Are Home Warranties a Scam?

A lengthy review and opinion piece on whether Home Warranty Service plans are scams. We go in-depth with how to use search engines in order to determine whether a product or service is legitimate. We also share how to look for when a company is intentionally providing misinformation.

Arlington, TX – If you are 40 or older, you may recall that yesteryear electronics and appliances seemed to last longer. When I was young, my mother had an oyster blender that originally belonged to my grandmother. That blender is over 70 years old today and still going strong. Of course, we replaced the blades over time. However, other than that, every other part of the blender is still original.

Today’s electronics and appliances seem to break down far more often than the appliances and electronics we had decades ago. Of course, one must keep in mind that not all electronics and appliances are created equally. Some we use on rare occasions – others we use every single day.

Also, as time has progressed, these helpful items have become much more expensive and complex.  Resulting in some homeowners not readily having the cash on hand when a major appliance may need to be replaced.

Enter Home Warranty Service Plans

Surely, most people can go out and purchase a new blender if theirs breaks down. However, not all appliances are as affordable as a blender is. This is where home warranty services come to the table. If you live in a hot climate and your HVAC breaks down, you may not have the cash on hand at the time to repair or replace it.

A home warranty service allows you to have peace of mind knowing that in the event of a major appliance break down you are covered.

Or are you really covered?

Are you covered?There are many different home warranty service providers throughout the United States. However, we are going to focus on just one of those companies. That company is, American Home Shield. They are one of the oldest home warranty service providers in the country. American Home Shield was founded in 1971 and is available in 49 states with a network of over 15,000 contractors.

On paper, their plans, services, availability, and response rate sound phenomenal. However, when it comes to actual service how do they fair? Let us have a look at the good first and then have a look at the bad. As of writing this Consumer Affairs website shows they have 19,253 reviews with an average score of 4.4 out of 5 stars. Google shows they have 16,035 reviews with an average score of 4.4 out of 5 stars.

You can view their score at Consumer Affairs here and you can view their score at Google here.

Additionally, if basing results on just these two very popular sites it appears that they are a wonderful company. However, when you look at other fairly popular websites such as the BBB, Trustpilot, Yelp, and more, a totally different picture is painted.

Other Home Warranty Review Sites

The Better Business Bureau has 14,905 reviews with an average score of 2.53 out of 5 stars. Trustpilot has 1,517 reviews with an average score of 1.1 out of 5 stars. Pissed Off Consumer has 2,264 reviews at an average score of 1.4 out of 5 stars. Sitejabber has 263 reviews with an average score of 1.5 out of 5 stars. Yelp and the Yellowpages which list companies by city show an average score of 1 out of 5 stars across the board.

The Numbers Game

Numbers do not lie or so the saying goes. In this case, the numbers are telling the truth and lying.

If you look at just Google and Consumer Affairs it appears that American Home Shield is a pretty good company. However, if you explore other rating services such as the BBB, Trust Pilot, Yelp, Sitejabber, Pissed Off Consumer, and more you start to see a pattern.

That pattern being they average between 1 to 1.5 stars out of 5. So how did they get an average of 4.4 out of 5 stars on Consumer Affairs and Google?

If you view the consumer affairs profile for American Home Shield you will find that they are a verified partner. Basically, that means they are paying Consumer Affairs thousands of dollars a month.

If you look further into this and dig through Google search results you will find hundreds of complaints from people who had posted bad reviews on Consumer Affairs against home warranty companies such as American Home Shield. However, their reviews weren’t visible to the public!?

consumer affairs fraud

Consumer Affairs had censored their negative reviews?

Unfortunately, the further you go down the rabbit hole; the more you find. Consumer Affairs has been sued on multiple occasions by other companies due to these practices.

Even though Consumer Affairs plasters the motto that you should trust them all over their site after you learn these things it begs the question of whether you should or should not.

How Accurate are Google Reviews on Home Warranty Providers?

Google is one of the most popular search engines on the web. Additionally, it accounts for around 75% of all desktop and laptop searches when compared to other search engines.

Google Reviews is a popular platform that many people use to determine the trustworthiness of a company. This also makes it a prime target for exploitation which cannot be proven so easily.

Even though Google does its best to counter people exploiting the review process, there are still ways to get around it. Those methods to getting around it are also a very lucrative business for black hat SEO.

You can search Google with key phrases such as ‘Buy Google Reviews’, ‘Purchase Gmail accounts’, and ‘Buy bulk PVA accounts’. These phrases will yield results from a large swathe of companies offering you fake google reviews to boost your brand’s confidence, organic rankings, and trustworthiness.

how trustworthy are review sites?

If You can’t trust Reviews, Then What do you Trust?

You can gauge the trustworthiness of a product or service IF you put in the necessary research. Like most things in life, it will never be just as simple as doing a quick search. Unfortunately, when it comes to some products and services you can’t base your decision on what you initially find in the first few top results. You must dig deeper.

Big Money in Fake Top Search Results

money in fake reviewsOn top of the wide availability of companies offering fake reviews, there are also companies offering what is called reputation management services. This service is where an online marketing company uses SEO to boost specific websites, review sites, and other mediums to the top of search results.

If you have ever looked up trending diets or trending supplements in search engines, then you know how where I am going. For those who have not, it seems that the first three to six results in the search engines seem to always have nothing but positive remarks about how the diet works or how the supplement is a miracle cure for whatever it is claiming.

This happens due to the sheer number of people who are trying to resell these products or services. Since so many people are trying to capitalize on the trendiness of these products or services then search engines are inundated with positive information about them. The positive will far outweigh the negative while they are trending. Therefore, since most of the data on these topics is positive information, they are considered the most relevant and pushed to the top.

If you have followed along, then at this point you have probably grasped how a company can manipulate search results to their advantage. This is why when you research a product or service, more often than naught you may end up having to spend quite a bit of time going through pages of search results to find the truth.

Does American Home Shield Manipulate their Online Reputation?

Clearly, based upon the vast differences in ratings across sites it appears as if American Home Shield ratings have been manipulated. Too many sites show an average of 1 to 1.5 stars out of 5 when compared to two of the most popular websites showing a contrast difference. One which has been exposed as being a fraud in the past and the other with an exploitation loophole.

We’ve spoken with many SEO companies, and they all unanimously agree that American Home Shield is spending quite a lot on reputation management to boost its online image positively.

What are the Most Common Negative Reviews on Home Warranty Services?

Specifically, if you dig through the negative reviews on American Home Shield you begin to see a repeating pattern with two prominent problems. Those two problems are customer service and replacing expensive parts or entire HVAC units within a timely manner.

With regards to customer service complaints, most of the negative reviews revolve around miscommunication and replacement delays. This can be contributed due to that at least a majority of customer service agents with American Home Shield are outsourced from call centers in the Philippines.

Why Would Outsourcing be the Problem?

bad outsourcingThere are multiple reasons why outsourcing can spell disaster for a company. One of the most common problems with outsourcing to countries is communication barriers.  However, English is a spoken by many in the Philippines. Unfortunately, many English-speaking Filipinos will not understand some expressions and accents of native English-speaking customers located in the USA.

Good old-fashioned experience and product knowledge is also another common area where outsourcing breaks down.  The Philippines has employment laws that are different than that in the United States. In Newly hired employees usually receive only temporary contracts. After six months, employees will receive permanent status.

Employment laws in the Philippines make it easier to terminate a temporary employee than a permanent employee. Therefore, most companies not only offer only temporary contracts but also terminate almost every batch right before they would gain permanent status. As you can imagine, this creates a work atmosphere where virtually no one has experience or a solid grasp of product and/or service knowledge.

Does Home Warranty Service Cover Major Repairs?

The other most common complaint we found with American Home Shield was its commitment to providing replacement parts within a reasonable amount of time. Most of the negative reviews spoke of customers having to wait weeks and often time several months or more for replacement parts and/or replacement units.

Why Would it take Months to Replace Parts?

Home warranty service companies offer many services for different types of electronics and appliances. However, we are going to focus on what we do and that’s Heating and Cooling. American Home Shield offers different types of monthly service plans and gives you the option of how much you pay the contractor by offering three different service fees. The rate for these fees is $75, $100, and $125. If the customer uses the lower service fee, the monthly deductible is higher and vice versa.

When repairs are cheap, home warranty service reviews appear to be more positive. American Home Shield only allows a $200 budget with their contractors. That means that the goal is to keep costs below $200, plus the service fee.

This, as you can imagine can be quite troublesome. Especially when you factor in the hourly wages for the technician, the cost of the utility vehicle, gasoline, insurance, licenses, parts, and more. Staying under $200 and the service fee can be quite a challenge, if not impossible.

More times than not repairs are rather simple for most household electronics and appliances. This is where positive reviews come in. However, reviews tend to go south when things become complicated. Additionally, most home warranty service providers establish that they are not responsible for replacing items of the same size, color, specifications, etc.

This can cause problems with a central HVAC unit for obvious reasons.  You could have a 5-ton unit and they conclude that you only need a 4-ton unit.  Repairs or replacements may be on hold for months since they are not accountable for speedy deliveries.

home owner warranty denied

The Name of the Game: DENY, DENY, and DENY

Another stipulation commonly found in Home Warranty Service Plans is what they are are and are not responsible for.  Such as, coverage could be in void if the repair needed could be due to owner negligence.  An example of this would be if the damage to an HVAC system could have been due to the owner not replacing air filters every month as the manufacturer suggests. It does not matter whether the lack of changing the filter is definitively the reason behind the repair. All that matters is that it could be the reason so that the Home Warranty Provider can deny coverage.

So Home Warranty Services is a Scam?

For the majority of homeowners, home warranty service plans are for peace of mind over expensive repairs or replacements. Whenever there is a breakdown if it is a small problem, most homeowners can afford this repair on their own.

But let me pose this question.  If minor repairs are affordable, then what is the point of home warranty service plans if major repairs are problematic?

Chances are you may spend more per year for the service than you will use when it comes to minor repairs. Major repairs seem to be more like a game of Russian roulette than peace of mind.

Will your home warranty service provider quickly approve and replace your HVAC unit in the dead of summer? Or will you be just another of the already thousands of customers writing negative reviews?

Personally, I would say Home Warranty Services are not worth it in the end. It is not worth it. However, do not take my word for it. The whole point of this article was to equip you with the necessary tools to do your own research. Now that you have read this article, you should have a better grasp of how to do your own research. If so, look it up yourself and come to your own decision on whether it is worth the gamble.




Randy Murphy

Randy Murphy has been building his knowledge of the air conditioning and heating business for several years now. He first started applying his knowledge while working for his father’s HVAC company. Later, in 1987, Randy started his own business: Metro Express Service. He has been a top 10 Trane & Amana dealer for over eight years. When it comes to heating and cooling, Randy knows the business better than anyone.
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