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eBay promotes electronics warranties

Buyers on eBay can now buy protection with the electronics goods they purchase on the online auction site--but fraud isn't covered.

People worried about buying electronics products on the popular auction Web site eBay can now buy a warranty to cover their purchases--but it won't protect them from fraud.

In a note to users earlier this week, the online auction giant announced that it has teamed up with warranty provider New Customer Services to offer protection for new and used electronics products. The warranty, which kicks in 30 days after a product is purchased on eBay, covers parts and labor costs and offers to replace products that require multiple repairs.

"Buyers have told eBay that they want to protect their eBay electronics and computer purchases with a warranty," eBay said in a separate note to sellers, encouraging them to offer the warranties on their listings.

"We expect the program to help give buyers more assurance when buying on eBay," said Danny Hourigan, president of New Customer Services' division of services plans, in a statement. A representative of the customer service provider declined to comment further.

eBay representatives did not return calls seeking comment about the warranty program.

eBay has targeted computing and electronics products as one of its key areas for growth as it tries to reach its goal of $3 billion in revenue by 2005. Already the company has attracted such electronics giants as Sun Microsystems, IBM and Motorola to offer used and refurbished goods through its site.

But with their typically high sale prices, electronics and computing auctions have also proven to be a popular place for fraud. Some unscrupulous sellers have offered products they had no intention of selling and made off with thousands of dollars from eBay buyers.

However, the new warranty program will not cover cases of fraud or misrepresentation, eBay said in a list of frequently asked questions on its site. Nor does the warranty cover inoperable products, the company said.

The boom in online auctions
Forrester Research says retailers,
portals are legitimizing the format.

"A warranty is intended to provide coverage and protection for a product that is in full working order," eBay said on the FAQ. "If you experience seller misrepresentation or fraud, please consult the eBay Rules & Safety section on how to resolve your issue."

Under its regular bidders' insurance, eBay reimburses buyers for up to $175 of their loss in cases of confirmed fraud. eBay-owned PayPal offers an additional $200 worth of coverage for items purchased using its payment system.

The warranty is only available for purchases of computing or consumer-electronics products. It covers products sold on eBay for up to $4,000 and lasts for one year.

eBay and New Customer Services will charge buyers between $9.99 and $299.99 for the warranty, depending on the price they pay for their item.

eBay is offering sellers an incentive to promote the warranties on their listings. If a buyer purchases a warranty on a particular item, eBay will refund the seller between one-fourth and one-half of his or her closing fees, depending on the price of the item. However, when a customer buys a warranty, the seller of the item will get the refund regardless of whether he or she advertised it.