Buyback Insurance: A Good Deal for Retailers

Staying current with the latest gadgets is expensive. Every other week seems to mark the debut of a brighter TV or a faster phone. Consumers on the wrong end of the upgrade cycle are left with the malady known as technologus obsoletus, a lingering sensation of regret and envy. That’s why retailers including Office Depot and RadioShack in the last few years have started offering a service known as buyback insurance. The world’s largest electronics retailer, Best Buy, started its own program earlier this year. Although details differ, the insurance generally works like this: For an upfront fee, the retailer agrees to buy back an old device for up to half its original cost when a customer returns it within a few years.

Some technology addicts praise the convenience and sense of security provided by the service. Others feel like Jesse Loggins, a software engineer in the Denver area. “My first reaction was, they can’t be serious,” he says. “These are totally not worth the price.” Consumer advocates advise customers to stay away. “There are so many potential gotchas that a customer should be wearing protective gear anytime they sign up,” says Michael Shames, executive director of the Utility Consumers’ Action Network.