[1] For instance, an auto warranty from a car dealership may be subcontracted and vehicle repairs may be at a lower rate which could compromise the quality of service.
At the time of repair, out-of-pocket expenses may be charged for unexpected services provided outside of the warranty terms or uncovered parts.
[5] In spite of such advice, consumers frequently purchase extended warranties because they overestimate the frequency of failure.
According to the Automobile Protection Association (APA), which publishes the Lemon-Aid Car Buyer’s Guides, extended warranties or vehicle service contracts are a good idea if they cover items likely to break down within the coverage period.
Based upon the Québec civil code and the Loi sur la protection du consommateur every merchant is responsible to uphold the legal guarantee of a product.
A merchant cannot ask a consumer to pay any fees or shipping charges in order to be eligible to receive their legal guarantee.
Service contracts can cover automobiles, consumer goods (such as appliances, electronics, lawn equipment, etc...) and homes.
The regulatory structure requires licensure or registration of the warranty providers, financial solvency regulation, and service contract consumer disclosures.
Service warranty "providers" apply for licensure or registration, and then may sell their products, usually at the point of sale of the product, for example at the car dealership, or at the retail consumer electronics store, but some companies such as After, Inc, SquareTrade, Warranty Direct and Motoreasy also sell directly to consumers.
In 2002 the Office of Fair Trading decided that self-regulation of the industry had failed and passed the case onto the Competition Commission.