The above link is a phone call between me and a client who was represented that they had a “Sewer Warranty” by a Warranty Management client in a regulated state (then accidentally gave them promotional material for SewerGard, a Trademark I own, likely due to lack of promotional collateral provided from WM). The homeowner reached out to me after they could get nowhere with HON/WM with their sewer line failure that had a price tag on it of $2900 which is not atypical and for an issue that would have been covered by our policy as we do daily. All they could get as a response was the “plumbing has a $200 limit” and no further details would be shared by WM as the “administrator”. The client, a Veteran and a First Time Home Buyer, who also happens to be a federal investigator for the EEOC, had significant and well founded concerns about how she was being treated and was so furious she was ready to report the incident to Consumer Affairs on the federal level. Being that the inspector is a good guy who just happened to be duped into this, I explained in later correspondence that he deserved none of that and we got the inspector to settle the issue and he even went to see this lady on a Sunday to deliver her a check for $2000 for which she was most grateful. She has agreed not to pursue anything beyond helping us with documentation to get the official letter from the Commonwealth of Virginia, like we did for New York, that this activity is unlawful.
The policy was not even shared with the client. It was marketed as if it were one of our legitimate warranties, with a single page that suggested there was a page 2 & 3 that suggests further that those pages are “available upon request” and then ironically reads in the border “Important Please Read Everything”. You can see both of those excerpts in the attachments.
They were also offered the “Recall Alert”, but when we logged in as the client and as we have seen with every other HON user we have ever encountered or looked into, the recall submission was completely and totally blank. Offering the service simply to compete with the guy next door that is actually providing recall protection with RecallChek is fine, so long as it is not deceptive and the service is actually performed. This scenario is clearly deceptive in every way imaginable. This is more of a HON than a WM issue, but the two are one in the same in actuality. See screen shots enclosed for the blank recall data, which is typical, and the login to get to the “Warranty Management Warranty”, which is simply the sign in screen for HON- where a client must log in in order to view such “warranties”.
Of course the Commonwealth of Virginia, with the complete policies, handouts, screenshots of everything in the system, and this recorded call as their guide will in accordance with their statutes issue a letter much as the State of New York did that condemns the practice Warranty Management is promoting and has suggested over and over again to inspectors to be compliant. It is clearly not.
The bad news for inspectors here is not just the potential for embarrassment or the consequences if they can’t pay the bills or cost of reprinting marketing materials or even the threat to their reputation or the harm done to clients that we cannot quantify at this moment until we have the time to go state by state and get Departments of Insurance to compel participants to hand over client lists to their respective states to investigate- it is much worse. There are three more attachments in this email that are directly from the contract that WM forces inspectors to sign prior to utilizing their program- which is a reference back to their legal counsel’s advice in initial documents stating that no actual compliance research was done and this issue could be solved by simply putting all of the due diligence responsibilities on the inspectors themselves. The three attachments state first that the “Company” (meaning the inspector) understands that WM does not sell warranties, isn’t an insurer, etc. but rather manages the programs that are “created by the [inspector]”, which is of course nonsense as the inspector simply takes their suggested template that violates the law nearly everywhere and fills in a few numbers according to every account we’ve been privy to. The second part says that the policies can be “interpreted” differently and may be a [problem] in a court or “other legal proceeding”, which we believe to be an inference to a compliance issue or investigation from a Department of Insurance. That second attachment goes on to suggest again, in writing, that the “warranty” being offered- whether compliant or not, whether deceptive or not- is the property of the Company (Inspector) and WM has no claim to it. And the final document says in no uncertain terms that no matter what happens that the “Company” (Inspector) will completely and totally indemnify WM and all of its affiliates and everyone associated with them for any damages for anything including legal fees defending the very violations they encouraged.
We now have New York and North Carolina officially putting in writing that WM and the concept behind it is unlawful and we have delivered such to industry influencers. We have Wisconsin, Florida, and Virginia with past notices to non-compliant inspection warranties (AHW or American Home Warranty) who were issued subsequent cease and desist orders, and now we will get even more specific with Virginia to address WM in their own state with all of the documents we have, scrubbed of any identifying marks or soundbites associating any individual inspector with this program.
Why do we have to scrub the inspector’s information?
This is quite simple. Since Warranty Management is not directly violating the law, the inspector would have to pay the consequences, which we will do everything in our power to prevent. If you listen to the call from the link above, it will become clear and apparent to you that the inspection company in question got very lucky that they had accidentally handed the client a couple pieces of paper with my number on it. Had this client gone to a State level authority, it could have turned out very badly, and clearly this client would have known how to get something done there.
Of course if WM is found to be in violation at some point simply for encouraging the violation, they have a right by their contract to send the bill for any fines and legal fees to all the inspectors in that State anyhow, so maybe our efforts are wasted beyond saving the reputation of WM victim inspection companies.
Please take a look at all attachments and a listen to recordings, and do your own due diligence. We have a compliance package available to guide discussions with compliance attorneys if you would like. Each of you copied on this is an influential person in the industry and should at the very least be aware of the issues. Some may even take a stance as InterNACHI has to eradicate any mention of these programs from their respective websites and programs. At least until an effort for compliance that ultimately results in a compliant product or service is established and deceptive practices are ceased. It should not be the responsibility of home inspectors to hire attorneys to determine if a product or service in our emails, at our conferences, or on our websites is something legal to do.
P. Nathan Thornberry
Residential Warranty Services, Inc.