Arizona AG announces $11.8M settlement in home warranty fraud case

PHOENIX — Arizona Attorney General Kris Mayes announced the resolution of a home warranty fraud case against Choice Home Warranty on Tuesday.

As part of the Jan. 23 agreement, the New Jersey service contract company will be required to reform its sales practices, provide a disclosure to customers prior to selling warranties and pay $11.8 million, according to the Attorney General’s Office.

The lawsuit was filed in 2019 after a large number of consumers complained about the company allegedly failing to replace air conditioning units and other home appliances, despite them being advertised as covered under warranty.

“Choice Home Warranty allegedly misrepresented the coverage provided by their warranties and pocketed millions of dollars from Arizonans, particularly veterans, senior citizens and others living on fixed incomes,” Mayes said in an announcement.

“Businesses cannot hide behind fine print and hidden disclosures to exploit our most vulnerable consumers. This conduct is unacceptable and will not be tolerated by my office, even if it means fighting scammers and fraudsters for years on end. We don’t quit.”

More details on the home warranty fraud case

More than 1,500 Arizonans have submitted complaints about Choice Home Warranty to the Attorney General’s Office, the Arizona Department of Insurance and Financial Institutions and the Better Business Bureau since 2013.

According to the Attorney General’s Office, customers frequently complained about the company’s telephone sales representatives failing to disclose certain exclusions and limitations under the warranty product. There were even some who claimed that repairs and replacements covered by the warranty were misrepresented over the phone.

It is important to note that the company did not admit to any wrongdoing as part of the settlement agreement and denied the allegations the state made in the lawsuit.

James E. Mostofi, CEO of Choice Home Warranty, said in a statement that the company is “pleased” that a resolution was reached.

“Importantly, the resolution includes no finding of wrongdoing, no admission of liability and no civil penalties,” Mostofi said. “While we strongly believe our practices have always been fair and compliant, we agreed to reimburse the State of Arizona for certain legal costs in order to put this long-running matter fully behind us and avoid further expense and distraction.”

Customers who purchased a home warranty in Arizona over the phone from the company between Jan. 1, 2013 and Jan. 1, 2023, may be eligible to receive restitution, according to the Attorney General’s Office.

Also, the announcement said additional information regarding eligibility and how to apply for restitution will be released at a later date.

In addition, the Attorney General’s Office will be disbursing the funds once they are received.

The New Jersey Attorney General previously investigated Choice Home Warranty for its business practices, which resulted in a $780,000 settlement in 2015.

Related

Arizona AG Brnovich accuses home warranty company of 'false promises'How homeowners can protect themselves from contractor fraudArizona AG's Office reaches $1.75M settlement with warranty companyFogo de Chao opens 2nd Valley location in GilbertSAFE Alert canceled after missing 77-year-old woman last seen in Phoenix found safeArizona erases more than $1 billion in medical debt for nearly 671,000 residents