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October 8, 2012

Refusing to Make Repairs Under a Service Contract

Filed under: Electronics,Retail — Edgar (aka MrConsumer) @ 6:30 am

Marie W. bought a front loading GE washer and dryer back in 2008 for over $2100. Just before her first year of ownership was up, she got a letter from GE offering her a four-year service contract for $298. She decided to buy it.

One of the inserts she received for GE Service Protection Plus (from Federal Warranty Service Corporation) promised “unlimited service calls” and “you pay nothing for repairs to operating components that fail during normal residential use throughout the life of your contract.”

Good thing she bought it because she needed two repairs in the past few years. Then recently she heard a loud banging sound and called for service. The repair guy came, diagnosed the problem, and called in the repair telling them what was needed. The service company responded that it would cost too much to make the repair, as the washer was now only worth $589. They said all they would do is pay her that amount instead of fixing the machine. The repair would supposedly cost $1300.

Marie was in shock because she thought she had purchased peace of mind and would not have to worry about repair bills until 2013. She was told to look at section 9 of her contract and see that the service company was within its rights to refuse repairs. Could that really be?

MrConsumer got a copy of the contract, which said in relevant part:

*MOUSE PRINT:

“Administrator, in its sole discretion, will determine if Your Product is “non-repairable.” If it is, your remedy is to select a GE PRODUCT or a MONETARY credit from one of the schedules below.” [GE product credit is 84% of original purchase price for a four year old appliance, and a monetary credit toward a non-GE appliance is 74%.]

” ‘Non-repairable’ Product is a Product that Administrator determines cannot feasibly be repaired based on commercial and technical considerations including, but not limited to: age of Product, repair cost, number of times the Product has been repaired or attempted to be repaired, physical access, or parts not available in GE’s parts warehouse….”

“… liability of the … Administrator… shall not exceed the purchase price of a comparable replacement Product…”

While the fine print in the contract tends to uphold the servicing company’s actions, the current value of a consumer’s washer is not explicitly part of the computation to judge non-repairability and may not be calculated correctly. The company’s actions also are at odds with their advertising claims of the consumer not having to worry about repair costs during the term of the contract.

After some back and forth with the servicing company, they upped their offer to $679, still refusing to make the repair. MrConsumer advised Marie to file a complaint with the Attorney General’s office to see if they could negotiate an even better deal for her.

But the lesson here is to read any service contract you plan to buy before you buy it, and see if it includes the right of the servicer to refuse repairs or to cap its liability.

• • •

16 Comments

  1. $2,100 for a washer? I had no idea they could cost that much.

    Edgar replies: That price is for BOTH washer and dryer.

    Comment by Bryan — October 8, 2012 @ 8:44 am
  2. Is this the washer in question? The “loud bang” sounds like one of these, and the price is about right.
    http://www.cpsc.gov/cpscpub/prerel/prhtml13/13003.html

    Edgar replies: Tom, I looked at the GE recall last week to check the model and it was NOT the recalled one. This one is WCVH6800.

    Comment by Tom — October 8, 2012 @ 9:27 am
  3. Although I don’t buy a lot of appliances, I do buy a lot of electronics and things like cars, have never bought a service contract, and have no regrets. Most credit cards will double a manufacturer’s warranty for free for up to an additional year; I once made a claim using that, and the warranty company found some excuse to not cover the repair anyway. Consumer Reports has generally recommended to not buy service contracts, and it’s good advice. They’re a bad buy, and are big money-makers for the retailer with far too much mouse print, as Marie W. discovered. In fact, if you back out the $298 she paid for her service contract, she’s really left with just $381–although I admit she did get a couple, former free repairs under it.

    Comment by Dan Kap, Whittier, CA — October 8, 2012 @ 9:49 am
  4. Between Federal Warranty, Sears, NEW Corp and Lowes, the vast majority of appliance service contracts are sold/administered in the USA. All have limits of liability as the price the consumer paid for the product. Many retailers have the “market value” as the replacement value. The ultimate outcome is still determined by how aggressive you pursue the solution and who you can get to up the chain at the retailer. Outside pressure from the BBB and/or Attorney General’s Office always helps but doesn’t help your time frame to get your product fixed/replaced.

    Fortunately, the majority of customers still do not need service contracts as the odds are weighted heavily with the house. The “mouse print” is such that one needs an attorney to decipher the terms and conditions anyhow – this is obviously intentional. The fact that retailers have NEVER posted key clauses in plain English in their stores reinforces the fact that these service contracts are essentially and intentially deceptive.

    Comment by Allen — October 8, 2012 @ 11:57 am
  5. Service and replacement contracts are very tricky business. I hesitate to buy one for anything that costs less than $1000 because technology loses value very fast and the cost of repair can often be more than the cost of replacement or service.

    I didn’t know about the clause that could refuse service. I’m, glad the customer was still offered money, but I would be much happier if the company offered to meet me in the middle and give me a refurbished product or something.

    Comment by Wayne R — October 8, 2012 @ 1:11 pm
  6. I had a central airconditioning system installed by Sears. I renewed my service contract every year. The coils would need to be cleaned every couple of years because they become dirty. After several years Sears refused to come clean my unit and refused to renew my contract because the way the unit was installed it was too difficult to clean. They were not concerned with the fact that they were the ones that had installed the unit. I will never have Sears do any kind of home improvement ever again, and warn everyone I know with this cautionary tale.

    Comment by Mary Ann — October 8, 2012 @ 2:48 pm
  7. Is it just me or was this GE washing machine a complete lemon…

    Marie goes through two repairs that she did get for free based on her contract and then the THIRD repair in around four years was for 1300 bucks if completed which is pretty much the cost of a high end washing machine from GE today.

    That is too many repairs in a short period of time.

    I wonder though how much the cost would have been for the two previous repairs if she had to pay 100% cash for them??? I hope they totaled more than the 298 she paid for the contract.

    Comment by Richard Ginn — October 8, 2012 @ 3:13 pm
  8. My husband work for Sears service dept. for over 25 years and we would never buy any appliances from them ever!

    Comment by Dee — October 8, 2012 @ 3:19 pm
  9. Had a Sears service contract for my Kenmore fridge. The guy came out, cleaned out the coils, tried to talk me into another contract (no thanks), and left. Bought a coil cleaning brush for < $10 and did it myself the next time. Not much maintenance needed for a fridge. I'll never buy another service contract for widgets ever again. For personal health, yes (this is called health insurance with reams of fine print behind it). For widgets, no. You'd be better off taking that widget service contract money to Vegas instead.

    In Michael Moore's "Sicko", the insurance company refused to cover the cost of the ambulance ride because the accident victim had failed to call ahead for prior authorization. Call ahead? How could she? It was an unplanned accident. She was unconscious. This fine print had to be written by Satan himself and, I think, is in my medical plan as well.

    Comment by anonymous — October 8, 2012 @ 5:44 pm
  10. I purchased a “professional” model lawn mower from Sears that advertises a two pull start guarantee – both a flyer and a dvd statement. When I brought my mower in for the above guarantee statement, Sears passed the buck to (briggs & straton) . no more Sears !!

    Comment by tom — October 8, 2012 @ 6:44 pm
  11. When it comes to an extended warranty regarding an appliance, I find it best to be self insured. Instead of spending $300.00 on a service contract, I put that $300.00 in a seperate savings account when I buy the new appliance. I do this with every appliance I purchase. The account currently has over $2000.00 in it. If something breaks, I’ll use that money to fix it. If something is broken beyond repair, there’s enough money in the account to buy a new one. That’s the way I’ve always done it. It’s always worked for me.

    Comment by Jack — October 8, 2012 @ 7:45 pm
  12. Recently my 10 yr old Kenmore frontloader needed repair. My repair man told me it wasn’t worth it as several other major parts on this machine were on their last legs. He recommended I purchase the basic top loader from Roper (made by Whirlpool). His experience was that the more basic the machine, the longer the lifespan and the more computerized parts, the more likely a repair was. I priced those machines–~$450 but not carried in stock by any local store. I wanted to SEE what I was getting before purchase. I can’t tell you how many barely used machines were on Craig’s list for $1000 +!

    So I decided to go to a local appliance store and buy a used washer. I figured I could buy 2-3 before I spent $450 and buying an older machine might be a better machine than new. PROS: the new washer holds more laundry per load and washes more quickly. CONS: needs to run through the spin cycle twice to get equal the water out and doesn’t have a delay start like my old machine. (I have an odd laundry arrangement so my drain goes uphill.)

    My repair guy also repairs computers. We agreed we want our computers on the desk or in our laps; not in the basement doing laundry.

    Comment by J in VA — October 8, 2012 @ 11:20 pm
  13. This is exactly why I did NOT buy an extended service contract on my new TV or my new stove… there were clauses like this in it and I figured “screw it, AmEx gives me the extra year on the warranty anyway, as does costco”

    Comment by Daniel — October 11, 2012 @ 1:44 pm
  14. Just from reading columns like Mouse Print, Consumer Reports and others, I don’t know why anyone would spend the money on these new front loading washers. Not only are they ridiculously expensive, but getting them repaired (which seems to happen a LOT) is also expensive and very time consuming.
    And now they have these commercials for the detergent that gets rid of the smell “common with front loading washers”. Really?
    I’ll stick with the cheaper top loaders.
    Thanks, Edgar.

    Comment by Sko Hayes — October 13, 2012 @ 6:43 am
  15. Mary Ann,

    I’m sorry to hear about the difficulty that you’ve had with having your central air conditioner serviced. Putting myself in your shoes, I wouldn’t blame you for being upset. My name is Brian H. with the Sears Cares Social Media Support team and we would like to help. We would like to have one of our dedicated case managers contact you to explore any options that may be available to you to get your air conditioner serviced. At your convenience please contact our office via email at SMAdvisor@searshc.com so you don’t have to be upset by this any longer. In the email please provide a contact number and the phone number the unit was purchased under (if different than the contact phone number) and we will call you directly. In addition, please include your screen name (Mary Ann) in the email so we can reference your post. Again, we’re sorry for any trouble we have caused and we hope to speak with you soon.

    Thank you,

    Brian H.
    Social Media Moderator
    Sears Social Media Support

    Comment by Sears Cares — October 15, 2012 @ 3:54 pm
  16. Thanks Tom
    I have that machine and did call GE, yet to receive an offical recall notice. The “fix” is to reduce the the spin speed.
    Would not be the best if you purchased an auto, and a couple of years later the mfg stopped by and reduced your speed to 45 MPH. The service fellow did re-program the machine which took about 20 minutes and did not encounter any problems. I had no idea that the machine was made in china, thought it was assembled in the US. Too bad that it has issues because its a great machine to use, like it alot, hoping the rpm reduction does not affect the cleaning and only causes a longer drying time. not a sears purchase.

    Comment by dave s — October 23, 2012 @ 5:31 pm

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