Defense Plans: Did Best Buy and Costco Overcharge You in Taxes?

If you bought a warranty at a department store like Best Buy, Costco, or Walmart, be careful: You could be paying a lot more tax.

At least that's what a new class action request filed in a Montreal courthouse last week alleges.

The story that led to the complaint is fairly common: A person buys an Apple computer at Best Buy and agrees to pay $630 for an “Applecare+” type of protection plan.

According to lawyers who signed the petition, the problem arises only when the trader adds GST and QST to the total invoice, the guarantee should be treated as an insurance product.

However, tax on these products (TPA) is 9% while GST-TVQ is close to 15%. For a $630 bill, the difference is $37.64.

Extensive practice

Best Buy is not the only brand to customarily apply GST and QST on sold guarantees, the lawyers added.

Costco, Walmart, Staples, Brick, Rona, Home Depot and others do the same with protection plans that put consumers at risk of paying more tax in many places.

According to the plea, this practice is a “false or misleading representation as it does not correspond to the economic reality to which the TPA applies”. Result: All these channels “mislead” their customers and should be forced to return the excess amounts collected and ordered to pay damages.

dispute

However, all this remains to be demonstrated, as it is not clear that the various protection schemes offered to consumers are actually insurance contracts.

In this regard, the request recalls that the Financial Markets Authority investigated Apple's insurance operations in 2021. The coverage against accidental damage included in the Applecare+ guarantee constitutes “insurance, as the company has come to a conclusion that indemnification is not limited to defect. or equipment malfunction.