop or tablet computer is your goal, you may have listened with interest to some stores’ advertised promises to buy back your gadget so you can upgrade quickly.

The BBB advises consumers to investigate the offers carefully before signing up or paying a fee. The plans are basically a form of insurance that allows you to trade in a gadget in good condition toward another product. However, the value may be less than you expected or it may be hard to qualify for the buyback if you don’t follow specific directions as required in the plan.

“Consumers who have to have the most sophisticated gadgets as part of their job or their lifestyle may find value in these offers,” said Michelle L. Corey, BBB president and CEO. “But you have to balance the cost of the plans against what you may actually get back if your item isn’t in tip-top condition when you trade it in.”

The New York Times recently reported that many of these plans come with high price tags, and their value drops sharply if you don’t trade in the old item within a short period of time – often less than a year. It could take longer than that for the new version to arrive on store shelves.

The BBB offers the following tips for consumers who may be considering a buyback plan:

• Consider the buyback plan as a form of insurance. The plans basically guarantee a resale value, but that value can drop off sharply over time. The true value may be nominal and may be hard to define, so make sure you read the fine print.
• The plans have the retailer’s interest at heart. When you bring back your item, you usually will be issued a gift card good only at that retailer, essentially locking you in to that store for the next technology purchase. In some states, consumers also have found that they have to pay sales tax as many as three times – for the original purchase, when they return the item and again when they use the gift card.
• Buyback plans don’t work if you’re forgetful or disorganized. Many plans require you to return the original purchase receipt, power cords and manuals. If you don’t have them, you may not be able to get as much trade-in value for your gadget.
• Mobile phone contracts are excluded. You may be able to upgrade your cell phone with a buyback program, but you will still have a contract with the cell phone service provider who may bill you for the life of the contract. Find out whether the service contract can be transferred to a new phone.
• Erase any personal data before returning your gadget. To avoid identity theft, make sure that the memory of the gadget is wiped clean before you turn it in. Otherwise, computers and even cell phones can contain sensitive information that could be used to commit identity theft.
• Consider reselling gadgets elsewhere. Some consumers have found that they can get more out of their gadgets by reselling them than by trading them in. Online auction or classified ad sites may be a better way to get some value out of your gadgets.

For more consumer tips or to check a company’s BBB Business Review, go to http://stlouis.bbb.org/