Overview Of Home Warranty Scam


If you own a home, you’ve probably received a letter regarding a home warranty at some point. A house warranty or extended warranty is a type of service contract that covers the cost of specific repairs for a set amount of money, like a car warranty.

Companies that sell house warranties will occasionally market themselves through the mail. Several readers inquired whether recent mailings about their house warranty that appeared to be from their mortgage provider were frauds.

What is a Home Warranty?


According to the Office of the Attorney General for the District of Columbia, a home warranty is an optional agreement you enter into with a firm to cover some repair and replacement of specific home systems and appliances.

Consider your major kitchen appliances or systems like plumbing, electricity, and HVAC, according to Bankrate, an online personal finance information resource. These plans often supplement the automatic manufacturer or builder warranties that come standard with new homes or appliances.

This is not the same as homeowners insurance. According to the Office of Connecticut Attorney General William Tong, home insurance covers property damage or liability in the case of an accident and is often required by mortgage lenders. Home warranties are entirely optional.

Home warranty contracts may have some terms and conditions that limit what they cover or pay for, and they may restrict replacements to specific brands or repair to specific contractors. Even if the repairs are covered, you may have to pay a percentage of the cost.

Most states require legitimate home warranty companies to register with a state insurance or consumer protection authority; some even require legitimate home warranty companies to obtain licenses that are even more difficult to obtain than a registration. Compare Home Warranty Quotes, a website that allows consumers to compare house warranty pricing, includes a public guide that lays down each state’s licensing and registration regulations.


What a Common Home Warranty Scam Looks Like

Although there are others, several states and institutions have issued warnings about a particular home warranty scam that has been prevalent since last year. Victims of this scam claim to receive no service and discover that the crooks will not allow them to cancel their subscriptions.

According to the Oregon Department of Justice and the attorney general offices of Tennessee and Maryland, the scammers send letters to homeowners claiming to be linked with the homeowner’s mortgage business and the “county deed records” office.

According to state attorney general offices and banks, the scammers know your mortgage company, address. They may even have images of your home because it is all public information that can be found online.


The letters say that the homeowner’s home warranty has expired or is about to expire, regardless of whether the homeowner has ever had a home warranty. It cautions the homeowner that they may be “financially liable” if they do not have a warranty and that failing to reply may result in a loss of coverage.

Scam letters have been placed online in Oregon, Tennessee, and Connecticut. The scammers’ letters are nearly identical in each of these states. They are all from the “Home Warranty Dept” of organizations with similar names, such as Home Warranty Solutions, Home Warranty Direct, and Home Warranty Division. They also include a forged $200 check.

According to Better Business Bureau (BBB) ratings and complaints, if a consumer calls the phone number on the letter and agrees to the company’s home warranty contract, they will subsequently learn that the company refuses to cover anything, making it difficult or hard to cancel. Some customers reported closing their debit or credit cards to prevent the firm from taking further payments.

What Should A Good Home Warranty Company Offer?

A reputable home warranty provider is open and honest about its legality, affiliations, limits, and marketing claims. They also provide excellent customer service and make every effort to minimize work delays. They pay their contractors regularly to keep them motivated to do their best.

A good home warranty company will also be forthcoming about the number of claims they have processed, the number of properties they cover, and other facts regarding their real performance. Customers are not expected to have blind faith in them.

Companies aim to make their customers’ lives easier by providing warnings before their plans expire and informing them about customizable plans, a large selection of optional things, etc. Over time, they develop novel solutions, such as digital platforms with auxiliary services like transaction tracking.


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