Who would buy a multi-year warranty from a retailer that might be about to go bust?
Many Canadians did, according to accounts collected by Global News. Sears Canada, after all, initially said the purpose of its corporate restructuring was to emerge as a better, leaner company. The plan was not to go out of business.
But it wasn’t just that. When customers inquired about the possibility of Sears going belly up, salespeople told them not to worry, because extended warranties were held by a separate company, according to six reports received by Global News.
Last summer, Charene Juraski, a realtor in Maple Ridge, B.C., was thrilled to find the best deal for a fridge and stove at the Sears store she had known growing up. But when the time came to take out her credit card, she started worrying: What if the company, which had already filed for creditor protection, went down the drains and her extended warranty with it?
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According to Juraski, a sales representative told her that she needn’t be concerned.
“The salesman told me I could be confident in the warranty as it was a separate legal entity from Sears and would survive a possible bankruptcy,” Juraski told Global News via email.
Reassured, she bought a five-year warranty for both appliances, spending roughly $700 on it.
She went home happy but when she woke up the next day it occurred to her that the separate warranty company she had heard about might also be owned by Sears.
When Global News contacted Sears to verify whether appliance warranties are, in fact, held by a unit separate from the company’s retail unit, it heard otherwise.
“Appliance protection agreements are held by Sears, this has always been the case, and I can’t speak to why a salesperson would say otherwise,” spokesperson Vincent Power said via email.
Only warranties on mattresses and furniture are actually held by a separate company. Those protection plans, called Guardsman plans and owned by a company called Valspar, will continue to be valid beyond Oct. 18, when Sears said it would stop honouring the rest of its extended warranties.
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Following her intuition, Juraski hurried back to Sears to cancel her purchase and opted to buy the appliances at another retailer.
Others, though, say they got stuck with the bad deal.
Paula Kraemer, a business manager in Winnipeg, said she heard a very similar story from a Sears salesperson when she extended the warranty on her washer and dryer on Aug. 29, just outside the 30-day window that would have made her eligible to demand a refund.
Kraemer said she was in a bind, as her dryer had been disconnected from the vent during a botched warranty repair by Sears and was blowing hot, humid air into her basement every time she did the laundry.
Although she was thoroughly unimpressed with the company’s warranty service she felt that she had no choice but to extend her expiring warranty in order to try to get her dryer fixed.
She said she did, however, inquire about the possibility of Sears going out of business.
She now stands to lose around $300 and said her dryer is still disconnected.
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Sean Morris, a sales professional in North Burnaby, B.C., was concerned about Sears’ future even before the company filed for creditor protection.
He had heard that the retailer was having trouble and was aware of the struggles of other big-box stores. So before extending his existing Sears warranty, he said he inquired about what would happen in case of bankruptcy.
“I feel like I was lied to,” he wrote.
For her part, Juraski said that she felt “like a traitor” at the time for ditching a store that had been a mainstay of her own and her kids’ childhoods.
“I really wanted Sears to right its problems.”
Now, though, she is relieved she trusted her brain and not her heart and cancelled her extended warranty purchase.
“I am so very glad I did.”