There is a thread on the AO regarding tech companies, insurance, and in particular their extended warranties that reminded me of my experience with Hewlett Packard several years ago. I wondered then whether other people had a problem like mine, but never thought to ask the AO.
Here is part of my letter to HP
"I purchased a laptop with a 3-year warranty in Sept07, and in Oct10 I bought another warranty, for 12 months. This last warranty would normally expire in Oct11. However when I called last week about actual and potential problems with my laptop, I was told that HP has stopped acquisition of replacement parts effective May11 and therefore warranty servicing was impossible. HP is in the process of refunding a prorata portion of the cost of the warranty.
So for this particular warranty you act as follows
- The cost is $15 per month. (It's paid all at once, up front, but that's not really relevant.)
- Up to May11, you provided warranty coverage and product service. The issue is what happens on/after May11.
- For people who do not have a warranty claim, you keep the $ 15 per month.
- For people who do have a claim, you give back the $15 for the month of claim and for any remaining months where you already collected the $15.
This is not really insurance or warranty coverage or anything of the sort...you are just taking money, sometimes keeping it, sometimes giving it back, but never providing the service you promised to provide."
I got no response there, and then tried NY AG and Calif DCA, where I also got no reply. Anyway, this is from my email to them:
"A similar topic, with far greater harm to individual consumers, involved the alleged action of some health insurers with respect to rescissions. You may recall that some insurers issued policies readily, and then were said to rescind policies quickly in the case of those individuals who had large medical expenses. The two circumstances are very similar - in each case, the consumer thinks he has insurance until he has a claim. A premium refund is small consolation."
Has anyone had a similar experience with respect to extended warranties? Or seen other examples of what I would call the “rescission fraud?” I tried some back-of-the-envelope calculations to estimate the profit from this sort of fraud, using vague guesses regarding the number of people who keep their PCs for several years, etc. FWIW, I managed to convince myself that the number is in the $$ multiple millions.
As a sort of odd postscript to my own experience, I received another email from HP in Sept11, described below:
"Finally, I got an email today from HP that just freakin' blows me away. They want to sign me up for another year of warranty "coverage," even though they just refunded 5 months or so of premium for the prior year of 'coverage.'"
Here is part of my letter to HP
"I purchased a laptop with a 3-year warranty in Sept07, and in Oct10 I bought another warranty, for 12 months. This last warranty would normally expire in Oct11. However when I called last week about actual and potential problems with my laptop, I was told that HP has stopped acquisition of replacement parts effective May11 and therefore warranty servicing was impossible. HP is in the process of refunding a prorata portion of the cost of the warranty.
So for this particular warranty you act as follows
- The cost is $15 per month. (It's paid all at once, up front, but that's not really relevant.)
- Up to May11, you provided warranty coverage and product service. The issue is what happens on/after May11.
- For people who do not have a warranty claim, you keep the $ 15 per month.
- For people who do have a claim, you give back the $15 for the month of claim and for any remaining months where you already collected the $15.
This is not really insurance or warranty coverage or anything of the sort...you are just taking money, sometimes keeping it, sometimes giving it back, but never providing the service you promised to provide."
I got no response there, and then tried NY AG and Calif DCA, where I also got no reply. Anyway, this is from my email to them:
"A similar topic, with far greater harm to individual consumers, involved the alleged action of some health insurers with respect to rescissions. You may recall that some insurers issued policies readily, and then were said to rescind policies quickly in the case of those individuals who had large medical expenses. The two circumstances are very similar - in each case, the consumer thinks he has insurance until he has a claim. A premium refund is small consolation."
Has anyone had a similar experience with respect to extended warranties? Or seen other examples of what I would call the “rescission fraud?” I tried some back-of-the-envelope calculations to estimate the profit from this sort of fraud, using vague guesses regarding the number of people who keep their PCs for several years, etc. FWIW, I managed to convince myself that the number is in the $$ multiple millions.
As a sort of odd postscript to my own experience, I received another email from HP in Sept11, described below:
"Finally, I got an email today from HP that just freakin' blows me away. They want to sign me up for another year of warranty "coverage," even though they just refunded 5 months or so of premium for the prior year of 'coverage.'"
Extended Warranties and Rescissions