Service America Home Warranty was a Fort Lauderdale-based company that had been in the home warranty business since 1973. They offered their customers yearlong as well as multi-year warranty contracts that covered malfunctions of air conditioners, water heaters, kitchen appliances, laundry equipment, plumbing systems, and other home systems and appliances.
As reported by the Sun Sentinel, Service America Home Warranty notified their customers in November 2018 that they were shutting down and that they were dismissing more than 160 employees from offices in Fort Lauderdale and Clearwater. This report came after numerous allegations of unethical behavior by the company. In the wake of such high-profile company misconduct, many people are asking: are home warranty companies scams? Let’s take a closer look at the story of Service America Home Warranty and what it means for the home warranty industry’s reputation.
The Service America Home Warranty company changed ownership several times during its long history. The company was originally created as a result of the merger between two dominant home warranty companies in South Florida – Amira Services and Encore Service Systems. Both of those companies were later acquired by Chemed Corp. In 2005, Service America Home Warranty became employee-owned when a group of 300 employees purchased the company from its parent company, Chemed Corp.
Later on, in 2006, another company purchased Service America Home Warranty when it was generating about $30 million in annual revenue and had about 65,000 clients. However, by the time the company was closed in 2018, the number of customers was almost three times as less.
Was this a Home Warranty Scam or a Good Company?
In 2016, Service America Home Warranty reviews on the Better Business Bureau were positive. They said things like, “Excellent service from the AC Technician” and “Very positive experience with Service America.”
Since Service America Home Warranty changed owners several times, it is not surprising that the quality of its services has deteriorated. By 2017, the situation had clearly gotten worse. One review that seemed to summarize the popular sentiment said, “We started using Service America more than 10 years ago and at the beginning, the service was decent until 2017. Service America’s customer service is very bad to the extent they are rude. Customers can not talk to the supervisors to complain about the bad attitudes of the customer service or the repair service personnel. The appointments take a minimum of 1 week to 10 days and they charge $45 dollars for every visit. Last year their pro-rated quote for AC replacement was much higher than the quote from another AC repair company. Overall, I am totally unsatisfied with their customer care. I am planning to cancel the contract and switch to another company.”
There soon followed a rise in complaints on consumer reporting sites describing the Service America Home Warranty scam they had experienced. Customers reported service call cancellations, long delays to get contractors to homes, and being unable to speak with the company reps when trying to schedule service calls. One client even predicted the company’s shutdown: “Since the purchase of Service America at the end of the year, the new company is disorganized and the maintenance department is incompetent to respond to requests. Nobody answers the phone, I think it will not belong to go to bankruptcy. Caution if you had to deal with this company.”
Service America Home Warranty promised in late 2018 that refunds would be issued by the end of the year, but many customers received reimbursement checks as late as January of 2019. According to company representatives, “a high percentage” of the checks have been cashed.
However, hundreds of customers of Service America Home Warranty have not yet received or cashed refund checks for the unused portion of their warranty periods. Company officials said that some might have been sent to the wrong address, mistakenly thrown away or hadn’t been opened yet.
While most staffers have been laid off, the company had several administrators on the payroll who deal with customer reimbursement. Ken Stoll, the chief operating officer, said that there was “plenty of money available to pay what’s owed. This is not a bankruptcy or liquidation. It’s an election by the organization to exit the market. We’ve covered every debt, paid every vendor and are paying every customer owed a refund.” Nevertheless, many customers still say they haven’t been paid.
The End Result
Service America Home Warranty has now turned over customers’ money to the Florida State Division of Unclaimed Property. The company no longer responds to its former customers who say they are owed money for what remains of their prepaid warranty policy terms.
According to Sun Sentinel, a government spokesman said that Service America transferred more than $878,000, as well as names and addresses of 4,693 account holders, to the state of Florida. This means that the average unclaimed refund is $187.
The Service America Home Warranty scam is a perfect example of a situation when a long-established company turns out to be unscrupulous and leaves many people without their money. This story shows how important it is to research a company’s reputation and reliability before signing any contracts to avoid home warranty scams. To get a complete picture of the home warranty industry, you have to learn about the worst home warranty companies, not just the best ones.