Mid-Year Service Contract Report:

Consumers will pay nearly $40 billion this year for product protection plans, despite the best efforts of the watchdogs who tell them not to. It’s mostly for smartphones and passenger cars, though, because everything else is perceived to be disposable and not worth fixing.

The service contract industry is huge and growing in the U.S., despite the best efforts of critics who, right around this time of year, repeat their outdated “don’t buy extended warranties” message to consumers.

Even our incomplete accounting of the various consumer-facing segments of the service contract industry suggests a market worth almost $40 billion this year, assuming that no polar vortex arrives before Santa. We’ve counted up the total premiums paid by consumers in the vehicle service contract segment, the home warranty segment, the retail brown and white goods segments, and the mobile phone insurance segment, and the total market estimate we come up with for this year is $39.5 billion to be paid by U.S. consumers for what we’ll call product protection plans.

And that’s not counting the jewelry, furniture, and sports equipment sectors, which we’ll get around to sizing in 2015, we hope. And that’s also not counting the purely business-to-business service contract sector, which covers everything from truck fleets to jet engines, not to mention printers, copiers and coffee machines. And that’s only the U.S. Then there’s the European market, and some Asian, African and South American markets that are just getting it together. They need to be counted too.

Bad Marks on Report Card?

Despite the best efforts of Consumer Reports and its allies, more protection plans are being sold now than ever before. If we were to give out ratings like they do, we’d have to give them a little black circle on their report card. For while they might take credit for some of the extended warranty industry downturn from 2006 to 2009, it just as easily could have been caused by the then-brewing recession, the commoditization of major home electronics and home computer product lines, or the shift to online shopping, where it’s quite easy to say no to a click box offering you a protection plan.

Since 2009, we don’t think there’s been a down year for the market. Then again, unlike with our product warranty expense data, with service contracts we’re making estimates based on confidential assistance from industry experts and occasional confirmations from the financial statements of some of the publicly-held players.

Readers are urged to take a look at the data in Figure 1 and compare it to your own internal estimates. Behind this data stands an array of charts and tables dissecting these various markets by underwriter, administrator, and seller. We won’t include all that information here, but rest assured that the $39.5 billion total is built from the bottom up.


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Appliance Warranties: Wasteful or Worth It?

Are you in the market for a new appliance? You’ll likely be offered an extended warranty by the salesperson, which may sound like a good way to cover any mishaps, but it’s not worth the extra money. Here’s why.

According to a recent study from Consumer Reports, most products seldom break during the two to three year window covered by an average service plan. Then, when they do break, your repairs tend to cost as much as the plan itself. Keep in mind that the manufacturer will sometimes cover out-of-warranty items, as well.

If your appliance breaks down within a short amount of time or because of a known issue, the manufacturer will usually offer free discounts or repairs, if you contact them for help. Another thing to consider is the extra charges associated with extended warranties. Some repairs call for the item to be shipped to the manufacturer, which typically isn’t covered by the company. In other cases, you may be required to pay a service charge when someone comes to repair your appliance.

Extended warranties aren’t the best deal for consumers, but salespeople have a reason for pushing you to buy one. Consumer Reports says that most retailers keep 50 percent or more of what they charge for these kinds of plans.

Bottom line: extended warranties aren’t worth it. Keep these things in mind the next time you’re shopping for an appliance and save yourself from unnecessary expenses.

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Drager unfairly restricting access to manuals

Posted on ECRI’s BiomedTalk May 22, 2014:

Once you attend Draeger’s Apollo training, you will have one year access to their manuals online through their secure system.  Draeger keeps tight control on their technical manuals and expressly warns us about giving copies to anyone not trained as they are traceable.

Does someone’s technical training magically evaporate after 1 year?  If someone attends a service school, their access to service manuals should remain for the life of their career.  It is pretty obvious that Drager is attempting to restrict service on their machines so that they can generate more revenue through annual training or service contracts.  Unless this policy changes, I recommend that NOBODY purchase Drager Apollo units.


Pat Lynch

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Are Your Emails Enforceable Contracts?

According to this article from Forbes, email promises are legal.  If your medical equipment salesperson promises something, you can use the email to enforce the delivery of the promise….  Pat

Many people consider email to be an informal form of communication. As a result, offers, counter-offers and terms of proposed agreements are frequently exchanged via email with the hope and expectation that they are for negotiation purposes only. The question is, could such email messages be deemed to be legal, valid and binding agreements that are enforceable against senders in accordance with their terms? The New York Appellate Division in the recent case of Forcelli v Gelco provides some important guidance regarding the answer to this question.

Appellate Division of the New York State Supre...New York Appellate Division  (Photo credit: Wikipedia)


In November 2008, Steven Kuhn drove through a red light and struck a vehicle owned by Gelco Corporation. As a result of the impact, Gelco’s vehicle was thrust forward into a vehicle driven by John Forcelli. A month later, to recover damages for his injuries, Forcelli commenced litigation against Kuhn, Gelco and other related parties.

In May 2011, while the civil procedure of the litigation progressed, Brenda Greene, a representative of Gelco’s insurer, who previously told Forcelli’s counsel that she had authority to settle the case on behalf of Gelco, offered $230,000 to settle the case on behalf of Gelco. Forcelli’s counsel orally accepted the offer on behalf of Forcelli. That same day, Greene sent an email message to Forcelli’s counsel stating the following:

Per our phone conversation today, May 3, 2011, you accepted my offer of $230,000 to settle this case. Please have your client executed [sic] the attached Medicare form as no settlement check can be issued without this form. You also agreed to prepare the release. . .Please forward the release and dismissal for my review. Thanks Brenda Greene.

The next day, Forcelli signed a release, notarized by his counsel, stating that he was releasing Gelco from all actions involving the accident in exchange for $230,000. However, just a few days later, on May 10, 2011, the New York Supreme Court (i.e., the trial-level court) issued an order granting a motion for summary judgment in favor of Gelco and dismissing Forcelli’s complaint and all claims asserted against Gelco. Gelco tried to reject the settlement claiming the email message did not constitute a binding written settlement agreement. However, the Supreme Court ruled against Gelco and entered a judgment ordering Gelco to pay Forcelli $230,000. In response, Gelco appealed to the New York Appellate Division.

The Decision

The Appellate Division unanimously upheld the decision of the lower court noting that, in accordance with general contract law, Greene had apparent authority to settle the case on behalf of Gelco, and her email message set forth the material terms of the agreement, contained an expression of mutual assent and was not subject to any conditions such as the outcome of the summary judgment motion. As to whether the email was a subscribed writing sufficient to establish an enforceable settlement agreement, the Appellate Division stated: “given the now widespread use of email as a form of written communication in both personal and business affairs, it would be unreasonable to conclude that email messages are incapable of conforming to the criteria of [New York law] simply because they cannot be physically signed in a traditional fashion.” The Appellate Division focused on the sign-off “Thanks Brenda Greene” at the end of the email concluding it evidenced a “purposeful” signature of the message that is consistent with the reasoning and intent of New York’s Electronic Signatures and Records Act (i.e., the New York version of the Uniform Electronic Transactions Act which governs the validity of electronic contracts and signatures).

Elaine and Karen Mills at 2013 contract signingContract signing (Photo credit: AFGE)

The Lesson For Contracting Parties

This case is a wake-up call to contracting parties to avoid casually negotiating the terms of proposed agreements via email without taking appropriate precautions to avoid having messages unintentionally deemed enforceable and becoming bound by unwanted agreements. In particular, offers, counter-offers and terms of proposed agreements communicated via email should explicitly state that they are subject to any relevant conditions, as well as to the further review and comment of the sender’s clients and/or colleagues. Further, such communications should include appropriate disclaimers such as that the email is not an offer capable of acceptance, does not evidence an intention to enter into an agreement, has no operative effect until a definitive agreement is signed in writing by both parties, and that no party should act in reliance on the email or any representations of the sender until a definitive agreement is signed in writing by both parties. Doing so would help avoid having messages sent for negotiation purposes only unexpectedly become enforceable agreements.

Oliver Herzfeld is the Chief Legal Officer at Beanstalk, a leading global brand licensing agency and part of the Diversified Agency Services division of Omnicom Group.

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Zimmer to pay Stryker in Patent Infringment

Judge orders Zimmer to pay Stryker $228 million in patent case

By Jonathan Stempel

Thu Aug 8, 2013 6:56pm EDT

(Reuters) – A federal judge ordered Zimmer Holdings Inc to pay Stryker Corp more than $228 million for infringing its surgical irrigation patents, and in doing so tripled a damages award by a jury that found Zimmer’s conduct was willful.

U.S. District Judge Robert Jonker in Grand Rapids, Michigan, also issued a permanent injunction banning Zimmer from selling infringing products, including from its Pulsavac Plus line.

Zimmer said it plans to appeal Wednesday’s decision.

Stryker and Zimmer are large producers of orthopedic pulsed lavage devices, a combination spray gun and suction tube that is used to clean wounds and tissue during surgery.

In a 2010 lawsuit, Stryker contended that Pulsavac Plus lavage devices infringed three of its patents and caused it to lose market share.

A jury in February awarded Stryker $70 million of damages representing lost profits, and found that Zimmer’s infringing conduct was willful.

Zimmer tried to have the award thrown out.

But Jonker said there was substantial evidence to support the jury’s finding, including testimony that Zimmer “all but instructed” its design team to copy Stryker’s products.

He also noted that Zimmer’s recent annual profit has been more than 10 times the size of the verdict and that a $70 million award “may not be enough, without enhancement,” to deter infringements.

“Zimmer chose a high-risk/high-reward strategy of competing immediately and aggressively in the pulsed lavage market and opted to worry about the potential legal consequences later,” the judge wrote in a 58-page decision. “Ultimately, however, the trial proofs demonstrated that this was not a close case.”

The judge also said Stryker should recover more than $18 million in interest and other damages, bringing the total award to more than $228 million.

Monica Kendrick, a Zimmer spokeswoman, said on Thursday the Warsaw, Indiana-based company made changes to its Pulsavac Plus line after the jury verdict, and believes the products it now sells are “outside the scope” of the injunction.

“Zimmer plans to file an appeal challenging both the earlier jury verdict and the recent rulings by the judge,” she added.

Jo Johnson, a spokeswoman for Stryker, said the Kalamazoo, Michigan-based company is pleased with the decision.

In Thursday trading, Zimmer shares closed up 70 cents at $83.29, and Stryker shares rose 11 cents to $70.90.

The case is Stryker Corp et al v. Zimmer Inc et al, U.S. District Court, Western District of Michigan, No. 10-01223.

(Editing by John Wallace and Bob Burgdorfer)

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$25.00 for a shipping box!

From TechNation . . . .

Albert Hardy said 2 hours, 19 minutes ago:


So, I sent out a display for repair to Ampronix in the original Spacelabs/ELO box with all the correct foam, when I received the repair estimate it included SHIPPING MATERIALS. I decided to call and inquire and was told that I should have told them to save my box to ship my display back in or they throw it away and sell you one of their boxes for $25.

Sorry, but this is utterly ridiculous


Followup comment from the company:

Marketing Department replied to the forum topic “Wall of Shame Nomination” in the group “Wall of Shame”:

“This was a repair completed within 2 days and returned to customer on 08-02-13. The customer service representative had communicated with Mr. Hardy with regards of disposing his original box, unless we are instructed prior to servicing the unit, we discard the used / damaged / torn, etc. boxes for recycling. It was explained to him that our standard service process set by ISO standards (ISO9001:2008, ISO 13485:2003 & ESD20.20-2007) is to send the serviced unit back to the customer in a new, double walled, ESD pre-molded foam. This will eliminate any denied shipping claim by the carrier as well. We feel that $25.00 for the white Ampronix box, pre-molded ESD foam, ESD bag to protect the unit & labels is more than reasonable of a fee.

Failure to follow ISO standards will only jeopardize our company’s medical certifications, something that is very difficult to achieve. We also let him know that if he wishes for us to send his units back in the original received boxes; we can accommodate this as we do this for various contracted customers. We had no indication by him that this needed to be escalated further. We are more than willing to waive the $25.00 fee in this instant. An attempt to reach out to this customer is underway.”


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HP Fined $3 Million For Misleading Consumers About Their Rights

HP Fined $3 Million For Misleading Consumers About Their Rights

If any business thinks the Australian Competition and Consumer Commission (ACCC) doesn’t take Australian consumer protection seriously, take note of this: the regulator has just fined HP $3 million for misleading consumers over their warranty rights.

Money picture from Shutterstock

The ACCC announced today it had reached an agreed settlement with HP over the case, after launching legal action last October. The behaviour which HP admitted to included:

  • the remedies available to consumers were limited to the remedies available at HP’s discretion;
  • consumers were required to have their product repaired multiple times before they were entitled to a replacement;
  • the warranty period for HP products was limited to a specified express warranty period;
  • consumers were required to pay for remedies outside the express warranty period; and
  • products purchased online could only be returned to HP at HP’s sole discretion.

Under Australian law, all consumers have a right to choose the remedy they want (refund, repair or replacement) in the event of a major flaw, manufacturers can’t unreasonably limit the period a warranty applies for, and consumers don’t have to bear the cost of return if a warranty repair is required. Anyone selling stuff in Australia, take note.

HP issued an apology following the announcement:

We deeply regret that in the instances identified by the ACCC, HP fell short of our core commitment to high standards of service for Australian consumers who purchased our HP-branded desktop computers, notebooks/laptops and printers and of our duties under Australian consumer laws . . . We will provide customer support to assist consumers in resolving concerns with HP products in accordance with the Australian Consumer Law and have established a specific consumer redress program (involving a customer contact centre) to help with past concerns relating to HP-branded desktop computers, notebooks/laptops and printers.

Consumers who purchased goods from HP and feel their warranty rights were misrepresented should contact the company to seek compensation. (There’s also a special email address, consumerclaimsau@hp.com.)

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