Texas Attorney General Greg Abbott has taken on a big local retail chain today, charging that Conn's Appliance stores have used high-pressure tactics to force consumers to buy defective products and then refused to live up to their warranties.
"According to the state's enforcement action -- and information contained in more than 2,000 customer complaints -- [Conn's] unlawfully relied on aggressive and deceptive sales tactics to increase its extended service warranty sales for consumer appliances, electronics and other products," the AGs office says.
The office doesn't paint a great picture of the retailer:
Conn's brochures obtained by state investigators claimed that the replacement warranties protected purchasers "for a two full years from the date [they] purchased the product." However, customers did not actually receive two-year warranties. In fact, the replacement warranty agreements stated that they did not apply to any period covered by the manufacturer's warranty, which typically covered one year after purchase.
Thus the two-year extended warranty does not begin at the time of purchase as represented by Conn's.
Further, in the event a product had to be replaced, the replacement was not covered by the warranty. Thus, if a replacement product failed within the two-year period, it was not covered, despite the defendant's promise to provide replacement coverage "for a full two years."
Also nice: "A Conn's sales manual obtained by state investigators, which was marked 'not to be distributed to customers,' said salesmen should 'create a sense of urgency' and 'make [customers] "live" the service call... [t]his is done by "painting a picture" in the customers [sic] mind, calling up that sickly feeling we all get in the pit of our stomachs when something goes wrong. The sales manual also provided a series of scripted responses to customer objections and reminds salesmen that selling more warranties would 'maximize' their personal incomes."
The extended warranties cost anywhere from $100 to $1,000; Abbott's office says they made up 5 percent of the company's $900 million in annual revenue.
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The AG is seeking "civil penalties" and a court order prohibiting the tactics.
We've asked Conn's for a response; we'll let you know when we hear.
Update: Here's Conn's response --
For the past three months, Conn's has been workng closely with the Texas Attorney General's office in regard to customer concerns. We're responded to each request his office has made and have been working in good faith to resolve those concerns.
We have a 118-year history of delivering outstanding service to our customers. A current measure of our dedication to customer service by our more than 3,200 employees is our Better Business Bureau rating. We currently receive the highest rating possible: A-plus....
We will continue to work actively with the Attorney General. We look forward to discussing with his office the issues he raised today.