Replacing Defective Equipment With Refurbished Ones?

If a camera breaks, while under warranty, do you think it is fair or appropriate that it is replaced with a refurbished model? A member has a recent incident of this happening.

I've always presumed that warranty replacements were new models. On the other hand, I've never checked carefully to determine if that is the case.


Also, do refurbished products need to be labelled as such? Is there any law? I see some references to FTC Guidelines but cannot find a definitive source?

It depends on the agreements & expectations of the owners. I have had contracts for maintenance where this was ok. I have worked for company's where this was ok as a practice. If New installation it is unethical, but I have worked for company's where this happened frequently. It's about keeping the customer happy no matter what.

Up and Operational asap. Thats the key. I personnally have found over the years that your ROI is far greater with new replacement. Then It also depends on the severity of the problem & cost of the item. Most manufacturers today, will ship fast track overnight advanced replacement to keep your business.

There is a law about once your install an item , You cannot remove no matter what with out owners consent regardless if they pay or not .

I think the market vertical makes a big difference is what's acceptable or the norm.

For example, electronic devices like cameras have a much shorter stock/SKU life than door hardware. Someone swapping out an IP camera from two years ago likely expects new, unused old stock of existing models, or a better model.

However, when it comes to items like exit devices or access controllers, refurbbed stock or even used inventory from like 15 years ago is often not even noticed. Many times, cosmetic blemishes are the only noticeable differences compared to 'new in box' inventory.

Also, I have never heard nor seen "a law about once your install an item , You cannot remove no matter what with out owners consent regardless if they pay or not." If you can furnish a citation or reg on that one, it would be appreciated Christopher.

Isn't the expectation of consumers that a product that receive is new, unless it has been otherwise noted? If so, would not properly labeling refurbished products fall under false advertising? I think we (Carlton) should put this question to the FTC for clarification.

Clearly, whether or not a product is refurbished is a material buying consideration, given that the market rate for a refurbished product is always significantly lower than a new product? Agree/disagree?

I can definitely take a look into what the FTC has to say on this, but I'm sure a lot of it is going to come down to what your warranty agreement says. A lot of electronics warranties say they will replace the item with something of similar quality or specs. The majority of my major electronics purchases are photo equipment and I've yet to see a warranty that says they will replace the item with something brand new. They usually say "of equal value" or "comparable replacement" or something like that. I've had a camera body replaced before that was an upgrade, but a refurbished version of the latest model. I've had an iPod that was replaced with a refurbished one after it mysteriously died. Unless the warranty agreement specifically says it's giving me something new, I never expect it to be new. I always expect refurbished.

This is a summary & explains a lot .

http://www.bear.ca.gov/consumer/consumer_guide.shtml

This one above is the basics

http://legal-dictionary.thefreedictionary.com/Product+Liability

This one listed above explains the most .

www.professionalhomeinspection.net/pdf/contractor_law_1...

http://www.bear.ca.gov/consumer/faq.shtml

http://www.bear.ca.gov/consumer/service_contracts.shtml

Christopher,

Laws or no laws, I hope you realize that the California Bureau of Electronic and Appliance Repair (BEAR) is about as useful as breasts on a bull. They almost totally lack enforcement powers. Basically, they're in business mostly for their contribution to California's general fund.

Bohang - WD also replaces defective in-warranty drives with "Recertified" drives. I can show you a number of them in our RAIDs. On our site, they haven't exhibited any higher failure rate than "new" drives.

You say "(customers) are not stupid and do no go returning nice perfectly working equipment". That's not necessarily the case with HDD failures, since many RAIDs kick out perfectly good drives that respond even slightly slowly to commands.

I think in any case, disclosure of 'used' or 'refurb' equipment is mandatory. If that's the question, then there is no grey area - used is used, and not new.

The question of whether a warranty replacement should be new - that's where the grey creeps in.

Brian, on the latter point (about whether warranty replacements should be new), I certainly agree that it's debatable. My big thing is that, if you send a refurbished item as a replacement, it should be labelled as such. I am not sure if it's the law but it certainly seems, at least, the right thing to do.

Brian

I think Chris is on point in regards to the inability to remove items once installed and you are thinking of it from the opposite side of the law. Every state is different when it comes to repossession laws but generally speaking they only apply to vehicles and a few items where both parties have entered into a "Lease" or "rental" contract where it stipulates how the property is to be returned if the purchaser defaults. A vehicle can usually be taken when it's on private property that is generally open to the public, like a driveaway at the front of the house.

When dealing with interior spaces within a private building the trespass laws apply if the owner does not want you within the property. Unless you can prove that the equipment was purchased with fraudulent intent, the only recourse is to bring suit to the party for the financial loss. Even if it were a fraud, the average beat cop would listen to both sides and the property rights trump the civil claim and you would be sent packing. So if there was fraud, this is something that a detective would need to investigate and then need a criminal a criminal warrant to recover the "Evidence" for the criminal prosecution.

So, bottom line, unless the owner allows you to come back in a remove property, your only recourse is to sue them for the cost of the job and hope for the best.

Mark

Since two years ago, Seagate has been fulfilling HDD RMA claims with "Recertified" HDD which are obviously used. Also, we have noticed these refurbs have higher failure rates then new HDDs. Seagate lost all our business with this move and we switched to WD.

I think the trouble with refurb is that they are usually returned units. Now customers are not stupid and do no go returning nice perfectly working equipment. So the manufacturer goes are repairs it bit there may be subtle faults that do not get found during refurb QA.

An example is a sturdy camera that has been dropped from high up and returned the poor integrator who cannot afford to cop the $1200 to replace it and RMAs it also does not want to risk installing as the spot where it is going is hard to reach. Now this accident is unknown to the manufacturer who after testing found it to be okay and recertifies as refurb. But micro cracks have begun to form in circuit boards. As the cameras parts endure expansion/contraction through sunshine and night cold it begins to malfunction.

I believe the best way us to flog the refurbs on eBay auctions as used items and supply new replacements to full price paying clients. People if eBay are used to receiving doggy equipment while channel clients need to be looked after.

If a manufacturer has a large inventory of refurbs the something is clearly wrong with QA or the designs themselves. If a company like Seagate needs to recoup pennies on the 1% of HDDs that ft returned to be profitable then obviously there is a HUGE problem with their business model. A 1% profit margin business - now thats dumb. Reminds me of Vodafone Australia (aka Vodafail) - who spend 99% of revenue of advertising, provides a broken service and broken phones with broken custom firmware that crashes, is unable to chuck out said broken phones due to said 1% margin, and ends up losing customers in the double percentages (they lost 600k customers in the last 2 years) and copping millions of dollars in losses each year.

Bohan's got a great example with the "recertified" drives. I had a couple once (probably Seagates) that gave me odd problems... I ran the SeaTools tests; ran the full "recertification" tests... ran the "write zeroes" tests... basically every test Seagate made available to the average public, and the drives passed them all. And yet, when I put them back into service, they started showing signs of failure again within a couple weeks. And still they passed SeaTools' tests. It wasn't easy convincing Seagate to RMA them under warranty, either, since they wouldn't throw any error codes.

With that history, I don't have a lot of faith in "recertified" drives.

That said, in general I don't have a problem with a "refurbished" product as a warranty exchange... as long as that product is backed by the same warranty as a new item... and as long as the manufacturer notifies me that it IS refurbished. Legal or not, passing off refurbed as new is pretty shady.

We recently had an issue with the (seagate) WD barracuda drives. They got stuck in an endless loop ( or ) it seemed to be recording on all 3 servers (3 per server ), 9 drives total

Not sure but the exacqvision software ( 6 years old ) displayed the servers recording as normal, when we tried to retrieve info, had no info, no info available.

Whole system on one UPS , UPS failure , we split up into individual ups's for dependability reasons. All indicators displayed normal , but when we tried accessing them , there was nothing to retrieve.

We did not question the company's or who's at fault; but for a display of good will. We upgraded the software, changed all the drives and system back to normal. Untill this happened: we had no idea this could happen.

Back in the Day, we used to ship Pelco 3-4 year old products, they would repair & overnight at no cost or replace at no cost. This left a great impression on me. Great Concept, We would really support, stand by, specify their products. Other companies were not so good to us. They lost a lot of return business

Bohan brings up an interesting point that I have heard manufacturer's contest, i.e., "I think the trouble with refurb is that they are usually returned units. Now customers are not stupid and do no go returning nice perfectly working equipment."

Many manufacturers have complained that returned cameras frequently work but the integrator did something stupid (e.g., they couldn't figure out the right IP address, their VMS did not support the camera but the integrator presumed the camera was broken, they could not configure a feature properly but blamed it on a 'faulty' camera). I can certainly appreciate this side as well as some returned/reused equipment may be perfectly fine. However, how do you know which one is or is not truly damaged?

Well you don't know which ones are damaged - which is why we delabel and flog all of them on eBay auctions.

A tradesman's time is very valuable - we understand this and do not take any unnecessary risks that may cause a customer to drive 60 miles to replace a refurbed part.

We get about 1 return out of 150 units. If I have to chuck it in the bin I will - how can it be an important factor to the profitability of the business? The only valuable aspect is studying the return product for possible design problems - which we do of course, but afterwards if just a writeoff.

I am so angry with what Seagate did - hell HDDs store data worth at least 10 times the drive - and Seagate treats it like a game. Seagate spec'd AFR is under 1% - just check out you bloody returned drives or sell as refurb in eBay or an outlet site (like Dell Outlet). Its so dumb to risk you reputation as a world leader is reliable digital storage solutions of less then 1% extra revenue - so dumb. Like Matt, I have wasted in excess of 50 hours decertifying Seagates recertified drives. I actually worked out a way to make them malfunction using benchmark tools like iometer that generate lots of random IO. I have submitted these findings to Seagate for the betterment of Society (lost family photos anyone?) And I am sure they just deleted my email.

And the HDD manufacturers are slashing warranties to 1-2 years left right and centre. How can they explain a datasheet sheet that specs 5 years design lfe and slap on a 2 year warranty? And this practice of separating HDD models be reliability (surveillance grade, SAN/NAS grade, "desktop" grade, etc) what a joke! So Seagate - you are into the data valuation business now - you have identified that the data of consumers is worth less than or corporation? WD is just as guilty in the aspect but at least no refurbs as RMA.

John & Bohan are right, there are a certain people who would deliberately do this. They just wanted better & newer products .

Thats why we have really strong contractual agreements to prevent this sort of abuse.

I remember the costco warranty, lifetime on any product you purchase from them. I wonder how many abused this program before they change it.

Costco is smart - they know those unscrupulous buggers are only like 1% of sales - so who cares? Penny pinching businesses will hurt ther customers which then hurts themselves.

Carlton, it's interesting to hear your expectation is for refurbished. Do you recall seeing a label on those replacement products that discloses they are refurbished? I can certainly understand manufacturers replacing with refurbished, I just can't find any clear evidence of whether or not US law requires that they be labelled as such.

John, on both of the replacements they told me I'd be getting new OR refurbished when I called. I never knew which it was going to be until it got there. When they finally arrived it wasn't marked on the equipment, but it was always clear on the invoice that came along with it.

This kind of philosophy or metrics works for large business's , but for small business's 50 or less employees it does not work . A matter of time .

As a small budgeted company you have to stand behind your product,image,presence in industry .

A bad name sinks a small co. ten fold , a bad name is just another unhappy customer in large companys.

If a person replaces old cameras with refurbished and leaves the wrong impression to the client or owner then it is wrong , but if the owner is in agreement with full knowledge, then well, its a mutual agreement .

Some things are out of the hands of the company and a product of distrubution policys set in the marketing process .

I ran support for a mid-sized integrator for a few years. We resold manufacturers products and made none of the stuff ourselves (except we built OEMed Geovision PC-based DVRs) and I can tell you that the entire RMA process is a big friggin game.

As the reseller, whenever something failed at a customer site, the integrator had to troubleshoot the device on-site (with us, on the phone) before we issued the RMA#. This process annoyed the crap out of the good techs since they had already done everything to isolate and eliminate components to determine the fail point...i.e. bad device, but it saved us thousands (perfectly good, now 'used' (B) product on our shelves; shipping/handling, etc) because lots of times the integrator just wanted to return the stuff because __________ (insert whatever you can imagine).

If the integrator can't use the product they ordered (for any reason at all), they are not going to eat it if they can make the supplier eat it. If we received a vetted RMA, and it worked (with 24hr burn test), then they got the same device right back. :) ...but I told them this would happen before they sent it to us.

Then, if I get the device back and it doesn't work, I have to play the very same game with the manufacturers support person before they will issue me an RMA# - which annoyed the crap out of me, as I had already tested it twice. If they got the device and it worked (don't know if they burn tested), they would send it back to me - and it would become B stock, magically losing around 40% of it's value because the buyer didnt want it/couldn't use it.

As far as used vs new as a replacement for an RMAed device, I agree with Carlton - unless the device was doa (or failed within a very short period of time) I wouldn't think a new device is a legitimate expectation. That said, as we did back in the day and I still agree now, you must disclose the policy and everyone needs to be aware of what it is.

I think referb is a common practice for warranty repair. Cisco network switches that are RMA’d net you a referb. So do most of the IP camera’s I’ve RMA’d. Servers are also typically referb. About the only thing I get replaced with new are Hard Disk Drives.

So the HDD is obviously a wear item, so it seems reasonable to get a new one if it was under warranty. A fixed IP camera is mostly solid state, so I don’t really see any issues there. The PTZ cameras might have a tired motor or something, so new might be preferred. I think most of the electronic capacitor/resistor issues would be largely in the power supply, not the IP camera itself.

I’ve haven’t been overly frustrated with a referb IP camera, yet. But I’m an end user and haven’t had the quantity of referbs that an integrator might have had.

IP cameras do contain PSU circuits:

Most ICs use 5V and 3.3V and some things like ICR and IR Leds use 12V

If PoE powered - there are many capacitors in the 48VDC -> 12VDC section

If 24VAC powered - there are another lot of capacitors (filters before/after the retification stages)

If 12VDC - maybe you are right in this case - but all the cameras we sell have additional filter (containing electrolytic caps) stages because they are designed to work between 8-15VDC

Aaron, thanks! Do you recall if the refurbished items are labelled as such, either on the unit itself or in the packaging?

I never see a refurbished label on the product. Generally it does show on the packing slip, but that varies. I guess my expectation is that it is referb. I can usually tell by the "not so new" condition.

You implication is that the manufacturer is not being forthcoming about the refurb status of the warranty repair. I seem to recall the warranty info for Cisco states it is a referb, and realistically it is a lifetime warranty, so it would have to be a referb at some point. I don't recall if the referb notice is on my servers, HD, or IP cameras. I do see your point that ideally a referb product would have a sticker.

Aaron, thanks for the feedback. Certainly, one concern I have is whether the device is properly labelled. The other two issues I see are:

  • Many warranties say that the manufacturer has the option to give either a new or refurbished unit. In such cases, unless they notify you explicitly, you have no way of knowing what the replacement unit is.
  • This relates to what Marty was discussing earlier. If I have a DOA, I would be infuriated if a manufacturer sent me a refurbished unit as a replacement. I can understand replacing a 2 year old broken product with a refurbished but if I buy something 'new' and a manufacturer send me something that is dead on arrival, it seems terribly unfair to replace it with a refurbished one.
John, Hey, you must have fixed something. I'm posting from my Blackberry. Anyway, I agree. If a manufacturer replaced a new DOA with a refurb, I would be pissed too!

I agree with Christoper, it depends upon what the customer expects. It was always a practice when we had a service contract to replace down dome PTZ's, J boxes, interface PC boards with a refurbished one from the repair center. I would troubleshoot first then replace the dome from an inventoried replacement stock which had full records of the type, model, serial numbers, which interface board it would/would not work with, and the serial number and shipping number or RA number of the dead camera. When it was returned, I tested the dome on a workbench with controller and matrix extensively before replacing it at the customer's site. It was like going through the lane at McDonald's, we always had to check to make sure the repairs were done. Sad but true.

The customer knew the full details on their equipment by checking their invoices.

I also used red fingernail polish on inconspicuous spots on the PC boards, inside gears, etc to keep the repair service honest after several were returned that had my serial number but weren't mine. Tis a shame we had to go to such lengths but when you have over several hundred domes to keep track of on one site it was a nightmare talking with the manufacturer/tech support about a dome that was just replaced and didn't work.

Scott, excellent feedback. Can you expand on this point? "Red fingernail polish ... keep the repair service honest after several were returned that had my serial number but weren't mine." Why were they doing? Seems strange (on their part).

Thank you John.

A major manufacturer we had used extensively, thus locking ourselves into their trust and care, tried some underhanded tactics which we discovered. We sent in PTZ dome cameras for repair after obtaining RA numbers from their tech support. On several occasions when the "repaired" dome was returned and we attempted to replace it by getting the lift, remove the temporary camera and replacing it with the repaired camera, the repaired camera worked at first then quit after several hours/days or would not function properly at the start.

At first we thought it was a communications issue so we started to reboot the matrix every time we replaced a camera. Sometimes it worked sometimes it didn't.* Please keep in mind we were using PTZ domes with fiber optics for video and control into a fiber optic MUX, then fiber optics again to the code translator then to the matrix. We had a lot of troubleshooting to do. When it was determined to be the PTZ dome we went into investigation mode by checking serial numbers and model numbers and the functionality between the camera and the PC board it snapped on.

We knew by trial and error several models would not work with previous versions of PC boards. We also had suspected since their manufacturing had been moved to Puerto Rico there was a possibility of poor construction tolerances where the camera snapped onto the PC board. This in fact was proven and a tech bulletin was generated by the manufacturer offering to replace bases that failed at no cost when returned for repair. The plastic used was not the same recipe so-to-speak and after a few hours in the sun the plastic gave way a bit and connection was lost.

It was after these occurrences we used the nail polish to the parts and discovered the repair depot of the manufacturer was giving our "innards" to another camera and putting the part with the serial number on someone else’s' "innards", testing it and sending it back. Example: Our model 4 was replaced with a model 3 which would not work with a model 4 PC board. Instead of fixing our camera they gave us someone else's problems or created more problems for us. After confronting them with this they admitted doing so and stopped the swapping procedure.

* We also discovered the 16 camera code translator would not work with 16 fiber optic cameras. Due to the converted tri-state RS 485 it would only work with four. Amazing what a large system will bring out in the way of faults and curiosities when you're trying to install it. If only the customers wouldn't buy the "make it work option".

I don't know how any of you guys luck out on getting new HDDs with any company RMA. I come from the PC hardware world and I have probably RMAed tens of thousands of drives in my career. Nobody sends new drives. They are always marked recertified in order to shorten the replacement drive warranty. Replacement products usually only carry a 90 days warranty, not a full new warranty. Now wether or not that replacement item has been used before is another question. They very well might mark them recertified even though they are new just for warranty purposes. The issue becomes a real problem when you replace the defective item out of your own inventory to get the client back up and running, yet you receive back an item that cannot be sold as new. This is where you must build in margins to cover this on every job you quote. It has to become a defacto line item. If you know the rate of failure is 2%, then simply add on an additional 2% of margin to cover the cost.