National Advertising Division Recommends Choice Home Warranty Modify, Discontinue Certain Claims for its Home Warranty Service Plans; Advertiser to Appeal
NEW YORK, Feb. 12, 2020 /PRNewswire/ -- The National Advertising Division (NAD) has recommended that Choice Home Warranty ("CHW") modify or discontinue certain claims regarding its home warranty service plans. The claims at issue were challenged by competitor Frontdoor, Inc. and appeared in television commercials, direct mail and e-mail marketing, online advertising and other media. CHW said that it will appeal certain adverse findings.
NAD is an investigative unit of the advertising industry's system of self-regulation and is a division of the BBB National Programs' self-regulatory and dispute resolution programs.
The claims challenged by Frontdoor included, but were not limited to:
Express claims:
- "Never pay to fix covered home systems or appliances again."
- "With Choice Home Warranty, whether you need your covered items repaired or replaced, you'll never pay more than a $60 service fee."
- "If we can't fix it, we'll replace it."
- "Choice's Heavyweight Protection Plan assures that you'll never pay for a covered breakdown again. You could save thousands."
- "Stop getting sucker-punched by the high cost of home repairs when your A/C goes out or when your washing machine takes a dive or when your electricity shorts out. Choice Home Warranty can protect over 25 of your home's major systems and appliances for about $1 a day."
- "First month absolutely free."
- "#1 Rated Home Warranty Service. Rated #1 Home Warranty Service by Top10HomeWarrantyReviews.com."
- "TOP RATED Nationally by Consumers on CONSUMERAFFAIRS.com *****."
- "Excellent. Trustpilot[.com]*****."
- "We're offering this special, limited-time, welcome gift: guaranteed $60 service call fees (regularly priced at $75) . . . you save 20% every time."
Testimonials:
- "When my refrigerator and air conditioning went, I had no worries. I was covered and saved thousands thanks to my Choice Home Warranty."
- "With Choice Home Warranty I save thousands of dollars and zero headaches."
Implied Claims:
- CHW Plans cover the full cost to repair or replace any covered appliance or system.
- Consumers with a CHW Plan will never pay more than a $60 service fee, even if their costs to repair or replace a covered item are $4,170 more.
- Plans covering costly appliances and systems, such as central air conditioning refrigerators, washing machines, pools and septic systems, cost only $1/day.
- Any service calls made in the "free" month of service will be absolutely free.
- CHW is the #1 rated home warranty plan by consumers, based on their actual experience with the plans.
- Consumers who have CHW will never have to worry about an expensive repair or replacement bill for any covered system or appliance.
- CHW consumers typically save thousands of dollars when they need to replace an expensive household appliance or system, such as central air conditioning.
- Adequate and well-controlled surveys establish that CHW is the #1 rated home warranty plan and given 5-star ratings by consumers.
NAD noted that both parties market and sell home service contracts, or home warranties, that are designed to help defray the often significant out-of-pocket costs associated with repairing or replacing home appliances and systems failures that occur from normal wear and tear.
As an initial matter, NAD determined that a 2015 New Jersey Consent Judgement, entered as a result of settled litigation with the advertiser, does not remove the matter from NAD's jurisdiction. NAD noted that there is strong language limiting the scope of the consent judgment, thus it does not amount to an approval of the advertising claims by any court or government entity such that administrative closure under NAD's Policies & Procedures would be warranted.
The challenger asserted that advertising claims regarding CHW's coverage and savings overstate the advertiser's coverage, which has a variety of restrictions and a cap of $1,500 of liability for each covered system, some of which cost well over that amount to replace. Whereas, the advertiser countered that consumers understand that coverage – like an insurance product – is limited, that it discloses its liability cap, and that consumers who experience more than one system breakdown, a foreseeable circumstance, could "save thousands."
NAD considered the messages conveyed by the challenged claims, as well as the advertiser's support, and recommended that CHW discontinue use of the term "never pay" and "if we can't fix it, we'll replace it" when describing its home service contracts. Further, NAD recommended that the claim "save thousands" and the other challenged qualified savings claims be modified to clearly and conspicuously disclose the limitations of the advertiser's liability. NAD also determined that the claim that the advertiser's services are priced "about a dollar a day" was not supported and recommended that it be discontinued. However, NAD found that CHW's "free month" claim was supported, and also determined that the advertiser provided a reasonable basis for its claim that its $60 service fee was a bona fide sale price.
With regard to CHW's claims that its service has been rated by an independent third-party entity as "#1 rated" or highly rated in its category, NAD recommended that the advertiser discontinue its "#1 Rated Home Warranty Service. Rated #1 Home Warranty Service by Top10HomeWarrantyReviews.com" claim or modify it to clearly and conspicuously disclose its material connection to Top1HomeWarrantyReviews.com. As for the advertiser's TrustPilot.com and ConsumerAffairs.com claims, the advertiser stated that it updated its ratings in current advertising to reflect its actual ratings on these sites: 4 stars on TrustPilot.com and "Highly Rated" on ConsumerAffairs.com. NAD appreciated the advertiser's voluntary modification of this claim and cautioned the advertiser to continue monitoring its ratings at regular intervals and modify its claims accordingly to ensure that its advertising remains supported.
Finally, to the extent that older testimonials in which the customer was compensated are still being used in CHW advertising, NAD recommended that they either be discontinued or modified to clearly and conspicuously disclose the material connection between the customer and advertiser. Further, NAD recommended that the advertiser discontinue testimonials claiming that consumers "saved thousands" or clearly and conspicuously disclose either (1) what a typical customer does save or (2) the material limitations on CHW's coverage such that consumers understand the claim to mean that the customers in question experienced multiple, covered system or appliance breakdowns in order to attain the "thousands" in savings.
In its advertiser's statement, Choice Home Warranty stated that it will appeal portions of the NAD's decision to the National Advertising Review Board. The advertiser stated that it respectfully disagrees with, and will appeal: NAD's assertion of jurisdiction in this matter, NAD's determination that CHW has not substantiated the claims "Never pay for covered home repairs again," "If we can't fix it, we'll replace it," "About a dollar a day," that customers can "Save thousands" relative to paying for home repairs themselves, and NAD's recommendation that it should disclose additional information about the rating and ranking web sites from which it receives ratings or accolades.
About the National Advertising Division: National Advertising Division (NAD), a division of BBB National Programs, provides independent self-regulation overseeing the truthfulness of advertising across the U.S. NAD reviews national advertising in all media and its decisions set consistent standards for truth and accuracy.
About BBB National Programs: BBB National Programs fosters trust, innovation, and competition in the marketplace through the development and delivery of cost-effective, third-party self-regulation, dispute resolution and other programs. BBB National Programs is the home of industry self-regulatory and dispute resolution programs that include the National Advertising Division (NAD), National Advertising Review Board (NARB), BBB EU Privacy Shield, BBB AUTO LINE, Children's Advertising Review Unit (CARU), Children's Food and Beverage Advertising Initiative (CFBAI), Children's Confection Advertising Initiative (CCAI), Direct Selling Self-Regulatory Council (DSSRC), Digital Advertising Accountability Program (Accountability Program), and the Coalition for Better Advertising Dispute Resolution Program (CBA DRM). The programs are designed to resolve business issues and advance shared objectives by responding to marketplace concerns to create a better customer experience. To learn more about industry self-regulation, please visit: BBBNP.org.
SOURCE BBB National Programs; National Advertising Division
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