Consumers Are Still Protected When Purchasing Service Contracts

According to the Service Contract Industry Council (SCIC), consumers can continue to buy and enjoy the benefits of service contracts for their electronic products durring the holiday season and beyond, with the knowledge that the contracts will still be viable and honored even if the retailer closes or files for bankruptcy. Many state legislatures across the nation have adopted or adapted the SCIC's model legislation, which among other provisions puts in place regulations -- including the requirement to buy insurance -- to protect consumers who purchase service contracts from struggling retailers.

Service contracts (sometimes referred to as extended warranties) purchased from major retailers are sold and administered by third-party service contract providers that are independent of retailers. And, according to the SCIC, a national trade association that represents the service contract industry and works to implement consumer protection regulations, these third-party providers will continue taking claims and providing service regardless of the status of the retailer that originally sold the service contract.

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