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:
“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.