eBay launched a new program, "Warranty Service for eBay provided by N.E.W." Sellers of computers, consumer electronics and musical instruments may participate at no charge in the optional program, which requires HTML code to be added to the auction description. Buyers who choose to purchase warranties for auction items that participate in the program deal directly with N.E.W. Customer Service Companies, a leading provider of extended service plans.

"N.E.W." will give buyers with warranties free repairs and a No Lemon Guarantee on items for 1 year. Buyers purchase the warranties directly from N.E.W. Fees for the warranties are steep: it cost buyers $9.99 for a warranty on an item with a selling price of up to $50. A warranty for an auction item with a winning price of $150.01 - $200 would incur a $24.99 fee (http://pages.ebay.com/help/warranty/buyer_overview.html).

The N.E.W. warranty does not provide coverage for seller misrepresentation or fraud (i.e., non-working product at time of receipt or product that is substantially different from what was described by the seller).

Buyers considering purchasing extended warranties should carefully read the Terms of Service (https://smart.newcorp.com/ebay/jsp/EBAY-Terms-Non-FL.jsp). The Terms of Service outlines conditions of warranty and a list of things that are not covered, including preexisting conditions; used merchandise that is over 5 years old; items that retail for over $4,000; and commercial use of products.

"N.E.W." will offer sellers a cash bonus for every warranty that is sold successfully on one of their items. For items that sell for $200 or less, the seller receives a bonus equal to 25% of the Final Value Fee. For items that sell for over $200, sellers will receive a bonus equal to 50% of the Final Value Fee (http://pages.ebay.com/help/warranty/seller_overview.html). Note that eBay encourages sellers to offer a 30-day return policy during which time buyers can return non-working merchandise. Warranties start 30 days after the close of transaction.