The settlement was the result of a class-action lawsuit filed by Laura and Steven Faught against American Home Shield on behalf of people in the US who purchased or were issued a home service contract from American Home Shield from July 24, 2001 through October 19, 2009. As part of the settlement, American Home Shield agreed to establish a review desk to consider claims from settlement class members whose claims were denied during the class period.
The Faught lawsuit alleged that American Home Shield "engaged in a pattern and practice of failing to fulfill its contractual obligations to its customers, including by declining generally to provide repair and replacement service to which its customers were entitled, and by improperly denying claims in the first year of customers' home service contracts for lack of maintenance" (from the Notice of Class Action and Settlement; www.faughtclassaction.com).
Despite entering into a settlement, American Home Shield denied any wrongdoing or any liability.
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Furthermore, the lawsuit alleges, American Home Shield denies claims because of minimal uncleanness, even if outside factors were the cause of the appliance's breakdown. Plaintiffs allege contractors were given a bonus for denying legitimate claims. The lawsuit claims breach of contract and fraudulent misrepresentation. Plaintiffs seek damages in excess of $75,000.
Meanwhile, customers of other home warranty companies have filed lawsuits of their own or may be investigating possible lawsuits, alleging their claims were improperly denied.