Consumer Fraud Archive

Extended Warranty: Do you Need it? What if a Repair Claim is Denied?

February 7th, 2012. By AbiK

It’s become the all-familiar conversation as you pay for that washing machine, HDTV, smart phone or even a set of luggage— “Would you like to purchase the extended warranty on this? It covers blah blah blah blah just in case blah blah blah…” Chances are, as if by rote, you shake your head to indicate that, no, you don’t want whatever protection plan they’re offering up.

It makes sense, after all, as we’ve been trained for years now by consumer advocacy groups to “just say no” to most extended warranties. It’s become a Pavlovian response. But then why are these protection plans still around if no one is buying them? Clearly some folks must be buying—and the question is, are they the smart ones or are we really doing the smarter thing by passing up what might seem like some extended warranty scam?

The answer is, it depends.

So here are some extended warranty guidelines—things to consider before opting to pay for a protection plan that goes beyond the manufacturer’s initial coverage plan period (and what to do if after you’ve purchased a protection plan you run into a bad faith insurance situation.)

1. Do your homework—research what you’re buying before you buy it.

Reliability Ratings. Find out how reliable the appliance or tech gadget is—does it have a bad track record for repairs? How costly are repairs? Look at how the product is rated at Consumer Reports, for example. Check out reliability reviews on laptops, smart phones, tablets, HDTVs, cameras—all tech gadgets and gizmos–at PC World, CNet or PCMag. Reliability ratings will give you a sense of what kind of repairs, if any, you can typically expect the product needing over the time in which you’ll own it

New May Not Mean Reliable. Keep in mind as well that new generation products–that is, products with new technology or design features–may not have all their bugs and kinks worked out when they launch. In such an instance—if you’re the type who has to have the latest and greatest thing on the market regardless of how much reliability data may be available on it—then an extended warranty may be worth looking into. Or, hold your horses and wait for the next production run in which improvements have been made. And a final note on new tech—if you think you’ll upgrade or switch to a new model within a couple of years anyway, the extended warranty probably isn’t worth it.

2. Look in your wallet—your credit card may protect your purchase, too.

Paying with Plastic can Provide Extended Coverage. Cards such as American Express offer some extended warranty protection with even the basic Green Card. This is how the AMEX extended warranty coverage works:

When you charge the entire cost of a covered product with your American Express® Card, the Extended Warranty will extend the terms of the original manufacturer’s warranty for a period of time equal to the duration of the original manufacturer’s warranty, up to one additional year on warranties of five years or less that are eligible in the U.S.

If you’re not sure how or what might be covered with your credit card, call the customer service number on the back of your AMEX, VISA, MasterCard, Discover, etc. card and ask. You may find that you’ve got extended warranty protection already.

3. Find out what the extended warranty covers.

Read the Extended Warranty to Understand the Terms. Know what you’re paying for and what to expect should your 3-year-old drop your smart phone into the toilet. Some warranties don’t cover all “accidents”. Some only cover a specific set of parts. After reading about the product’s reliability and which parts are most likely to fail, compare that information with what’s covered by the extended warranty.

Understand the coverage period as well—typically, you’ll pay more for a longer coverage period, which at first makes sense. But if you’re not planning on keeping or using the product for a full five years, you probably don’t need a 5-year extended warranty, and you’re better off saving your cash.

4. Follow the 20% rule.

Don’t Pay more than 20% of the Product Price for an Extended Warranty. Some reports indicate markups of close to 50% for extended warranty protection plans. The generally accepted rule of thumb is not to pay more than 10-20% of the price of the product for an extended warranty to cover it.

5. If something goes wrong…

Get help when Covered Repairs or Replacements aren’t made. As with any agreement, sometimes things don’t go as planned. If you’ve had a legitimate problem with a product that you’ve purchased an extended warranty for, and you’re having difficulty getting the warranty company to cover the repair or replacement—or they’ve outright denied your claim when it should have been covered—you may have a bad faith insurance claim. Most people think of bad faith insurance in regard to life or health insurance claims, home insurance claims, or as it relates to car accident claims. Your extended warranty agreement is a form of insurance that can go “bad” as well. If you feel you have an extended warranty bad faith insurance claim, you may want to seek legal help.

Tags: Bad Faith Insurance, Extended Warranty, Home Warranty, home-warranty-insurance-lawsuit, Protection Plan, Reliability Rating
Posted in Consumer Fraud, Emerging Issues, Insurance | 93891 Comment »2012-02-07+17%3A19%3A42AbiK

Gambling for Justice: Class Action Lawsuit v. Small Claims Court, Place Your Bets

January 13th, 2012. By AbiK

It’s a well-chronicled sentiment: class action lawsuit lawyers get rich on attorneys’ fees and the little guy gets stiffed. Whether true or not—and there are arguments on both sides—it’s easy to see how a settlement check for $1.13 can make a plaintiff feel like ‘thanks, but no thanks’. And that brings us to the case of Heather Peters, who is suing Honda in small claims court over her claim that Honda engaged in false advertising when it stated her 2006 Honda Civic Hybrid had a 50 MPG rating.

Small claims court? Isn’t that only for some kind of ‘my boyfriend split with my smart phone and $800 I had under the mattress” type of reality tv show crap?

Well, no—and that’s the point—or calculated bet—Peters is trying to make. See, according to the Honda Civic Hybrid Class Action lawsuit proposed settlement FAQ, each class member would receive $100 as settlement. Peters, who is a former attorney herself, deems that a bit of a paltry sum and so she took the route that most of us do not and she chose to opt out of the proposed settlement. And, in turn, she took her complaint to small claims court.

What’s intriguing about her choice is that, not only can she seek up to $10,000—the new 2012 limit set for small claims in California where the complaint is being heard—but, if she can persuade enough 2003-2009 Honda Civic Hybrid owners to follow suit (no pun) and head to small claims court, she estimates that Honda would be liable for nearly $2 billion—vs the current liability they face coming out of the class action lawsuit in which each class member would receive $100.

Talk about power to the people—if only the people took to the power—by February 11, 2012—the date by which class members’ opt out requests to the Settlement Administrator need to be postmarked.

At issue in the Honda Civic Hybrid Class Action lawsuit is not just that advertised miles per gallon (MPG) ratings for the car were misrepresented, but also—and here’s where a subclass of class members enters into the picture, to which Peters also belongs—that for model years 2006-2008, Honda Civic Hybrid (HCH) owners were told their cars needed a software update to the Integrated Motor Assist (“IMA”) battery system.

What HCH owners didn’t know—and American Honda Motor Co. apparently did not disclose—was that allegedly, in order to install the update, the result would be a negative impact on fuel economy. Not ideal when the primary reason you purchased the car was for its fuel economy.

You can start to see where $100 per claimant—worth what? a couple of tank fills?—isn’t sounding like much.

So Peters is placing her bets on small claims court. But as stated earlier, it’s a bit of a calculated bet for her–she’s done, and doing her homework. Just see her website. And she says that anyone can do the same.

But would you?

Prepping for small claims court, sans an attorney of course as that’s part of the charm of small claims court—no lawyers allowed—takes time. And, you do have to have the ability to put together a pretty darn good case, particularly if you’re taking on a major corporation. Given that, it comes down to whether you think it’s worth it, or not. And that’s probably why so many of us sit back and await whatever settlement check we receive.

You have to admire Peters though. She’s up for a fight, and she’s got a pretty good one from the looks of it—perhaps even a new profession in behind-the-scenes small claims coaching. And, at least she is not just sitting back and complaining about attorneys’ fees—she’s trying to take a stand, both literally and figuratively.

Peters’ next hearing date is January 25.

Tags: American Honda Motor Co, Class Action Lawsuit, Consumer Fraud, false advertising, HCH, Heather Peters, Honda Civic Class Actin Lawsuit, Honda Civic Hybrid, MPG, Small Claims Court
Posted in Class Action, Consumer Fraud, Emerging Issues | 9333No Comments »2012-01-13+14%3A28%3A12AbiK

Channeling Picasso for Oscillo Flu Relief Fraud?

January 11th, 2012. By AbiK

Picasso must be rolling in his grave at Château de Vauvenargues. That is, if he’s seen the latest round of homeopathic ‘remedy’, Oscillo, flu symptom relief ads. Yes, the same Oscillo that found itself on the receiving end of a class action lawsuit last August for fraudulent marketing—something about its being “nothing more than a sugar pill.”

Well, those Oscillo (or Oscillococcinum) marketers over at Boiron, which has its US headquarters not far out of Philly, must’ve taken a field trip when the Picasso exhibit was at the Philadelphia Museum of Art—and in a flash of creative genius someone said, “that Picasso right there…it’s the embodiment of the being…completely ensnared by flu…just feel the incoherence begging for clarity!” Ah yes, the germ of an ad campaign, right then and there. Just add water.

That’s the ad at left. You can see it has an illustration of a woman, clearly a bit discombobulated a’la Picasso, that’s meant to show how she’s suffering from flu symptoms. Woe is she, indeed.

But then, she takes homeopathic Oscillo and before you know it, everything is clear, a gentle breeze flows through her hair and she smiles as she takes in the great outdoors around her, lake and all.

There’s this little splotch of text, however, under the “after” picture. It reads,

“Time-accelerated dramatization.”

Hmm.

Are they for real? I hope someone (namely the art and copy team on this) had a good laugh. Sure it’s there as a legal disclaimer, but it’s a cartoon folks. I’m thinking we, as readers of the ad, would first have to believe that some parallel cartoon reality actually existed—like in Mary Poppins when they all hop into the sidewalk drawing—in order to expect cartoon-like results in our normal reality. Tracking with me?

But the American public is not that stupid.

Nor is it foolish when it comes to reading package labels. Here’s what the Oscillococcinum one has on its back (forgive the resolution):

Oscillo Package2 Channeling Picasso for Oscillo Flu Relief Fraud?

Active Ingredient: Anas Barbariae Hepatis et Cordis Extractum 200CK HPUS; Inactive ingredients: sucrose, lactose.

Now, if you whip out your Cassell’s Latin Dictionary, you’ll find that the active ingredient is extract of duck liver and heart. The 200CK means that its gone through a series of 200 dilutions—with each one equating a 1:100 dilution. If you do the math, the level of “active ingredient” would seem to get rather miniscule, leaving almost…nothing. (In fact, the court filing for the Oscillo class action states that, given the dilution, “At this purported ratio, the probability of getting 1 molecule of the active ingredient of Oscillo in a regular dosage is approximately equal to winning the Powerball every week for nearly an entire year.” Someone has a sense of humor!)

For those who missed basic nutrition class, the inactive ingredients, sucrose and lactose are sugars.

Nothing—or almost nothing—and sugar is, well, sugar. Which is the basis for the Oscillo false marketing class action lawsuit.

I suppose Boiron deserves some kudos for creativity—on both fronts, product development and advertising. But that’ll only go so far to “reduce the duration and severity of flu symptoms” including body aches, headache, fever, chills and fatigue. And exactly how far is what the class action will determine now.

Tags: Boiron, Consumer Fraud, false advertising, Homeopathic remedy, Homeopathy, homeopathy-remedy-fraud, Oscillo, Oscillococcinum
Posted in Class Action, Consumer Fraud, Emerging Issues | 92895 Comments »2012-01-11+15%3A43%3A52AbiK

LAS Lookout: Fastin Weight Loss Ad – Read the Small Print

January 5th, 2012. By AbiK

Note to self: when a one-page ad in a magazine has 12 daggers—those are those “†” symbols that lead you to some teeny-tiny footnote disclaimer—pause to ponder what the ad is really telling you.

It’s important as now that we’re in flu season, we’re seeing more and more homeopathic ‘remedy’ ads popping up with questionable claims and the telling footnote or two.

The 12-dagger ad above is actually a recent ad for Fastin, “the world’s most advanced weight loss aid ever developed!†” (there’s that dagger!). The ad appeared in Self magazine. And yes, it has 12—no joke, twelve—daggers in it, all leading to the footnote below. Don’t believe it? They’re all circled on the actual ad above.

Just about everything but where to buy Fastin has a dagger leading you to the disclaimer (the disclaimer is reprinted below.

In fact, even the doctor’s statement has the disclaimer. And there’s another tip-off to something potentially askew: try to locate some quick background info on Dr. Mark Wright. You can’t. Oh sure, he has his own website, but try to find him on doctor rating sites like RealSelf.com, Vitals.com, Avvo.com, or HealthGrades.com. He’s not there. He’s also not showing up as

Tags: Dr. Mark Wright, false advertising, Fastin, Homeopathic remedy, Homeopathy, homeopathy-remedy-fraud, weight loss
Posted in Consumer Fraud, Drugs/Medical | 9275No Comments »2012-01-05+16%3A08%3A51AbiK

Week Adjourned: 12.30.11

December 30th, 2011. By LucyC

Top Class Actions

Neiman-Marcus Class Action Filed Over $1.50. That’s one dollar fifty cents, folks. This is interesting–and I have to admit I’d never thought about ATM fees in department stores. But this woman has–Marilyn Frey, from Sherman, Texas. She has filed a consumer fraud class action against Neiman-Marcus claiming unfair business practices over its charging $1.50 ATM fees at ATM terminals in their stores, without posting the fees. Umm. Ok.

The lawsuit, brought individually and on behalf of others similarly situated, claims that Frey made a withdrawal at an ATM on October 11, 2011, which is operated by Neiman-Marcus in their store, and was charged a “terminal fee” of $1.50 in connection with the transaction. The lawsuit claims that the fee is in violation of the Electronic Fund Transfer Act, which requires a notice posted on or at the ATM regarding the fee that would be charged for use. Well, this could certainly open up a can of worms…all this for $1.50.

Top Settlements

A couple of biggies this week…

AIG Low-balling Workers’ Comp Claims. First up—American International Group Inc (AIG)—they received final approval from a federal judge to pay $450 million as settlement of the AIG class-action lawsuit brought by a group of other insurers alleging underreporting of workers compensation premiums.

The settlement is supported by AIG and Ace Ina Holdings Inc., Auto-Owners Insurance Co., Companion Property & Casualty Insurance Co., Firstcomp Insurance Co., Hartford Financial Services Group Inc., Technology Insurance Co. and Travelers Indemnity Co. Liberty Mutual Group’s two subsidiaries, Ohio Casualty and Safeco, had opposed the settlement. In August, the U.S. Court of Appeals for the Seventh Circuit denied Liberty Mutual’s request to appeal the proposed $450 million settlement while the case is still ongoing. Liberty Mutual could still file an appeal down the road, and can still drop out of the settlement class to pursue a case against AIG on its own.

The lawsuit stems from allegations that AIG intentionally underestimated its workers’ comp premiums to avoid premium taxes and substantial residual market charges before 1996. In some states, from the mid-1980s to the mid-1990s, the residual market losses were greater than the residual market and voluntary market premium combined, so the more voluntary premium a company wrote, the more it had to pay out to cover its share of the residual market losses. That, allegedly, gave companies an incentive to under-report workers’ comp claims. Got it? Hey—fraud is fraud…

Look Sharp? Next up…A $538.6 million settlement has been agreed between Sharp Corp., Samsung Electronics Co. (005930) and five other makers of liquid crystal display panels which, if approved, would end claims that the companies fixed prices on the panels used in computers and televisions. The attorney generals of eight states, including California, Florida and New York are part of the settlement agreements with the manufacturers.

In a nutshell—the antitrust lawsuit alleged that the companies fixed prices of thin-film liquid crystal display panels, between 1999 and 2006, which effectively increased the prices for purchasers of devices such as televisions, notebook computers and monitors.

How is a consumer supposed to know this stuff? Oh right, we’re not. All things considered maybe the term “trust” should be stricken from terminology relating to the free market… just a thought…

Apparently, this settlement will see about $501 million made available for partial refunds to consumers and about $37 million made available for compensation to governments and other public entities for damages.

Ok—That’s a wrap for this year. Happy New Year and all that jazz. See you in 2012!

Tags: AIG, American International Group Inc, Antitrust, ATM Fees, Consumer Fraud, Insurance, Neiman Marcus, Price Fixing, Samsung Electronics Co, Sharp Corp, Workers Compensation
Posted in Class Action, Consumer Fraud, lawsuits, Settlement, Week Adjourned | 9259No Comments »Week+Adjourned%3A+12.30.112011-12-30+22%3A44%3A31LucyC