Columnist Muriel Stevens: Ins and outs of service contracts

Wednesday, April 14, 1999 | 11:57 a.m.

Is it a good thing to purchase a service contract (extended warranty) along with an appliance?

A number of household appliances are cheaper these days to replace than repair, so when I received notice from Montgomery Ward that the service contract on my 5-year-old dishwasher was up for renewal, I was no longer interested. The dishwasher had been bought on sale. It had never required a service call. The average life of most appliances is about 10 years. The price of a service contract increases with each year. If the dishwasher required service in a year or so I'd probably opt to buy a new one.

I wrote across what I thought was the renewal slip that I no longer wanted the contract. That simple act started a chain of events that could have ruined my credit rating.

Had I read the small print I would have learned that Montgomery Ward contracts are automatically renewed. Unlike magazines and other things I subscribe to, Ward contracts cannot be canceled without a phone call to the number on the notice, or by writing to a different address. Oblivious to all this information, I did what I usually do and learned a hard lesson.

I also learned that Ward treats a service contract just like a purchase. If the contract is not paid on time, instead of canceling it, penalties are added and continue to grow until the bill is paid or it's turned over for collection.

My story has a happy ending, but it took a good deal of time and many phone calls to correct the situation.

When I returned that first notice, I bucked the Ward computer system -- this according to Tim Meder, a Ward supervisor who is a collection process coordinator, but who would do well in the diplomatic corps.

Since renewal is automatic, my request to cancel was thrown into a basket of rejected mail. All of this is done by a computer. It could take weeks before a human gets to see it, Meder told me. By that time the collection process is at work.

It began with a phone call from a collection agency. When I learned it was for the canceled contract, I was furious. What's more, the original $69 fee had now become $134. This enraged me even more.

Everyone I spoke to in my efforts to resolve this was nice. I was not. I learned when my husband died that a woman is a mere appendage to her husband's credit. I was not able to just remove his name from our joint credit cards. They were canceled (except for Neiman Marcus) and I had to start all over again. I'm still smarting from those long-ago indignities.

Assuredly, some of what happened to me is my fault. I never paid any attention to what was written on the notice and I ignored a second notice, assuming that the correction would soon be made.

By the time I got to Meder, the charges for the contract had been removed by other Ward service representatives, but no one could assure me that my credit rating would be corrected.

Within minutes, this exceptional representative defused my anger, pointed out my responsibility in this comedy of errors and assured me he would take care of the rest. The letter of confirmation arrived in a few days.

Except for expensive electronics, I doubt that I'll ever buy another extended warranty. The first year, most appliances are covered by the factory. After that, I'll just take my chances.